CASE 1: The Stock Market Crashes. Step 1. Which curve shis AD or SRAS? Step 2. What is the direction of the shift? Step 3. Show this on your diagram and label the short run equilibrium price P1 and the shortrun equilibrium output Y1. Step 4. Will the unemployment rate increase or decrease? What about the price level? Step 5. a) In the kingLug, which curve will shift AD or SRAS? b) What is the direction of the shift? 0) Show this on your diagram and label the new long run equilibrium price P2 and the new longrun equilibrium output Y2. Step 6. What do you notice about P2 and Y2? CASE 1 The Stock Market Crashes Positive/Negative DemandlSupply Shock Price level (GDP deflator, LHAS 2005 = 100) SRAS1 120 A01 0 $120 Real GDP (trillions of 2005 dollars)