Money illusion occurs
A) only in the classical case when the AS-curve is vertical
B) only in the Keynesian model, in which prices are fixed
C) only in a period of strong economic growth when real and nominal wages are rising at the same rate
D) when people respond to nominal values rather than to real values
E) when a change in the nominal money supply has no impact upon real values such as output or real wages
Correct Answer:
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