Final answer:
The correct diagram associated with cyclical unemployment is the Business Cycle Diagram (A), which illustrates the economic fluctuations that affect cyclical unemployment.
Step-by-step explanation:
To answer which diagram would be associated with cyclical unemployment, the correct choice is A. The Business Cycle Diagram. Cyclical unemployment is directly related to the economic fluctuations shown in the business cycle. The business cycle diagram represents the various stages an economy goes through, namely expansion, peak, contraction, and trough.
In the AD/AS diagram, cyclical unemployment can be observed by how close the economy is to the potential or full GDP employment level. When the level of output is close to potential GDP, as in equilibrium point E1, there is relatively low cyclical unemployment. In contrast, high cyclical unemployment is present when the output level is significantly left of the potential GDP, as seen at equilibrium point E0.
Furthermore, the AD/AS diagram can show expectations of unemployment levels and inflation concerns based on where the aggregate demand and aggregate supply curves intersect in relation to the potential GDP line.