explain determination of equilibrium output under fixed price model

Dear Student,
Equilibrium output is solely determined by AD when an assumption is made that AS remains constant. The equilibrium output is solely determined by AD in the 'Fixed Price Model'.  It refers to a situation of effective demand. ​The Aggregate Supply curve is represented by the 45° line. Throughout this line the planned expenditure is equal to the planned output. That is AS = Y = Expenditure. The implication of 45° line is that in case of any disequilibrium, AS will be adjusted in a way to equate AD in order to restore equilibrium back. That is in other words, in case of any inequality between AD and AS, equilibrium output will be determined by AD. 

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