AS shift right. Price level falls and real GDP rises. This is unsustainable if no LRAS shift occurs. Thus, profits shrink, causing AS to shift left toward its original position. Unanticipated SRAS Decrease Let AS shift left.
Price level rises and real GDP falls.
This is unsustainable if no LRAS shift occurs. Thus, profits expand, causing AS to shift right toward its original position. A recession began with AD shifting left Fed tightened money supply, shifting AD further left Fiscal policy lowered G and raised T, so AD shifted further left Excessive AD shift to the left created the Great Depression 5. Resulted in demand-pull inflation 6. This kicked off the prosperity run from 1983 to the present 8.