• as the unemployment is very low now, there is strong pressure on wages to rise
• while in the short run this pressure does not affect sticky wages, in the long run this pressure will result in increase in factor prices (including wage rates)
• as a consequence, producers face higher factor prices and are able to raise product prices which increases inflation
• higher inflation will curb total real aggregate expenditures and as a result producers decrease their production quantities
• it means that real GDP returns to its potential level and unemployment returns to its natural rate level.

Long run developments induced by increase in AS are shown graphically below.