Which type of unemployment results from economic downturns causing overall job losses?

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Cyclical unemployment arises from the fluctuations of the business cycle. When the economy slides into a downturn, overall demand for goods and services falls, so firms cut production and lay off workers. As the economy recovers and demand strengthens, hiring resumes and unemployment declines. This is different from frictional unemployment, which is short-term and related to people transitioning between jobs, and structural unemployment, which stems from longer-term shifts in the economy that change which jobs exist or the skills workers need. Monetary policy is a tool policymakers use to influence economic activity, not a type of unemployment.