The basic theory of AS -Sticky price model . 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