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An "adjustment asymmetry" is exhibited in the aggregate supply curve by

A) a leftward shift.
B) its concave shape.
C) its convex shape.
D) the difference in speed of a rightward shift versus a leftward shift (when wages adjust to output gaps). E) a rightward shift.

User RhapX
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Final answer:

Adjustment asymmetry in the aggregate supply curve refers to the difference in speed of shifts to the right or left, correlating with how wages and prices adjust depending on the economy's output level.

Step-by-step explanation:

An "adjustment asymmetry" exhibited in the aggregate supply curve is represented by the difference in speed of a rightward shift versus a leftward shift, which occurs when wages adjust to output gaps. This is because the AS curve's slope is not linear and changes from nearly flat at its far left to nearly vertical at its far right. At lower levels of output, the economy can increase its production quickly for a relatively small increase in price levels as there is plenty of unemployed labor and capital. However, as output approaches potential GDP, the curve becomes nearly vertical, representing how difficult it is to increase output and that increases in demand primarily lead to increases in price levels rather than output. The correct answer to the question is D) the difference in speed of a rightward shift versus a leftward shift (when wages adjust to output gaps).

User Omi Harjani
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