Equilibrium Output
By definition, GDP records the total production of a country.
GDP = aggregate output
AE = total expenditure (total demand) by all sectors
When a country’s GDP is equal to AE, the economy is said to be in equilibrium
This should be most efficient, as it is producing just enough goods to satisfy the demand of all sectors in the economy
So, the point that GDP(Y) is equal to AE is Equilibrium GDP(Y*) or Equilibrium Output.
Y* is the level of Y that is equal to AE