Unemployment that occurs when there is deficient demand for the goods and services of an economy is called:
A) Frictional unemployment
B) Cyclical unemployment
C) Structural unemployment
D) Natural unemployment

Question

Quizplus · Accepted Answer

Cyclical unemployment is a type of unemployment that arises due to fluctuations in the business cycle. When there is a recession or a slowdown in the economy, the demand for goods and services diminishes, and firms reduce production, leading to layoffs and job losses. This type of unemployment occurs due to deficient demand and is, therefore, the best choice. Frictional unemployment occurs when people are transitioning between jobs, and structural unemployment arises due to a mismatch between the skills of workers and the available jobs. Natural unemployment represents the unemployment rate that exists when the labour market is in equilibrium.

Unemployment That Occurs When There Is Deficient Demand for the Goods