Due to recession, there has been a drastic rise in job cuts. This is a case of

1. Structural unemployment
2. Cyclical unemployment

Select the correct answer using the codes given below:
a) 1 only
b) 2 only
c) Both 1 and 2
d) None of the above

Ans- b

Explanation- Economists mainly classify unemployment on 5 heads. They are cyclical, structural, frictional, classical and Marxian.

Cyclical unemployment is an unemployment that relates to the cyclical trends in growth and production in a business cycle. When business cycles are at their peak, cyclicalunemployment will be low because total economic output is being maximized. When economic output falls cyclical unemployment will rise.

Recession is slowdown of economic activities. It is the result of businesses not having enough demand. The lack of demand comes from a lack of spending and consumption in an economy. This causes in turn job cuts or unemployment.

Structural unemployment is unemployment caused by a mismatch between the present skills of worker and the skills demanded by employers. It is also known as the skills gap. Structural unemployment is often brought about by technological changes.