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A-Level Economics · AD/AS equilibrium diagram question

Which point is the macroeconomic equilibrium?

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The diagram

The answer

Point E. Where AS crosses AD — price level P₁, real output Y₁. The only price level with no pressure to change. Equilibrium is the CROSSING of AD and AS at point E: price level 5, real output 5. Every other point on either curve is a plan, not an outcome.

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This is one of 6 questions on the ad/as equilibrium diagram — every corner lettered, every wrong answer diagnosed.

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