INFLEXIBLE 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, inflexible (also termed rigid or sticky) prices are a key reason underlying the positive slope of the short-run aggregate supply curve. Prices tend to be the most inflexible in resource markets, especially labor markets, and the least inflexible in financial markets, with product markets falling somewhere in between. See also | market | shortage | surplus | price | short-run aggregate market | short-run aggregate supply | short-run aggregate supply curve | flexible prices | price level | real production | aggregate demand | unemployment | employment | resource prices |
