Correct Answer: Both assertion and reason are true, and the reason is the correct explanation of the assertion.

Solution : The correct answer is (a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.

The assertion states that cyclical unemployment occurs due to fluctuations in the business cycle, which is true. Cyclical unemployment refers to the unemployment that arises as a result of downturns in the business cycle. During economic recessions or contractions, businesses may experience a decrease in demand for their products or services, leading to a decrease in production. To cut costs and adjust to the reduced demand, businesses may lay off workers, resulting in cyclical unemployment.

The reason provided states that businesses reduce their workforce during economic recessions to cut costs, which is also true. Economic recessions often lead to a decline in sales and revenue for businesses, making it necessary for them to reduce expenses, including labor costs. One way to achieve this is by reducing the number of employees through layoffs or hiring freezes.

Therefore, both the assertion and reason are true, and the reason provides a correct explanation for the occurrence of cyclical unemployment during economic downturns.