If workers and firms expect that inflation will be 3 percent next year, and real wages are not changing over time, by how much will nominal wages increase?

Question

Quizplus · Accepted Answer

If workers and firms expect inflation to be 3 percent next year, then nominal wages are likely to increase by the same amount to maintain the same real wage rate. So, nominal wages will increase by 3 percent.

If Workers and Firms Expect That Inflation Will Be 3