ScienceGuy

In the short run,  we had assumed that the expectations of prices are fixed in the short run but not in the medium run. In the short run price expectations can be wrong, in the medium run they cannot.

In the dynamic AD-AS model, we remove the assumption that the inflation rate, the expectation for the inflation rate and output growth are zero in the medium run. Additionally, we had assumed that there is no growth in the medium run.