Question

if a country is experiencing significant cyclical unemployment, how would an increase in government spending affect real output, the price level, and unemployment?

Answer 1

Increase, Increase, Decrease is the required answer.

What is Cyclical unemployment?

Cyclical unemployment is the amount of overall unemployment which is particularly brought on by periods of economic boom and recession. Usually, unemployment rises during recessions and falls during expansions. Cyclical unemployment is a result of changes in economic activity across the business cycle. When there is a decline in demand for products and services, there are fewer jobs available for individuals who wish to work.

High unemployment rates are mostly a result of cyclical unemployment. It results from a contraction in the economic cycle. It is a normal cycle of economic growth's ups and downs that happens throughout time

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