Which type of unemployment is directly associated with fluctuations in the business cycle?

Cyclical unemployment is directly tied to the business cycle, which includes periods of expansion and contraction in economic activity. This type of unemployment occurs when there is not enough demand for goods and services in the economy, leading businesses to reduce output and, consequently, their workforce. During economic downturns or recessions, cyclical unemployment rises as companies lay off workers due to decreased consumer spending. In contrast, during periods of economic growth, cyclical unemployment usually decreases as businesses hire more workers to meet rising demand.

Frictional unemployment refers to the short-term unemployment that occurs when people are transitioning between jobs or entering the workforce. This is not directly related to the business cycle since it persists even in a healthy economy. The natural rate of unemployment includes both structural and frictional unemployment, reflecting the normal turnover in the labor market but is also not specifically linked to the fluctuations of the business cycle. Real wage unemployment occurs when wages are too high, causing firms to hire fewer workers, which is a factor more related to wage determination than to cyclical economic conditions.