In which of the following situations are people experiencing money illusion?
A) when prices rise 5% while incomes remain unchanged and thus people think their real incomes have not changed.
B) when prices remain unchanged and incomes remain unchanged and thus people think their real incomes have not changed.
C) when prices rise 5% and incomes rise 5% and people think that their real incomes have risen 5%.
D) when prices rise 5% while incomes rise 8% and people think that their real incomes have risen 3%.
Correct Answer:
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