For given P e , Y falls so the AS curve shifts to the left. The dynamics are those shown on page 142 of the text in figure 7-11. In the long run, the AS curve passes through the AD curve at the natural level of output, so output has fallen and prices have risen. Note that the AD curve does not move. An increase in A shifts the AS curve to the right and leaves the AD curve unchanged.
Unemployment is unchanged, prices fall, and output increases.
Note that workers are receiving a higher real wage. So workers would definitely prefer an increase in A over an increase in z. Note that, as in part 2, real wages are unchanged but unemployment is higher. So it is not clear what workers would prefer, it depends on which case has the smaller increase in unemployment. The Central Bank is worried about inflation and is determined to keep the price level constant.