Short-run macroeconomic equilibrium occurs where which two curves intersect?

Short-run macroeconomic equilibrium is established at the intersection of the Aggregate Demand (AD) curve and the Short-Run Aggregate Supply (SRAS) curve. This point indicates the level of output and the price level in the economy, where the total quantity of goods and services that households, firms, and the government wish to purchase corresponds to the total quantity that firms are willing to produce in the short run.

The AD curve represents overall demand in the economy at various price levels, influenced by factors such as consumer confidence, government spending, and interest rates. In contrast, the SRAS curve reflects the total production supply in the short run, which can be affected by resource prices, production costs, and temporary supply constraints. The intersection of these two curves signifies that the economy is in equilibrium, meaning that the quantity of goods and services demanded equals the quantity supplied at that specific price level.

Understanding this intersection is crucial for analyzing economic conditions, as any shifts in either the AD or SRAS curves can lead to different equilibrium points, affecting overall economic output and price levels in the short run. This concept is essential for interpreting changes in economic policy, external shocks, and market dynamics.