Final answer:
Movement along the SRAS curve in the short run leads to a decrease in the unemployment rate when AD shifts right, and an increase in unemployment when AD shifts left, assuming all other factors remain constant.
Step-by-step explanation:
In the short run, movement along the Short-Run Aggregate Supply (SRAS) curve corresponds to changes in the unemployment rate, all else being equal.
When the Aggregate Demand (AD) curve shifts to the right, this implies that there is an increase in aggregate demand, leading to a higher output and thus moving the output closer to the potential GDP. As a result, the unemployment rate will decrease due to more production requiring more workers.
On the other hand, if the AD curve shifts to the left, the economy produces less than the potential GDP, and the unemployment rate will increase as there is less demand for labor.
For instance, in the intermediate zone of the SRAS curve, a rightward shift in the AD curve not only reduces unemployment but also raises the price level, exerting upward pressure on inflation.
Conversely, a leftward shift in AD would increase unemployment while putting downward pressure on the price level and inflation. Over the long run, wages and prices adjust, and the SRAS curve might shift, returning the economy to potential GDP with short-run fluctuations having only temporary effects on output and unemployment.