In the short run, however, most economists believe that real and nominal variables are intertwined. Economists use the model of aggregate demand and aggregate supply to examine the economy's short-run fluctuations around the long-run output level. The following graph shows an incomplete short-run aggregate demand (AD) and aggregate supply (AS) diagram—it needs appropriate labels for the axes and curves. You will identify some of the missing labels in the questions that follow.

The horizontal axis of the aggregate demand and aggregate supply model measures the overall ???.

The aggregate ??? curve shows the quantity of goods and services that firms produce and sell at each price level.

The horizontal axis of the aggregate demand and aggregate supply model measures the overall quantity of output.
The aggregate supply curve shows the quantity of goods and services that firms produce and sell at each price level.

What do you mean by the aggregate demand and supply?

The total quantity of demand for all finished products and services generated in an economy is measured as aggregate demand.

The total amount of money spent on those goods and services at a particular price level and time is known as aggregate demand.

The whole supply of products and services produced within an economy at a specific overall price over a specific time period is known as aggregate supply, also known as total output.

The amount that businesses are willing to create and the amount that customers are willing to demand at a particular price point are expressed as aggregate supply and aggregate demand.

Therefore, according to the question, in the short run of economists:

The horizontal axis of the aggregate demand and aggregate supply model measures the overall quantity of output.
The aggregate supply curve shows the quantity of goods and services that firms produce and sell at each price level.

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