In the short run, a change in the interest rate alters the economy because it affects investment spending, which in turn affects aggregate demand and real GDP through the multiplier process. However, in the long run, changes in consumer spending and investment spending will eventually result in changes in nominal wages and the nominal prices of other factors of production. For example, an expansionary monetary policy will eventually cause a rise in factor prices; a contractionary policy will eventually cause a fall in factor prices. In response, the short-run aggregate supply curve will shift to move the economy back to longrun equilibrium. So in the long run monetary policy has no effect on the economy.