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Quiz: Suppose that: - the firms with flexible prices follow p = P + a(Y - Y), where a = 2. - the firms with
Quiz: Suppose that: - the firms with flexible prices follow p = P + a(Y - Y), where a = 2. - the firms with sticky prices follow the same rule but take the expectation of the RHS. - Y = 100, EP = 60, s = 0.25 Derive the SRAS curve and draw it (with LRAS curve). Derive the SRAS curve when EP = 120. Derive the SRAS curve when EP = 60 and s = 0.5
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