If individuals have money illusion,they react to changes in certain prices without regard to simultaneous changes in other prices.

Question

Quizplus · Accepted Answer

Money illusion refers to the tendency of individuals to focus on nominal prices instead of real prices. This means that they may react to changes in a specific price without considering the impact of changes in other prices. For example, if the price of a particular product increases, individuals may assume that they are paying more overall for goods and services, without realizing that the cost of other products may be falling or staying the same.

If Individuals Have Money Illusion,they React to Changes in Certain