Principles of Macroeconomics / Unit 5 MAC 0413 short lesson, about 20 seconds
Cyclical Unemployment
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The idea
Cyclical unemployment is the part that moves with the business cycle. In a recession the demand for labor shifts left.
In practice
If the wage cannot fall, quantity supplied exceeds quantity demanded, and that gap is the unemployment.
Where people slip
Most unemployment is involuntary, which is the puzzle: with fully flexible wages the market would clear and nobody willing to work would be idle.
Your place on the trail
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