Consider the AD/AS Macro Model

question 19

Multiple Choice

Consider the AD/AS macro model.An important asymmetry in the behaviour of the AS curve is that

• A)prices are sticky but wages are not.
• B)positive output gaps can persist for a long time without causing increases in wages and prices,whereas negative output gaps lead to immediate reductions in wages and prices.
• C)negative output gaps can persist for a while without causing large decreases in wages and prices,whereas positive output gaps lead more quickly to increases in wages and prices.
• D)wages are very flexible in the downward direction,but not in the upward direction.
• E)wages and prices are equally sticky in both directions.

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Definitions:

APR Discount Rate

The annual percentage rate that represents the actual yearly cost of funds over the term of a loan, including any fees or additional costs associated with the transaction.

Monthly Payments

Regular payments made over a specified period of time towards the settlement of a debt obligation, typically calculated on an amortization schedule.

Compounding Frequency

Compounding frequency refers to the number of times per year that earned interest is added to the principal balance of an investment, affecting the total interest earned over time.

APR Interest

Annual Percentage Rate; a measure that reflects the total interest to be paid on a loan, mortgage, credit card, or other financial product, factored as an annual rate.