Question

When would you expect cyclical unemployment to be rising? Falling?

Short answer

Increase during recession and fall during expansion.

Step-by-step solution

Step.1 Introduction 

Unemployment can be defined as the situation when a person who is able to work and is work, is also actively looking for jobs but is not able to find one. The type of unemployment caused by the cyclical fluctuations is known as cyclical unemployment.

Step.2 Explanation 

Cyclical unemployment will fall when an economy is doing goods and is in the phase of expansion. Because in the time of expansion the firms will hire a greater number of people. An increase in labor demand would cause rightward shift in the demand curve, increasing employement.

Cyclical unemployment will rise when the economy is not doing good and is in a state of recession. Because at the time of recession the firms will hesitate from hiring people. An decrease in labor demand would cause leftward shift in the demand curve, reducing employement.