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Explain the relationship between cyclical unemployment and the business cycle. Again, with reference <

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to the business cycle, explain when cyclical unemployment is positive and when it is negative. 

Jamilah is a particularly productive waitress and she is often employed given her excellence. Yet for 

the past 3 months she has found herself unemployed despite still being a very efficient waitress. What 

does Jamilah's situation tell you about Australia's output gap at present, and what does this indicate 

with respect to the relationship between the actual (or current) unemployment rate and the full‐

employment rate (i.e. natural rate of unemployment)? 

A fall in the unemployment rate must indicate that the economy is doing well. While this is almost 

always true, it is not always true. Explain why this is so. 

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Cyclical unemployment occurs when the overall... View the full answer

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