Question

The demand for automobiles falls when the economy experiences a recession. If an automobile manufacturer lays off workers during a recession, this would be an example of:________. a. cyclical unemployment. b. natural unemployment. c. structural unemployment. d. frictional unemployment.

Answer 1

a. cyclical unemployment.

Step-by-step explanation:

Unemployment rate refers to the percentage of the total labor force in an economy, who are unemployed but seeking to be gainfully employed. The unemployment rate is divided into various types, these include;

I. Cyclical unemployment rate (CU).

II. Frictional unemployment rate (FU).

III. Structural unemployment rate (SU).

IV. Actual unemployment rate (AU).

V. Natural Rate of Unemployment (NU).

In this scenario, the demand for automobiles falls when the economy experiences a recession. Thus, if an automobile manufacturer lays off workers during a recession, this would be an example of a cyclical unemployment.

A cyclical unemployment can be defined as a type of unemployment which is typically related to changes in the business, economy or industry cycle such as recession, governmental policies etc.

Mathematically, cyclical unemployment rate can be calculated using the formula;