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What is hysteresis in economics?

Updated: 9/23/2023
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10y ago

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It is a situation in business cycle where the long run equilibrium depends on the path followed in short run. For example, shift in labor supply curve in short run due to economic shocks causes wages to rise. Even after the economy stabilises the tendency of wages not to fall is described as hysteresis.(rchekurir@Yahoo.co.in)

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