Maria was thrilled to receive a 3% raise. Inflation is 4%. Maria is experiencing:
A) money illusion.
B) opportunity cost.
C) income inflation.
D) tunnel vision.

Question

Quizplus · Accepted Answer

Maria is experiencing money illusion because she feels thrilled about her raise without considering that inflation at 4% actually reduces her purchasing power, making her effectively poorer despite the nominal increase in her income.

Maria Was Thrilled to Receive a 3% Raise