economy discussion 1

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?