Cyclical unemployment can indeed result from a decrease in spending by businesses and the government. This type of unemployment is directly related to the cyclical trends in the economy. When businesses and the government reduce their spending, it often leads to a decrease in demand for goods and services. As a result, companies may cut back on production and lay off workers, leading to higher unemployment rates.
During periods of economic downturns or recessions, cyclical unemployment tends to rise. This is because reduced spending by businesses and the government can create a ripple effect throughout the economy, causing a decline in overall economic activity. As businesses experience lower revenues, they may need to reduce their workforce to cut costs, which in turn leads to higher unemployment.
In summary, the statement is true. Cyclical unemployment is closely tied to the economic cycle and can be exacerbated by decreases in spending by both businesses and the government.