The concept of 'Hysteresis' in unemployment refers to:
A. Temporary unemployment that disappears quickly
B. Only seasonal unemployment
C. Only frictional unemployment
D. The tendency of unemployment to persist even after the original cause has disappeared
Answer: Option D
Solution (By JKSSB Mock Tests)
Hysteresis in unemployment means that high unemployment can become self-perpetuating through loss of skills, reduced employability or changes in wage-setting behaviour, so that the natural rate itself rises.
Explanation:
Seigniorage is the difference between the face value of money and the cost of producing it; it represents the real resource gain to the government from issuing currency.
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