Final answer:
Moving up along the long-run aggregate supply curve keeps the real wage rate constant, as money wage rates adjust to match price level changes, maintaining the purchasing power of wages.
Step-by-step explanation:
As we move up along the long-run aggregate supply curve (LRAS), the real wage rate remains constant. This means that the money wage rates adjust in proportion to the price level changes, allowing the purchasing power of wages to stay consistent. In the context of a rational expectations framework, if people anticipate an increase in the price level due to a monetary policy change, they will demand higher nominal wages to compensate for the expected rise in prices. Employers, expecting to sell their goods and services at higher prices, are inclined to agree to these higher nominal wages. Consequently, the immediate shift of the short-run aggregate supply curve (SRAS) to a new position such as SRAS2 results. However, in the long run, the economy moves to a point along LRAS where real GDP remains unchanged, indicating that in this model, monetary policy impacts the price level but not the real output.