From the Short Run to the Long RunIn panel (a), the initial equilibrium is E1. At the aggregate price level, P1, the quantity of aggregate output supplied, Y1, exceeds potential output, YP. Eventually, low unemployment will cause nominal wages to rise, leading to a leftward shift of the short-run aggregate supply curve from SRAS1 to SRAS2 and a long-run equilibrium at E2. In panel (b), the reverse happens: at the short-run equilibrium, E1, the quantity of aggregate output supplied is less than potential output. High unemployment eventually leads to a fall in nominal wages over time and a rightward shift of the short-run aggregate supply curve. The end result is long-run equilibrium at E2.