Money illusion is the
A)Use of nominal dollars rather than real dollars to gauge changes in one's income or wealth.
B)Movement of taxpayers into higher tax brackets as nominal income increases.
C)Focus on real dollars rather than nominal dollars to determine purchasing power over time.
D)Uncertainty that occurs because of inflation.

Question

Quizplus · Accepted Answer

Money illusion refers to the tendency of people to use nominal dollars (current dollar value) instead of real dollars (adjusted for inflation) to gauge changes in their wealth or income. This can lead to incorrect perceptions of changes in purchasing power over time.

Money Illusion Is the