FIGURE 14-2: How Shifts in Aggregate Demand Lead to Short-Run Fluctuations Here the economy begins in a long-run equilibrium, point A. When aggregate demand increases unexpectedly, the price level rises from P1 to P2. Because the price level P2 is above the expected price level EP2, output rises temporarily above the natural level, as the economy moves along the short-run aggregate supply curve from point A to point B. In the long run, the expected price level rises to EP3, causing the short-run aggregate supply curve to shift upward. The economy returns to a new long-run equilibrium, point C, where output is back at its natural level.