in the short run out put deviates from its natural rate when the price level is different than expected , lending to an upward-sloping short run aggregate supply curve. The three theories proposed to explain this upward slope are the sticky wage theory, the sticky prices theory.
The short run aggregate supply curves shifts in response to changes in the expected prices level and to anything that shifts the long run aggregate supply curve.
When aggregate demand falls, Over time a change in expectation causes wages,price, and perception to adjust , and the short run aggregate supply curves shift rightward.
In the long run the economic return to natural rate of output and unemployment but with a lower prices level.
A fall in aggregate suppl y result in stagflation falling output and rising price.
Wage,prices and perception adjust over time, and the economy recovers.