Welfare cost of business cycles

A business cycle is when the economy goes up and down. Sometimes the economy will be doing really well (going up) and other times it will be doing much worse (going down). When the economy is doing well, businesses are able to make more money and hire more people. But when the economy is doing poorly, businesses make less money and have to lay off people. This is where welfare costs come in. When businesses lay off people, those people may need help from the government to pay for things like food and rent. This help is called welfare, and the money the government pays out for welfare is called welfare costs. So, when the economy is going up and down (which is called a business cycle), the welfare costs go up and down too.