Multiple Choice
Suppose you are forced to take a pay cut of 5% when the economy is experiencing overall deflation of 5%.If in response to your pay cut you also reduce your consumption by 5%,then economists would say:
A) you made a rational decision.
B) you are exhibiting money illusion.
C) your real wage decreased by 5%.
D) the quantity theory of money held.
Correct Answer:
Verified
Correct Answer:
Verified
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