Final answer:
Supply-side economics is the branch that stresses the importance of aggregate supply in determining inflation and unemployment, focusing on labor markets and output determinants.
Step-by-step explanation:
The branch of economic theory that emphasizes the role of aggregate supply in determining inflation and unemployment is Supply-side economics.
Supply-side economics focuses on how labor markets work and the underlying determinants of output and employment in markets. It suggests that economic growth can be most effectively created by lowering barriers for people to produce (supply) goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility in the labor market. Neoclassical economics, closely related to supply-side economics, holds that policy efforts should focus on increasing supply rather than demand. This perspective argues that increasing aggregate supply is the most effective way to achieve long-term economic growth and that aggregate demand will only match the gradual shifts in aggregate supply, thus maintaining price stability and low inflationary pressures.