In the very short run, demand shocks will tend to change the level of output but have little effect on
prices.

Question

Quizplus · Accepted Answer

In the short run, firms may not be able to adjust their prices immediately in response to changes in demand, so changes in demand will primarily affect output rather than prices. However, in the long run, firms will adjust their prices to reflect changes in demand and supply, so both output and prices may be affected.

In the Very Short Run, Demand Shocks Will Tend to Change