Comments on: If firms and workers could predict the future price level exactly, the short-run aggregate supply curve? http://FutureFirm.com/blog/if-firms-and-workers-could-predict-the-future-price-level-exactly-the-short-run-aggregate-supply-curve/ FutureFirm.com Tue, 22 May 2012 12:44:09 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Oblivion http://FutureFirm.com/blog/if-firms-and-workers-could-predict-the-future-price-level-exactly-the-short-run-aggregate-supply-curve/comment-page-1/#comment-171 Oblivion Sat, 25 Jul 2009 08:56:30 +0000 http://FutureFirm.com/blog/if-firms-and-workers-could-predict-the-future-price-level-exactly-the-short-run-aggregate-supply-curve/#comment-171 SRAS curve usually sloped up due to: 1.The Sticky-Wage Theory 2.The Sticky-Price Theory 3.The Misperceptions Theory Formally, if firms and workers would be able to predict future prices, imperfections will disappear, so SRAS=LRAS=vertical, and the answer will be (D). There is a small caveat, though: Menu costs might still cause SRAS curve to be upward-sloping. Not sure what the Prof. really want here.. SRAS curve usually sloped up due to:
1.The Sticky-Wage Theory
2.The Sticky-Price Theory
3.The Misperceptions Theory

Formally, if firms and workers would be able to predict future prices, imperfections will disappear, so SRAS=LRAS=vertical, and the answer will be (D).

There is a small caveat, though: Menu costs might still cause SRAS curve to be upward-sloping. Not sure what the Prof. really want here..

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