Consider the AD/AS macro model.Why do we say that the wage-adjustment process is asymmetrical?
A)Because factor prices fluctuate more frequently than goods prices.
B)Because goods prices rise more quickly than factor prices.
C)Because employers delay wage increases in a boom but lay off workers quickly during a slump.
D)Because taxes rise quickly in a boom but do not fall during a slump.
E)Because wages rise quickly in a boom but fall slowly during a slump.

Question

Quizplus · Accepted Answer

The wage-adjustment process is asymmetrical because wages rise quickly in a boom but fall slowly during a slump. This is because employers are reluctant to reduce wages during a slump, as it may reduce worker morale and productivity, and instead choose to lay off workers. On the other hand, during a boom, employers may be more willing to raise wages to attract and retain workers.

Consider the AD/AS Macro Model