In short-run equilibrium in the AD-AS model,output is determined by the intersection of

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In the short-run, output is determined by the intersection of the aggregate demand (AD) and short-run aggregate supply (SRAS) curves. This is because in the short-run, prices are sticky and do not adjust to changes in the economy quickly. Therefore, changes in demand (as represented by shifts in the AD curve) can affect output in the short-run, and the economy will adjust along the SRAS curve to the point where output equals the level of demand. The long-run equilibrium is determined by the intersection of the AD and long-run aggregate supply (LRAS) curves, but this takes into account the adjustment of prices in response to changes in the economy.

In Short-Run Equilibrium in the AD-AS Model,output Is Determined by the Intersection