Impact of cyclical fluctuations on different economic groups: Employment: Unemployment rises in downturns (hits lower-income workers hardest); firms reduce hiring, increase layoffs, reduce wages. Wages: Procyclical (rise in expansions, fall in recessions); nominal sticky (slow to fall), real adjustment greater. Profits: Highly cyclical; rise in expansions, fall sharply in recessions; affects investment. Investment: Most volatile; firms defer projects in downturns, accelerate in expansions. Interest rates: Fall in recessions (reduce borrowing costs), rise in expansions (increase costs). Government revenue: Falls in recession (lower incomes, reduced sales); rises in expansion. Inequality: Often increases in downturns (lower-income suffer most); may decrease in expansions if employment strong. Regional impacts: Regions dependent on cyclical industries (autos, construction) suffer more; service-dominated regions more stable. Poverty: Cyclical (increases in downturns as unemployment rises); long-term unemployment reduces future earning capacity. Financial markets: Stocks fall in downturns, rise in expansions; borrowing costs rise for weaker firms. Social impact: Increased crime, health issues, family stress during downturns. Policy response: Automatic stabilizers help; discretionary policies targeted at vulnerable groups. ICAI focus: Differential impacts, vulnerable groups, policy responses. Exam tip: Lower-income and employment-dependent groups suffer most in downturns; policy should target hardest-hit groups.