The following graph shows a hypothetical economy in longwrun equilibrium at an expected price level of 120 and a natural output level of $600 billion. Suppose the economies of several foreign countries experience rapidly growing incomes. causing foreign spending on domestic goods and services to increase. Using the graph, shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to Show the short-run impact of the economic prosperity abroad. 6?) 240 O 200 c AS AD El 160 + 4 AS l.l.l > LIJ -' 120 - Lu 2 n: D. 30 - AD 40 - 0 wllllli 0 200 400 600 800 1000 1200 OUTPUT (Billions of dollars) In the short run, the increase in foreign spending on domestic goods associated with expansion abroad causes the price level to V the price level people expected and the quantity of output to v the natural level of output. The economic prosperity abroad will cause the unemployment rate to V the natural rate of unemployment in the short run. Again, the following graph shows a hypothetical economy experiencing long~run equilibrium at the expected price level of 120 and natural output level of $500 billion, prior to the increase in foreign spending on domestic goods associated with expansion abroad. Along the transition from the short run to the long run, price-level expectations will V and the V curve will shift to the V