Question

When would you expect cyclical unemployment to be rising? Falling?

a) Rising during economic expansion, falling during recession
b) Rising during recession, falling during economic expansion
c) Rising during both economic expansion and recession
d) Falling during both economic expansion and recession

Answer 1

Option B is answer. Cyclical unemployment rises during a recession and falls during an economic expansion, influenced by shifts in the labor demand curve and sticky wages.

Step-by-step explanation:

The question regarding when cyclical unemployment would be expected to rise and fall relates to economic patterns. The correct answer to this question is that you would expect cyclical unemployment to be rising during a recession and falling during an economic expansion. This is because during a recession, businesses are seeing less demand for their products and services, which leads to layoffs and higher unemployment. Conversely, during an economic expansion, businesses grow and hire more employees, reducing the unemployment rate. These patterns are due to shifts in the labor demand curve and wages that are typically sticky downward.

This is because the overall state of the economy affects labor demand and wages. In a recession, businesses may reduce production and lay off workers, leading to an increase in cyclical unemployment. During an economic expansion, businesses tend to hire more workers, reducing cyclical unemployment.