FIGURE 12-7: The Short-Run and Long-Run Equilibria We can compare the short-run and long-run equilibria using either the IS–LM diagram in panel (a) or the aggregate supply–aggregate demand diagram in panel (b). In the short run, the price level is stuck at P₁. The short-run equilibrium of the economy is therefore point K. In the long run, the price level adjusts so that the economy is at the natural level of output. The long-run equilibrium is therefore point C.