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Some people may argue that unemployment is ?°a part of the functioning of the economy?±. They are partly right, for the unemployment is inevitable because of the dynamic economy. This kind of unemployment is called natural rate of unemployment©¤the sum of frictional and structural unemployment. However, this is only a part of unemployment. Because the firms ?°cut back and produce less?± when they experience recessions, they will employ fewer workers. Therefore, the unemployment rate rises. This increase in unemployment caused by recessions and depressions is called cyclical unemployment.
Recessions cause social consequences...
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