Aggregate demand is used to show the long run effects of price on equilibrium, but how is price a long run concept and interest a short run one ?. I see price fluctuating on a daily basis, interest rates on the other hand fluctuate on a quarterly basis.

Forgive the simplicity of my doubt, I'm an Econ undergrad student. But these concepts were never clearly elucidated in class so I thought of taking to the internet where experts could help clear my doubts.

  • $\begingroup$ You're going to need to give some context as to who/where it is said that "price is a long run concept". On top of that, interest rate is a type of price, so what exactly is the claim that price and interest rate are long run/short run? $\endgroup$
    – Kitsune Cavalry
    Dec 4, 2017 at 1:46


Browse other questions tagged or ask your own question.