Economics (AS & A Level) · May / June 2025 · Paper 32 · Question 20
A government decreases interest rates to reduce unemployment but finds this has little effect due to hysteresis. What causes this hysteresis?
- Acapital investment increases
- Bfewer people are encouraged to save
- Cskills of unemployed workers become outdated
- Dthe money supply increases
As printed in the paper
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Correct answer: C. skills of unemployed workers become outdated
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