The author describes the factors which determine decisions concerning intertemporal allocation of demand by individual agents with respect to goods as well as labour and leisure. In the model presented, the representative agent initially makes decisions under uncertainty. Later, when expansionary monetary policy is introduced into the model, this assumption is lifted. The analysis leads to the following observation: expansionary monetary policy brings about real effects, such as increased demand for goods and reduced supply of labour in the very period of monetary expansion. However, the accompanying nominal effects in the form of price increases result in an adverse real effect, e.g. a drop in demand for goods coupled with increased supply of labour in the period following the monetary expansion. The nominal effects influence the real economy through an unanticipated increase in inflation levels. The theoretical model the paper presents is supported with evidence from empirical research based the US economy of the 1964-99 period.