Short and Long Run Economics in a Nutshell

This lesson shares an overview of the difference between short-run and long-run economies. A precursor to the introduction of the money and quantity theory of money. Understand the difference between short-run (Keynesian) and long-run (Classical economics), Classical Dichotomy, the concept of economic fluctuations, and research on the price being sticky in the short run. 

In the long-run prices are flexible, interest rates are determined by the intersection of savings and investment within an economy and the policy focus is on economic growth rather than stabilizing the economy (short run). As we advance, more lessons will be on stabilization and production function for a more nuanced understanding of short run and long run economics.

Video: The middle Road 

This series will discuss the following

• Meaning of classical dichotomy and monetary neutrality over long-run
• Effect of money over inflation over the long run and Fischer Effect (inflation and nominal interest rates)
• The Quantity Theory of Money
• For detailed note on Open Market Operation – Refer Here