Final answer:
The scenario representing cyclical unemployment is when a transport worker is sacked due to an economic downturn. Cyclical unemployment relates to the changes in unemployment due to economic business cycles, differing from frictional and structural unemployment.
Step-by-step explanation:
The scenario that best represents cyclical unemployment is: A transport worker was sacked because of an economic downturn. Cyclical unemployment occurs when there is not enough demand for goods and services in the economy at large, leading to workers being laid off. This can often happen during a recession or a significant economic downturn.
Types of Unemployment
- Cyclical unemployment: Caused by economic downturns and upturns, it is a factor of overall unemployment that relates to the cyclical trends in growth and production within a business cycle.
- Frictional unemployment: Occurs when there is a voluntary transition from one job to another. For instance, the financial analyst who quits a job in Chicago in pursuit of similar work in Arizona represents frictional unemployment.
- Structural unemployment: Results from industrial reorganization, typically due to technological change, rather than fluctuations in supply or demand. An example is factory workers who lose jobs because the plant shut down and moved to another country.
An increase in the unemployment rate is not necessarily a bad thing for a nation, as it could also reflect a larger number of individuals seeking employment because they are confident in finding a job, which could be a sign of a healthy, dynamic economy.