Question

The idea that the natural rate of unemployment is increased following extended periods of unemployment is called:

Answer 1

Hysteresis

Step-by-step explanation:

Hysteresis is an economic term that describes a situation that persists even after the events that lead to that situation is removed.

For example if there was an increase in unemployment as a result of a recession. The recession ends and economic growth increases.

Unemployment may continue to increase despite the recession having ended.

Hysteresis implies that there is a time lag between when an input is applied and when the effect is felt.