If credible low-money-growth policies were continually pursued by the Fed, nominal wages and prices would eventually fall as the economic agents would expect lower inflation rates over time.

Question

Quizplus · Accepted Answer

This is because if the Fed consistently implements low-money-growth policies, it would result in lower inflation expectations and thus lead to lower nominal wages and prices over time.

If Credible Low-Money-Growth Policies Were Continually Pursued by the Fed