Answer
a) Please see the graphs. The decreased consumer spending decreases the aggregate demand curve from $AD_1$ to $AD_2$. The price level and output decrease from $P_1$ and $Y_1$, respectively, to $P_2$ and $Y_2$. Inflation decreases, while the unemployment rate increases.
Work Step by Step
b) The short run Phillips curve shifts from $PC_{SR_1}$ to $PC_{SR_2}$. Also, since the expected inflation decreases, the aggregate supply curve also shifts--from $AS_1$ to $AS_2$. Eventually, the economy will face a better set of inflation-unemployment combinations.
