![FIGURE 29-1 The [em]AD–AS[/em] Model](c29_fig01.jpg)
The AD–AS model combines the aggregate demand curve and the short-run aggregate supply curve. Their point of intersection, ESR, is the point of short-run macroeconomic equilibrium where the quantity of aggregate output demanded is equal to the quantity of aggregate output supplied. PE is the short-run equilibrium aggregate price level, and YE is the short-run equilibrium level of aggregate output.