A
Acadi
Fi
Courses
Knowledge Hub
Community
Practice
Pricing
About
Search
⌘K
Question Bank
/
CFA
/
Level III
/
Capital Market Expectations
Capital Market Expectations
Medium
A severe recession causes prolonged unemployment, reduced capital investment, and business failures over a multi-year period. Which concept best describes the potential effect on the economy's long-term growth trajectory?
A
Hysteresis — the cyclical downturn may permanently lower the trend growth rate through persistent damage to human and physical capital
B
Transitory shock — the cyclical effects will fully reverse and the trend will be unaffected
C
Phillips curve breakdown — inflation-unemployment relationships become unstable
D
Efficiency wage effect — voluntary unemployment reduces productive capacity temporarily
Select an answer to continue
Tags
#hysteresis
#trend-growth
#business-cycle
#recession
#macro-analysis
More Capital Market Expectations questions
Start full Level III quiz