Final answer:
The vertical range of the AS curve reflects a scenario where the economy is at the natural rate of unemployment and output doesn't fluctuate with changes in aggregate demand or inflation. Technological progress shifts the curve rightward over time, indicating long-term growth, while short-term inflation effects are present without output change.
Step-by-step explanation:
The vertical range of the Aggregate Supply (AS) curve represents a situation where employment is at the natural rate of unemployment. Changes in aggregate demand have no impact on output levels, but they do influence the price level in the economy. When the AS curve is vertical, output does not respond to technological changes; instead, these are reflected over time as the potential GDP line shifts to the right. Equilibrium output corresponds to potential GDP, and long-term economic growth is visible through this gradual shift to the right of the AS curve. In the short-term, aggregate demand shifts can lead to inflationary or deflationary outcomes without changing the output level.
The vertical Phillips curve complements this concept by showing that beneath a certain level of unemployment (the natural rate), unemployment does not change with inflation. This means that in the long-term, the economy operates at a level of unemployment that is not affected by inflation rates.