O'Reilly logo

A Primer on Macroeconomics by Thomas Beveridge

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Macroeconomic Equilibrium: Balance in the Short Run

Reaching Short-Run Equilibrium

In this section, we examine how the macroeconomy achieves short-run equilibrium. Considering Figure 5-11, we have done enough economics to realize that equilibrium occurs where the two curves, AD1 and SRAS1, intersect, at an aggregate price level of P* and an output level of y*. However, it is worthwhile to trace through the process by which the economy achieves that equilibrium.

58731.jpg

Figure 5-11. Short-run equilibrium.

To analyze the equilibrating process, let us suppose that the AD curve initially is at AD0, and that the equilibrium price and output are P0 and y ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required