Economics,,,question about nominal?

Question

which of the nfollowing can a country increase in the long run by increasing its money growth rate?

a. the nominal wage divides by the price level

b.real output

c. real interest rates

d. none of above

I KNOW it cants be b or c because in the long run REAL anything is uneffected by money supply

but will nominal wages divided by price level change?

keep in mind this is 2 nominals divided...BOTH will be increasing.....so will both divided increase or remain constant?

Answer 1

To clear the doubt in the mind please note that a. nominal wage rate divided by the price level is nothing but the real wage rate. So, ideally this being a real thing it should not be affected by incresed money supply. Except when, the increase in money supply does not lead to either a dispropotionately higher rise in nominal wage rate relative to inflation because of shortage of labour or to a lower than inflation rate increse in nominal wages due to existence of surplus labor as in many developing economies.

Answer 2

"D" is right one - money are neutral in long-run