Final answer:
The term 'employment forecasting' refers to the practice of using a firm's past employment data to predict future staffing needs, which is used to optimally align labor supply with the anticipated labor demand influenced by economic conditions.
Step-by-step explanation:
The correct term for studying variations in a firm's past employment levels to predict future needs is employment forecasting. This practice involves examining historical employment data and economic trends to make informed predictions about a firm's likely future demand for labor. Firms use employment forecasting to ensure they have the optimal number of employees to meet their strategic goals. When the economy is expanding, firms tend to hire more employees, shifting the labor demand curve to the right. Conversely, during economic slowdowns or recessions, firms might scale back on hiring or lay off workers, resulting in a leftward shift of the labor demand curve. This variation in employment due to economic conditions is referred to as cyclical unemployment, distinguishing it from other types like frictional or structural unemployment.