The rational expectations approach postulates what two aggregate supply curves?

Question

Quizplus · Accepted Answer

The rational expectations approach suggests that in the short run, the aggregate supply curve is upward sloping, indicating that as prices increase, producers are willing to supply more. In the long run, the aggregate supply curve is vertical at the full-employment level of GDP, reflecting the idea that in the long term, the economy's output is determined by its resources, technology, and institutions, not by the price level.

The Rational Expectations Approach Postulates What Two Aggregate Supply Curves