Some Economists Believe That When Workers and Firms Come to Expect

Multiple Choice

Some economists believe that when workers and firms come to expect an expansionary monetary policy and the resulting inflation,

A) they act so as to prevent the inflation from occurring
B) their actions lead to a further increase in output
C) the expansionary monetary policy will have no effect on either output or employment
D) the monetary authority will be forced to cancel its planned expansionary policy
E) both output and employment will increase even more than was originally planned