One of the reasons why the short run aggregate supply curve is upward sloping is because prices are sticky – they don’t adjust as quickly as we might expect.
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Get it written →One of the reasons why the short run aggregate supply curve is upward sloping is because prices are sticky – they don’t adjust as quickly as we might expect. This story from NPR’s Planet Money discusses perhaps the stickiest price of all time: the 5-cent Coke. After listening to this podcast, discuss what kept the price of Coke so steady over such a long period of time and what caused it to change. How do sticky prices slow the adjustment of the macro economy? What other prices are sticky? What makes them so?
Listen to the podcast story; here is the link: https://www.npr.org/player/embed/456410327/456550228
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