Final answer:
The aggregate demand/aggregate supply model identifies the relationship between the overall demand and supply of goods and services. The equilibrium point in the model represents the balance between quantity demanded and supplied. Short run and long run aggregate supply represent the amount of goods and services firms are willing and able to produce in the short and long term, respectively.
Step-by-step explanation:
The aggregate demand/aggregate supply model identifies the relationship between the overall demand for goods and services in an economy (aggregate demand) and the overall supply of goods and services (aggregate supply).
The point of equilibrium in the aggregate demand/aggregate supply model represents the level of output and price level at which the economy is in balance. At this point, the quantity of goods and services demanded equals the quantity of goods and services supplied.
Short run aggregate supply (SRAS) represents the total amount of goods and services that firms in an economy are willing and able to produce in the short run at different price levels. Long run aggregate supply (LRAS) represents the total amount of goods and services that firms in an economy are willing and able to produce in the long run at different price levels.