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CSS Micro Macro Economics P-I QUESTION #1681
Question 1
Which category of unemployment is directly attributable to the cyclical fluctuations of an economy — rising during recessions and falling during expansions?
  • Seasonal unemployment
  • Frictional unemployment
  • Cyclical unemployment✔️
  • Structural unemployment
Correct Answer Explanation
Cyclical unemployment (also called demand-deficient or Keynesian unemployment) arises directly from downturns in the business cycle. When aggregate demand falls during a recession, firms reduce output and lay off workers, causing cyclical unemployment to rise. It falls during economic expansions. Frictional unemployment results from job-searching transitions; structural from technological/skills mismatches; seasonal from time-of-year variations.