Updated: Aug 20, 2021

An economic model in which quantities are fixed in the short run, and prices adjust faster than quantities. This is contrasted with a fixprice model, in which prices are fixed in the short run,and quantities adjust faster than prices. The real world is a mixture of markets where relative prices adjust faster than quantities, for example the foreign exchange market and stock markets, and markets where quantities adjust faster than relative prices, for example the labour market and markets for industrial products.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.