Question

Sarah lost her job at the bank because the economy is in a________. This layoff is an example of __________ unemployment.

First blank- boom, expansion, or recession

Second blank- cyclical, frictional, or structural

Answer 1

Sarah lost her job at the bank because the economy is in a recession. This layoff is an example of cyclical unemployment.

A recession is an economic contraction whenever there is a slowdown in economic activity. The economic cycle is made up of recesions and booms. During an economic recession investment, production, incomes and profits decrease.

Cyclical unemployment go hand in hand with the cyclical trends in growth and production, that make up part of the economic cycle. Whenever there is a recession there tends to be unemployment.