Which type of unemployment is most closely associated with recessions?

• A. Frictional unemployment.
• B. Cyclical unemployment.
• C. Structural unemployment.
• D. Seasonal unemployment.

Answer: (B)

Cyclical unemployment is the type tied to the ups and downs of the overall economy. When a recession hits, demand for goods and services falls, and firms respond by cutting production and laying off workers. This pushes unemployment up beyond its normal level, reflecting the economy’s contraction. This is different from frictional unemployment (short-term job search while changing jobs), seasonal unemployment (patterns tied to the calendar), and structural unemployment (long-term mismatch between skills and available jobs). So, during recessions, the unemployment that rises most directly is cyclical unemployment.