Final answer:
Recessions often cause cyclical unemployment because businesses lay off workers due to decreased economic activity. Different situations, such as industry regulations, technological changes, or relocation of jobs, may lead to structural unemployment. Frictional unemployment occurs with normal job transitions.
Step-by-step explanation:
When the economy is in a recession, companies may lay off workers due to decreased demand for goods and services; this causes cyclical unemployment. This type of unemployment relates directly to the swings in the business cycle, growing during recessions and shrinking during expansions.
Examples of Unemployment Types
- A) Landscapers laid off in response to a drop in new housing construction during a recession are experiencing cyclical unemployment, as it's directly tied to the downturn in the economy.
- B) Coal miners laid off due to EPA regulations that shut down coal fired power plants are facing structural unemployment, a mismatch caused by changes in the industry and regulations that affect the demand for certain jobs.
- C) A financial analyst who quits a job in Chicago and is pursuing similar work in Arizona is experiencing frictional unemployment, which occurs when workers are between jobs or are seeking better employment.
- D) Printers laid off due to a drop in demand for printed catalogues as firms transition to Internet advertising are also facing structural unemployment, driven by technological changes.
- E) Factory workers in the U.S. laid off as plants shut down and move to Mexico and Ireland are facing structural unemployment, due to geographic shifts in jobs and global economic changes.
An increase in the unemployment rate isn't necessarily a bad thing for a nation; it can reflect a more dynamic labor market with people transitioning between jobs (frictional unemployment). However, consistent high unemployment, especially cyclical or structural, can indicate economic problems.