The hypothesis that hysteresis may play an important role in macroeconomics implies,among other things,that:
A) the history of economic thought is important to macroeconomics.
B) workers get hysterical during long depressions.
C) hysteresis lowers the sacrifice ratio.
D) the natural rate of unemployment may increase if unemployment is high for a long period.

Question

Quizplus · Accepted Answer

Hysteresis implies that the natural rate of unemployment may increase if unemployment is high for a long period. This is because long periods of unemployment can lead to a loss of skills, discouragement, and other factors that make it more difficult for individuals to find employment in the future.

The Hypothesis That Hysteresis May Play an Important Role in Macroeconomics