An argument in support of hysteresis is
A)companies may be reluctant to hire workers until AD increases
B)prices are sticky in the short run
C)the skills of unemployed workers may deteriorate making it more difficult to find a job
D)overlapping wage contracts

Question

Quizplus · Accepted Answer

Hysteresis in economics refers to the phenomenon where temporary disturbances in the economy can have permanent effects on the level of output. Choice C, "the skills of unemployed workers may deteriorate making it more difficult to find a job," directly supports the concept of hysteresis by suggesting that the effects of unemployment can persist and worsen over time, making it harder for the economy to recover to its original state. This is because the longer workers are unemployed, the more their skills may become outdated or forgotten, potentially leading to a permanently higher level of structural unemployment.

An Argument in Support of Hysteresis Is