With regard to national income,what is the hypothesis in economics known as hysteresis?

Question

Quizplus · Accepted Answer

The hypothesis of hysteresis in economics suggests that the path of real GDP in an economy can influence its level of potential output in the long run. This means that if there is a prolonged period of low GDP, it can lead to a decrease in the economy's potential output. This would result in a reduced national income even if the GDP picks up in the future. It implies that a recession or a period of low growth can have long-term negative effects on the economy, even after the initial shock has passed.

With Regard to National Income,what Is the Hypothesis in Economics