A country is initially at the long-run and short-run equilibrium. However, in the short-run, the country experiences a drop in the general price level and the real GDP at the same time due to a temporary shock and we know there is one shock only.

1. Which curve(s) in the LRAS-SRAS-AD diagram must have shifted to generate the observation above? If any of the curves has shifted, state the direction of the shift, propose a factor that leads to the shift of the curve and state clearly whether the factor has increased or decreased.
2. Without any intervention from the government or the Central Bank, we know that the country will adjust to the new long-run equilibrium through labor contract renewal. During the adjustment process,

(i) which curve(s) in the LRAS-SRAS-AD diagram will shift and in what direction?

(ii) how will the real GDP, unemployment rate and the general price level change during the adjustment process?