Cyclical unemployment occurs when there is not enough demand for goods and services in the economy, leading to job losses. This type of unemployment is closely linked to the economic cycle, which includes periods of growth and recession. During a recession, businesses may reduce their workforce to cut costs, resulting in higher unemployment rates. As the economy improves and demand increases, cyclical unemployment typically decreases. Governments and policymakers often implement measures, such as stimulus packages, to boost economic activity and reduce this type of unemployment. Understanding cyclical unemployment helps in addressing the broader issues of economic stability and job creation.