Cyclical unemployment
What Cyclical unemployment means in Economics A-Level, as defined for AQA.
Definitions of Cyclical unemployment
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Reference: AQA
Unemployment linked to the economic cycle, rising during recessions when aggregate demand falls and firms lay off workers to cut costs.
Rises with a negative output gap as firms need fewer workers, which reduces wage demands and leads to lower inflationary pressures.
Increases when aggregate demand falls during a recession as firms reduce output and require fewer workers.
Unemployment caused by deficient demand, as lower aggregate demand reduces the derived demand for labour.
Topics that use Cyclical unemployment
- Employment and unemployment (AQA A-Level)
- Possible conflicts between macroeconomic policy objectives (AQA A-Level)
Related terms
- Long-run Phillips curve
- Natural rate of unemployment
- Negative output gap
- Supply-side policies
- Causes of unemployment
- Claimant Count
- Demand-side policies
- Economic growth
Using Cyclical unemployment in the exam
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