Some Economists Believe That When Workers and Firms Expect a Contractionary

Multiple Choice

Some economists believe that when workers and firms expect a contractionary monetary policy, _____

A) they try to prevent the price level from increasing.
B) their actions lead to a further increase in output.
C) they are likely to negotiate for relatively lower wages.
D) the monetary authority is forced to cancel its planned recessionary policy.
E) both output and employment increase even more than was originally planned.