A 2017 column in the Wall Street Journal noted that “longterm consumer inflation expectations [are] at record lows.” If inflation turns out to be higher than households and firms had previously...

A 2017 column in the Wall Street Journal noted that “longterm consumer inflation expectations [are] at record

lows.” If inflation turns out to be higher than households

and firms had previously expected, will the actual real

wage end up being higher or lower than the expected real

wage? Will employment in the short run end up being

higher or lower? Briefly explain.

Source: Lev Borodovsky, “WSJ’s Daily Shot: Americans’ Inflation

Expectations at New Lows; Will It End in Disappointment?” Wall

Street Journal, March 19, 2017.