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What is Cyclical Unemployment?

Definition of Cyclical Unemployment

Cyclical Unemployment is one result of a fluctuating economy and swings in the business cycle, which causes a shifting rate of unemployment. This is based on the cyclical trend of recession and expansion that occur continuously the general business cycles of all economies. For example, when a given economy is expanding the unemployment rate is likely to be lower as more people are hired to carry out a role to meet a growing demand for a particular service; however when an economy is in recession the unemployment rate is likely to be higher because companies are likely to reduce their expenses, in order to maintain a reasonable profit margin, which results in more people becoming unemployed.
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