Increases in nominal wages in the economy are generally the effect of which force(s)?

Question

Quizplus · Accepted Answer

Increases in nominal wages in the economy are generally the result of both the output-gap effect and the expectational effect. The output gap effect occurs when tight labor markets lead to workers receiving higher wages, and the expectational effect occurs when workers adjust their wage demands based on their expectations of future inflation.

Increases in Nominal Wages in the Economy Are Generally the Effect