Short-run equilibrium output
Definition
The short-run equilibrium output refers to the level of production in an economy where aggregate demand (AD) is equal to aggregate supply (AS) in the short run.
Analogy
Imagine a classroom where students are working on a group project. The short-run equilibrium output is like the point where all group members are contributing equally and efficiently, resulting in maximum productivity.
Related terms
Aggregate Demand (AD): The total demand for goods and services in an economy at a given price level.
Aggregate Supply (AS): The total supply of goods and services produced by firms in an economy at a given price level.
Long-run Equilibrium: A state where there is full employment of resources and no inflationary or recessionary gaps exist.
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