What is the different between the short run and long run in macroeconomy?
In macroeconomy, prices and wages are sticky therefore, they do not adjust well to the changes in the market in the short-run. However, in the long-run prices and wages are fully flexible and they fully adjust to the market changes. Also, in the short-run, the economy may operate below or above the potential output level and unemployment rate can be higher lower than the natural rate unemployment. However, in the long-run, the economy operates at the potential output level and the unemployment level is equal to the natural rate of unemployment.
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