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Economics A Level (DONEEEEEEE)

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Question:

What is Cyclical Unemployment? [Demand-deficient Unemployment] -Could it lead to a Doom Loop?

Author: eric_galvao



Answer:

-This usually occurs when the Economy is in Recession, or a Negative Output Gap. This can affect Any Industry -When AD falls, Unemployment will Rise. This is because Firms will have to Lay off Workers as Profits are Tanking -This may lead to a Doom Loop as People losing their Jobs leads to Further less Consumption, leading to more Job losses.. -But at the same time it depends how long the Economy takes to Recover. If its a Short Recession, then it won't have enough Time to Develop


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