Why is there an equilibrium in the economy when AS=AD ?

Answer :

Because in such a situation, planned production in the economy is equal to planned purchases in the economy. The producers do not suffer:

(1) the burden of unwanted supplies or unsold stocks, or

(2) the loss of unfulfilled demand(due to lack of stocks)

When AS=AD, actual stocks with the producers = desired stocks with the producer.

Determinationof Equilibrium Income and output (1)

Determinationof Equilibrium Income and output (2)