The theory that the longer the unemployment rate remains above the natural rate, the higher will be the natural rate, is known as
A)hysteresis
B)hysterical analysis
C)historical analysis
D)histoplasmosis
E)hypoglycemia

Question

Quizplus · Accepted Answer

The theory that the longer the unemployment rate remains above the natural rate, the higher will be the natural rate is known as hysteresis. This means that when there is high unemployment for a prolonged period, it can lead to a structural shift in the economy where the natural rate of unemployment is permanently higher, even after the economy recovers.

The Theory That the Longer the Unemployment Rate Remains Above