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RIGID PRICES: The proposition that some prices adjust slowly in response to market shortages or surpluses. This condition is most important for macroeconomic activity in the short run and short-run aggregate market analysis. In particular, rigid (also termed inflexible or sticky) prices are a key reason underlying the positive slope of the short-run aggregate supply curve. Prices tend to be the most rigid in resource markets, especially labor markets, and the least rigid in financial markets, with product markets falling somewhere in between.
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SELF CORRECTION, AGGREGATE MARKET The automatic process in which the aggregate market adjusts from short-run equilibrium to long-run equilibrium. Self-correction results through shifts of the short-run aggregate supply curve caused by changes in wages (and other resource prices). The self-correction mechanism acts to close both recessionary gaps and inflationary gaps. The short-run aggregate supply curve increases (shifts rightward) due to lower wages to close a recessionary gap and decreases (shifts leftward) due to higher wages to close an inflationary gap.
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GRAY SKITTERY
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Today, you are likely to spend a great deal of time wandering around the shopping mall looking to buy either a case of blank recordable DVDs or a pair of red goulashes with shiny buckles. Be on the lookout for jovial bank tellers.
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Only 1% of the U.S. population paid income taxes when the income tax was established in 1914.
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"Do not go where the path may lead, go instead where there is no path and leave a trail." -- Ralph Waldo Emerson
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