Which type of unemployment rises during economic downturns and falls when the economy improves? a. seasonal b. cyclical c. structural d. frictional the correct answer is , not structural. cyclical unemployment unemployment that rises during economic downturns and falls when the economy improves is called cyclical unemployment. during recessions, or downturns in the business cycle, the demand for goods and services drops. the resulting slowdown in production causes the demand for labor to drop as well, and companies begin to lay off employees.