In the AD and SRAS model, short-run prices and wages are assumed to be perfectly flexible.

Name: In the AD and SRAS model, short-run prices and wages are assumed to be perfectly flexible.
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The AD and SRAS model assumes that prices and wages are sticky in the short-run. This means that they do not adjust immediately to changes in demand or supply, leading to periods of output gaps and inflationary or recessionary pressures.

In the AD and SRAS Model, Short-Run Prices and Wages