Glossary · Macro · Aggregate demand and supply

Macroeconomic equilibrium

Short-run equilibrium is where aggregate demand crosses short-run aggregate supply, fixing the price level and real GDP for now. Long-run equilibrium is when that crossing also sits on LRAS, so output equals potential and there is no gap.

Also called: short-run equilibrium, long-run equilibrium

Practice reading the aggregate demand and aggregate supply graphTaught in: Macro Equilibrium

Related terms

Aggregate demand (AD)Short-run aggregate supply (SRAS)Long-run aggregate supply (LRAS)Output gap

More from aggregate demand and supply

Business cycleInflationary gapPotential outputRecessionary gapSelf-correction

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