Which of the following is the basic cause of cyclical unemployment ?

Question

Question

This question was previously asked in

HTET TGT Social Studies 2020 Official Paper

A general deficiency in the demand for goods and services
The reluctance of workers to move to other parts of the country where work is available
The inability to change occupations because of lack of skills
Workers' ignorance of opportunities of employment.

Answer 1

The correct answer is A general deficiency in the demand for goods and services.

Key Points

Unemployment occurs when there are changes to an economy’s business cycle is termed as Cyclical Unemployment.
Cyclical unemployment is termed as demand deficiency i.e. unemployment starts to rise when demand falls.
Causes for Cyclical Unemployment
- The decline in Demand contributes to less investment in business hence requiring fewer employees.
- Negative multiplier effects when demand falls this effects stores, farmers manufacturing worker and also those investing in transporting of this good and products which results in further affecting multiple areas.
- A bad Market Crash can cause a recession by instilling loss of confidence in an economy decline in employers looking to hire and expand can be seen.

Additional Information Types of Unemployment

Disguised Unemployment	This occurs when more people are employed than the required amount.
Seasonal Unemployment	Due to the seasonal nature of its industries employment is present only in certain period of the year.
Structural Unemployment	Occurs due to change in the economic structure.
Technological Unemployment	Improvement in technology and machinery reduced the demand for labour in factories.
Frictional Unemployment	when people voluntarily change jobs within an economy