Some evidence suggests that prolonged periods of high unemployment actually increase the natural unemployment rate.This phenomenon is known as
A)Okun's law
B)structural unemployment
C)unemployment hysteresis
D)the misery effect
E)the long-term unemployment effect

Question

Quizplus · Accepted Answer

Unemployment hysteresis refers to the idea that prolonged periods of high unemployment can permanently raise the natural unemployment rate because workers who are unemployed for a long time may become less marketable due to setbacks in their human capital, loss of motivation, or stigma associated with long-term unemployment. As a result, they may drop out of the labor force or have difficulty finding jobs even when the economy recovers. This can lead to a persistent increase in the unemployment rate even when aggregate demand returns to normal levels. Okun's law is a relationship between changes in output and employment, not unemployment hysteresis. Structural unemployment refers to a mismatch between the skills of workers and the demands of employers, which is not necessarily affected by cyclical changes in the economy. The misery effect and the long-term unemployment effect are not recognized economic concepts.

Some Evidence Suggests That Prolonged Periods of High Unemployment Actually