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show work please Problem 1. (30 points) Consider the Sticky price model that we discussed during the lecture, and suppose that The firm with flexible

show work please

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Problem 1. (30 points) Consider the Sticky price model that we discussed during the lecture, and suppose that The firm with flexible prices follow p = P + a(Y - Y), The firm with sticky prices follow the same rule but take the expectation of the RHS, i.e., p = E[P + a(Y - Y)]. Further, assume that a = 2, Y = 100, EP = 60, s = 0.25 a) Derive the SRAS curve (i.e., obtain an equation for the SRAS). b) Draw a figure show the SRAS and LRAS curves on the figure. c) Derive the SRAS curve when EP increases to EP=120. d) Derive the SRAS curve when EP is still the same as in part a (i.e., EP=60), But "s" has increased to s=0.5

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