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Macroeconomics: Sticky Price Model
The model of aggregate supply emphasizing the slow adjustment of the prices of goods and services.
This model assumes that firms do not instantly adjust the prices they charge in response to changes in demand. It states that the slope of the short-run aggregate supply curve depends on the proportion of firms in the economy that have flexible prices.
Short-run aggregate supply curves are steeper for those countries with variable AD and higher rate of inflation.
According to Macroeconomics by Gregory Mankiw
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