Suppose that a rise in consumer spending causes an expansion.

On the following graph, shift one or both curves to reflect the short-run effect of the rise in consumer spending.

Aggregate DemandAggregate SupplyPrice LevelQuantity of OutputAD1AD2AS1AS2

On the following graph, shift a curve or adjust the point to reflect the short-run effect of the rise in consumer spending.

SRPCShort-Run OutcomeLRPCInflation RateUnemployment RateSRPCLRPC

In the short run, inflation and unemployment .

Now suppose that over time, expected inflation changes in the same direction that actual inflation changes.On both of the preceding graphs, shift the appropriate curve or curves to reflect the change that brings the economy to its long-run state.

After the expansion is over, the economy faces a set of inflation-unemployment combinations.