cyclical unemployment

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5 Terms

1
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cyclical unemployment

arises from fluctuations in the economic cycle, specifically during downturns or recessions which are associated with a fall in aggregate demand

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pt 1

when Ad decreases there is less demand for goods and services

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pt 2

this lower total expenditure causes firms to reduce their output

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pt 3

because demand for labour is derived from the demand for its product, firms will reduce their demand for labour

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pt 4

this reduction in the demand for labour then requires fewer workers, causing firms t lay off employees and increasing cyclical unemployment