For this question,assume that the economy is initially operating at the natural level of output.A monetary expansion will cause
A)no change in the real wage in the medium run.
B)an increase in investment in the medium run.
C)a reduction in the interest rate in the medium run.
D)no change in the nominal wage in the medium run.

Question

Quizplus · Accepted Answer

In the medium run, a monetary expansion leads to adjustments in the economy that neutralize real effects on variables like the real wage. Prices and nominal wages adjust to restore the real wage to its original level, consistent with the natural level of output.

For This Question,assume That the Economy Is Initially Operating at the Natural