How will expansionary monetary policy impact real wages under long-term contracts?
A) Real wages decrease.
B) Real wages remain constant.
C) Real wages decrease but are offset by falling prices.
D) Real wages increase.
E) Real wages increase but are offset by rising prices.

Question

Quizplus · Accepted Answer

Expansionary monetary policy typically leads to inflation, which can erode the purchasing power of wages set under long-term contracts, causing real wages to decrease.

How Will Expansionary Monetary Policy Impact Real Wages Under Long-Term