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When Bob Receives a 5 Percent Nominal Wage Increase in a Period

Question 78

Multiple Choice

When Bob receives a 5 percent nominal wage increase in a period where inflation is also 5 percent, then we say that he experiences money illusion when:


A) when he believes that his real wage did not change.
B) he believes that his real wage decreased.
C) he believes that his real wage increased.
D) All of the above are correct.

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