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.