An anticipated change in monetary policy does not have any effect on output because
A)employees and employers negotiate a nominal wage according to the anticipated change in the price levels.
B)employees and employers cannot negotiate a nominal wage during the contract period.
C)employees and employers do not agree on the effect of the anticipated monetary policy.
D)unions always push for higher wages in their negotiations.

Question

Quizplus · Accepted Answer

Anticipated changes in monetary policy can lead to expected changes in price levels. As a result, employees and employers negotiate nominal wages based on these expectations, resulting in no change in output.

An Anticipated Change in Monetary Policy Does Not Have Any