cyclical unemployment
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5 Terms
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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
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