(In microeconomics): The period of time over which the amount of land and capital employed in the production of a good is fixed in quantity. “The fixed-plant period”. Labor and raw materials are the only variable resources in the short run. (In macroeconomics): The period of time over which wages and prices are relatively inflexible. A fall in aggregate demand will lead to unemployment and recession in the short-run. Due to the inability of the nation’s producers to reduce wages paid to worker, they must lay workers off to reduce costs as demand falls.

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