Final answer:
During recessions, unemployment rates increase due to less demand for labor, which is referred to as cyclical unemployment and is expected to decrease as the economy recovers.
Step-by-step explanation:
During contractions or recessions unemployment rates tend to increase as the economy operates below its potential. This is because the overall state of the economy influences the labor demand curve. When the economy is not performing well, there is less demand for labor, which results in higher unemployment rates.
This type of unemployment that rises in response to an economic downturn is known as cyclical unemployment. Moreover, unlike structural unemployment, cyclical unemployment is expected to diminish as the economy recovers and begins to expand again.