MACROECONOMICS W/CONNECT
18th Edition
ISBN: 9781307253092
Author: McConnell
Publisher: Mcgraw-Hill/Create
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Question
Chapter 18, Problem 1DQ
To determine
The differences between the short run and the long run in macroeconomics .
Expert Solution & Answer
Explanation of Solution
Differences between the short run and the long run in macroeconomics:
- 1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.
- 2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and
monetary policies are required to stabilize the economy.
The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.
Economics Concept Introduction
Concept introduction:
Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.
Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.
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