The "asymmetry" in the behaviour of the AS curve implies that
A)unemployment can persist for a while without causing large decreases in wages and prices.
B)wages are very flexible in the downward direction.
C)wages and prices are equally sticky in both directions.
D)booms can persist for a long time without causing increases in wages and prices.
E)prices are sticky but wages are not.

Question

Quizplus · Accepted Answer

The asymmetry of the AS curve refers to the fact that it is steeper in the short run than in the long run. This means that changes in aggregate demand have a larger effect on output and employment in the short run than on wages and prices. Therefore, unemployment can persist for a while without causing large decreases in wages and prices.

The "Asymmetry" in the Behaviour of the AS Curve Implies