Money Illusion

Multiple Choice

Money illusion

A) occurs when the Federal Reserve reduces the money supply, and is the misperception that prices have changed.
B) occurs when output rises, and is the misconception that the price level is higher.
C) is the distinguishing factor between the short run and the long run.
D) is the misperception that one is wealthier when one's nominal income rises due to an increase in the price level.