In macroeconomics, input prices are often assumed to be inflexible or even fixed in the short run. This assumption is commonly used in models to explain how wages and prices do not adjust immediately to changes in economic conditions, leading to temporary inefficiencies and disequilibria in the economy. Over the long run, however, it is assumed that prices, including input prices, will adjust to reflect changes in supply and demand, resulting in a return to equilibrium.
In macroeconomics, input prices are assumed to be inflexible or even fixed in the .
1 answer