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== How it happens ==
According to [[Keynesian theory]], the more firms will employ people, the more people that are employed
At first, unemployment will go down, shifting AD1 to AD2, which increases demand (noted as "Y") by (Y2 - Y1). This increase in demand means more workers are needed, and then AD will be shifted from AD2 to AD3, but this time much less is produced than in the previous shift, but the price level has risen from P2 to P3, a much higher increase in price than in the previous shift.
This increase in price is called [[inflation]].
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