5. Short-run shocks in the AD-AS model The following graph shows an economy that is initially in equilibrium. Then, a large decline in stock prices occurs, reducing the wealth of individuals.   On the graph, show the economic impact of this event in the short-run aggregate demand and aggregate supply (AD–AS) model by shifting one or both curves.   Show the movement of the AD and SRAS on a graph.   This event is an example of a decrease in AD/increase in AD/ decrease in SRAS/ increase in SRAS. As a result, the price level declines/rises, and the equilibrium real GDP declines/rises.

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