Unemployment from Economic Downturn

Steps:

• Identify cause: Virus pandemic reduces incomes, leading to broader economic contraction.
• Recall unemployment types: Cyclical from business cycle fluctuations; frictional from job searches; seasonal from time-based patterns; structural from skill mismatches.
• Match scenario: Falling incomes signal recessionary demand drop, fitting cyclical.
• Rule out others: No job transitions, seasonal patterns, or skill gaps mentioned.

Why A is correct:

• Cyclical unemployment arises from economic recessions, where aggregate demand falls, as in pandemics disrupting production and consumption (per Keynesian economics).

Why the others are wrong:

• B: Frictional involves temporary job changes, not economy-wide income drops.
• C: Seasonal ties to predictable cycles like holidays or harvests, absent here.
• D: Structural results from long-term industry shifts, not sudden pandemic shocks.

Final answer: A