The following graph shows the economy in long-run equilibrium at the expected price level of 120 and the natural level of output of $600 billion. Suppose several foreign economies experience severe recessions, causing foreign purchases of domestic goods and services to decline sharply. Shift the short-run aggregate supply (AS) curve or the aggregate demand (AD) curve to show the short-run impact of the economic turmoil abroad. AS 120 PRICE LEVEL 80 40 o I l l I I o 200 400 600 800 1000 1200 OUTPUT (Billions of dollars) In the short run, the decrease in foreign spending on domestic goods associated with recession 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 turmoil abroad will cause the unemployment rate to V the natural rate of unemployment in the short run. Again, the following graph shows the economy in long-run equilibrium at the expected price level of 120 and the natural level of output of $600 billion, before the decrease in foreign spending on domestic goods associated with recession abroad. During the transition from the short run to the long run, price-level expectations will V and the V curve will shift to the V . Now show the long-run impact of the economic turmoil abroad by shifting both the aggregate demand (AD) curve and the short-run aggregate supply (AS) curve to the appropriate Positions. (9 240 + 200 AS AD + 1 80 AS 120 ICE LEVEL In the long run, as a result of the economic turmoil abroad, the price level V , the quantity of output natural level of output, and the unemployment rate v the natural rate of unemployment. v the