While frictional unemployment results from voluntary decisions by workers, cyclical unemployment is caused by involuntary actions. Specifically, cyclical unemployment happens when companies respond to business or economic conditions bylaying off employeesto cut costs. An example of cyclical unemployment: A ma...
Frictional unemployment is the only form of unemployment that islargely unaffected by economic stimulusfrom the government. For example, during bad economic times, the Federal Reserve Bank might lower interest rates to encourage borrowing. The hope is that the added money will spur spending by consum...
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