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Macroeconomics: Imperfect-information Model
The model of aggregate supply emphasizing that individuals do not always know the overall price level because they cannot observe the prices of all goods and services in the economy.
This model assumes that all markets are clear, but that short-term and long-run aggregate supply curves differ because of short-run misperceptions about prices.
Therefore, when the price unexpectedly rise, supplies infer that their relative prices have increased, which induces them to produce more output.
According to Macroeconomics by Gregory Mankiw
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