Final answer:
Cyclical unemployment rises with decreased labor demand during recessions and falls as labor demand increases during expansions, influenced by economic conditions and downwardly sticky wages.
Step-by-step explanation:
Cyclical unemployment is caused by the demand for labor decreasing during a recession and then increasing during an expansion. During recessions, overall buying power in the economy diminishes, prompting firms to cut back on hiring or lay off workers, thus increasing unemployment. As conditions improve and expansion occurs, demand for goods and services rises, prompting firms to increase production and hire more workers, thereby decreasing cyclical unemployment. Wages that are sticky downwards can exacerbate this situation, as employers may resist cutting wages during a recession, leading to layoffs instead of wage reductions.