[This is part of the series: The Complete Guide To Economics 101.]
What is cyclical unemployment?
Cyclical Unemployment is unemployment that comes from economic fluctuations in an economy.
Examples of this would be from the natural ebb and flow of the business cycle.
For instance, in a contracting economy, people may choose to:
- Travel less
- Buy fewer luxury watches
- Purchase used cars, as opposed to new cars
- And frequent discount stores
While in an expanding economy, people may choose to:
- Upgrade electronics more frequently
- Buy more cars, on average
- Enjoy more leisure time
- And purchase more Christmas presents
Cyclical unemployment results from changes in consumer behavior, such as these.