Principles of Macroeconomics / Unit 8 MAC 0710 short lesson, about 20 seconds
Macroeconomic Equilibrium
Captions available
The idea
Equilibrium is where aggregate demand crosses short-run aggregate supply. It sets real GDP and the price level together, in one intersection.
In practice
Neither curve alone determines output, and neither alone determines prices.
Where people slip
This is the model's whole point: output and prices are decided jointly, so any event has to be traced through to both.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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