Answer to Question #113719 in Macroeconomics for Andrews

Question

What is equilibrium in economics

Answer 1

Economic equilibrium is the state of the economy in which the volume of aggregate demand is equal to the volume of aggregate supply.

There are two types of market equilibrium:

- stable, when after an imbalance in the market the former equilibrium price and volume are established;

- unstable when, after an imbalance, a new market equilibrium is established and the equilibrium price and volume change.