Option 1 -> Equilibrium occurs when aggregate demand equals aggregate supply, meaning the market clears.
Option 2 -> This represents excess demand, leading to upward pressure on prices, not equilibrium.
Option 3 -> This represents excess supply, leading to downward pressure on prices, not equilibrium.
Option 4 -> Zero AD and AS would mean no economic activity, which is not a realistic equilibrium condition.
Hence, Aggregate demand equals aggregate supply -> Equilibrium in the final goods market is achieved when the total quantity of goods and services demanded (AD) equals the total quantity supplied (AS). At this point, there is no excess demand or excess supply, the market clears, and there is no inherent pressure for prices or output to change. This is a fundamental concept in macroeconomics and represents the condition where the economy is in balance in the goods market -> correct