Which type of unemployment often results from economic downturns?

Cyclical unemployment occurs when there is a decline in economic activity, often during periods of recession or economic downturns. During these times, businesses may face reduced demand for their goods and services, leading to a decrease in production. As a result, companies may need to lay off workers or halt hiring, which increases the number of people who are unemployed due to the downturn in the overall economy.

This type of unemployment is directly linked to the business cycle; it rises when the economy slows and falls when the economy improves. The cyclical nature of this unemployment differentiates it from other types, such as seasonal unemployment, which occurs regularly due to seasonal changes in demand, or frictional unemployment, which is the result of workers transitioning between jobs. Structural unemployment reflects a mismatch between skills and job opportunities, often due to technological changes or shifts in the economy, but it is not inherently linked to the economic cycle in the same way as cyclical unemployment.