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# Temporary Versus Permanent Price Effects

## Definition

The distinction between short-term price fluctuations caused by temporary market conditions and long-term price changes resulting from fundamental economic factors or government policies. Smith argues that trade restrictions often create permanent price distortions.

## Source Chapter

Book IV, Chapter 2

## Context

Smith distinguishes between temporary market price fluctuations and permanent price effects caused by government regulations, arguing that protectionist policies often create lasting distortions in market prices that harm economic efficiency.

## Economic Domain

Distribution

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