THE ROLE OF THE AGGREGATE DEMAND – AGGREGATE SUPPLY MODEL IN ANALYZING MACROECONOMIC EQUILIBRIUM

Abstract

This article examines the theoretical content of the aggregate demand – aggregate supply model, its structural elements, and its role in the analysis of macroeconomic equilibrium. The study explains why the aggregate demand curve is downward sloping and why the aggregate supply curve takes different forms in the short run and the long run. It also analyzes the relationship between the general price level, real output, employment, and inflation on the basis of the AD–AS framework. The practical importance of the model in evaluating business cycles, inflationary pressure, production disruptions, and the effectiveness of fiscal and monetary policy is highlighted. The article systematically presents the effects of demand and supply shocks on macroeconomic equilibrium and develops scientific and practical conclusions regarding the application of the model in the conditions of Uzbekistan