What is cyclical
Unemployment is the situation in which the labors are willing to offer their labor power at the prevailing market wage rate and are actively searching for a job whereas the labors are not able to find any job in the economy. This situation occurs when the current economy is unable to intake the available labor force. There are many different types of unemployment in the economy and one amongst them is the cyclical unemployment.
The cyclical unemployment occurs in the economy when there is an economic contraction or the period of slower economic growth. When there is economic contraction or when the economic growth rate is very slow, the aggregate spending in the economy would fall which means that the AD curve of the economy would shift towards the left. This leftward shift indicates the decline in the aggregate demand in the economy.
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