If the economy is at potential output and the Bank of Canada increases the money supply so that actual output exceeds potential output,eventually nominal wages will:

Question

Quizplus · Accepted Answer

When actual output exceeds potential output, there is an increase in demand for goods and services, leading to an increase in prices. To keep up with higher prices, workers will demand higher wages, leading to an increase in nominal wages.

If the Economy Is at Potential Output and the Bank