Negative supply shock on the AD–AS graph: SRAS shifts left (stagflation)

An example figure from the AD–AS Model generator.

AD–AS graph of price level against real GDP with no numbers on the axes: a downward-sloping blue AD line, a vertical green LRAS line, and a red SRAS₁ line crossing AD on LRAS at a dot labeled E₁; two arrows point left to SRAS₂, which crosses AD higher up and to the left of LRAS at a dot labeled E₂. Dashed lines to the axes mark PL₁ and PL₂ on the price level axis and Y₂ and Yf on the real GDP axis, and a brace under the axis from Y₂ to Yf is labeled Recessionary gap — A negative supply shock from long-run equilibrium, drawn with no numbers. AD, SRAS₁ and LRAS meet at E₁, at full-employment output Yf. SRAS shifts left to SRAS₂, which crosses AD at E₂: the price level rises from PL₁ to PL₂ while real GDP falls to Y₂, as in stagflation. The recessionary gap from Y₂ to Yf is braced under the axis.

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