If people CORRECTLY anticipate an increase in aggregate demand, a result is
A) an increase in the real value of outstanding government debt.
B) workers demanding higher money wages to keep the real wage unchanged.
C) a lower rate of inflation in the current time period.
D) there are no predictable results associated with an anticipated increase in aggregate demand.

Question

Quizplus · Accepted Answer

When people correctly anticipate an increase in aggregate demand, they expect higher prices in the future. Consequently, workers demand higher money wages to maintain their purchasing power, leading to an adjustment in wages in anticipation of inflation.

If People CORRECTLY Anticipate an Increase in Aggregate Demand, a Result