After an unexpected increase in the price of oil, the long-run adjustment decreases the price level and decreases the unemployment rate as they return to their original levels.
One mechanism that can help the economy recover from a shock and return to "normal" is the long-run self-adjustment mechanism. This presumption is based on the premise that an economy would self-correct and that shocks only have an impact in the near term. The self-correction process is really about price adjustment.
The percentage of the labor force that is employed that is unemployed is known as the unemployment rate (the labor force is the sum of the employed and unemployed). (Unemployed Labor Force) x 100 equals the unemployment rate.
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