But1 - But,, pricelevelasfirms,producers,.Whenthisoccurs

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But, as we move to the long run, the expected price level comes into line with the actual  price level as firms, producers, and workers adjust their expectations. When this occurs,  the short-run aggregate supply curve shifts down along the aggregate demand curve  until the long-run aggregate supply curve, the short-run aggregate supply curve, and the  aggregate demand curve all intersect. This is represented by point C and is the new  equilibrium where short-run aggregate supply curve 2 meets the long-run aggregate  supply curve and aggregate demand curve 2. Thus, contractionary policy causes output  and the price level to decrease in the short run, but only the price level to decrease in  the long run.  This is the logic that is applied to all shifts in aggregate demand. The long-run 
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