Cyclical unemployment and recession often arise from in aggregate demand.

Answer 1

Cyclical unemployment and recession often arise from a decline in aggregate demand. When aggregate demand falls, it leads to decreased spending by consumers and businesses, resulting in lower production levels. This, in turn, can cause firms to reduce their workforce, leading to cyclical unemployment. A recession is characterized by a significant decline in economic activity across the economy, which is often linked to a sustained decrease in aggregate demand. Factors that can contribute to declines in aggregate demand include reductions in consumer confidence, increased interest rates, contractions in credit availability, or external economic shocks.