Which term describes unemployment that rises during economic downturns and falls when the economy improves?

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Multiple Choice

Which term describes unemployment that rises during economic downturns and falls when the economy improves?

Unemployment that tracks the ups and downs of the overall economy is cyclical. When the economy enters a downturn, demand for goods and services falls, leading firms to cut back or lay off workers, so unemployment rises. As the economy recovers and growth resumes, demand strengthens and workers are rehired, causing unemployment to fall. This pattern is different from frictional unemployment (short-term job-search or transition between jobs), structural unemployment (long-term mismatch between skills and available jobs), and seasonal unemployment (patterns tied to the time of year). So the term that describes unemployment rising in downturns and falling as the economy improves is cyclical unemployment.

Unemployment that tracks the ups and downs of the overall economy is cyclical. When the economy enters a downturn, demand for goods and services falls, leading firms to cut back or lay off workers, so unemployment rises. As the economy recovers and growth resumes, demand strengthens and workers are rehired, causing unemployment to fall. This pattern is different from frictional unemployment (short-term job-search or transition between jobs), structural unemployment (long-term mismatch between skills and available jobs), and seasonal unemployment (patterns tied to the time of year). So the term that describes unemployment rising in downturns and falling as the economy improves is cyclical unemployment.

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