Multiple Choice
Which of the following is an example of money illusion assuming that inflation is 5%?
A) You receive a 5% raise at your part-time job and start spending extra money on entertainment every weekend.
B) You receive a 5% raise at your part-time job but do not increase or decrease your spending.
C) You do not receive a raise at your part-time job but cut out some expenses as you notice some prices rising.
D) You receive a 10% raise at your part-time job and start spending extra money on entertainment every weekend.
Correct Answer:
Verified
Correct Answer:
Verified
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