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Chapter 8: "Q.19" (page 214)

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

Short Answer

Expert verified

Increase during recession and fall during expansion.

Step by step solution

01

Step.1 Introduction 

Unemployment can be defined as the situation when a person who is able to work and is work, is also actively looking for jobs but is not able to find one. The type of unemployment caused by the cyclical fluctuations is known as cyclical unemployment.

02

Step.2 Explanation 

Cyclical unemployment will fall when an economy is doing goods and is in the phase of expansion. Because in the time of expansion the firms will hire a greater number of people. An increase in labor demand would cause rightward shift in the demand curve, increasing employement.

Cyclical unemployment will rise when the economy is not doing good and is in a state of recession. Because at the time of recession the firms will hesitate from hiring people. An decrease in labor demand would cause leftward shift in the demand curve, reducing employement.

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Most popular questions from this chapter

Unemployment rates have been higher in many

European countries in recent decades than in the United States. Is the main reason for this long-term difference in unemployment rates more likely to be cyclical unemployment or the natural rate of unemployment? Explain briefly.

Why is there unemployment in a labor market with flexible wages?

Under what condition would an increase in the unemployment rate be a positive sign?

What type of unemployment (cyclical, frictional,

or structural) applies to each of the following:

a. landscapers laid off in response to a drop in new housing construction during a recession.

b. coal miners laid off due to EPA regulations that shut down coal fired power

c. a financial analyst who quits his/her job in

Chicago and is pursing similar work in Arizona

d. printers laid off due to drop in demand for printed catalogues and flyers as firms go the internet to promote an advertise their products.

e. factory workers in the U.S. laid off as the plants shut down and move to Mexico and Ireland.

As the baby boomer generation retires, what should happen to wages and employment? Can you show this graphically?
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