Question
One of the reasons the short-run aggregate supply curve is upward sloping is because prices are sticky - they dont adjust as quickly as we
One of the reasons the short-run aggregate supply curve is upward sloping is because prices are sticky - they dont adjust as quickly as we might expect. This story from NPR's Planet Money (episode 416)(Links to an external site.) discusses perhaps the stickiest price of all time: the 5-cent Coke. Listen to this podcast and then discuss what kept the price of Coke so steady over such a long period of time and what caused it to eventually change. How do sticky prices slow the adjustment of the macroeconomy? What other prices are sticky? What makes them so?
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