A recession causes a decrease in the demand for housing, resulting in substantial layoffs in the construction industry. This is an example of
A) cyclical unemployment.
B) frictional unemployment.
C) seasonal unemployment.
D) structural unemployment.

Question

Quizplus · Accepted Answer

Cyclical unemployment occurs when there is a downturn in the business cycle, leading to a decrease in demand for goods and services, which in this case includes housing. This decrease in demand results in layoffs in industries affected by the downturn, such as the construction industry.

A Recession Causes a Decrease in the Demand for Housing