How Does Money Illusion Cause Nominal Wage Rigidity

Multiple Choice

How does money illusion cause nominal wage rigidity?

A) Wages fall only when money illusion is present.
B) Since workers focus on nominal wages, employers focus on matching the rate of wage increase with the rate of inflation.
C) Money illusion leads to workers asking for fixed wage increases (and decreases) adjusted to the rate of inflation (or deflation) .
D) Since workers focus on nominal earnings and thus resent wage cuts, employers often choose to hold nominal wages constant rather than lower them.