money illusion

Just remember the difference between the money illusion and reality.

Another good illustration of money illusion came in the late 1990's.

Mr. Anderson's leap is no more than a money illusion.

Real wages remain constant and therefore so does output, no money illusion occurs.

By confusing real and nominal investors suffer from 'money illusion'.

Money illusion can also influence people's perceptions of outcomes.

Why bother with this arcane explanation of what economists call the "money illusion"?

In the actual world with money illusion, inflation (and deflation) did serious harm.

Furthermore, the money illusion means nominal changes in price can influence demand even if real prices have remained constant.

Shafir et al. also state that money illusion influences economic behaviour in three main ways:

Some saw the irrational spectre of money illusion lurking menacingly in the wings.

Explanations of money illusion generally describe the phenomenon in terms of heuristics.

This is also consistent with the distinction between real and nominal values and represents a common hypothesis in economics of no money illusion.

In the long-run, this money illusion will disappear as workers come to realise that price inflation is depriving them of their perceived increase-in real income.

The irrational spectre of money illusion is often seen to lie behind the complex facade of income-expenditure models derived from the system.

Money illusion has been proposed as one reason why nominal prices are slow to change even where inflation has caused real prices or costs to rise.

Economists tend to cite four possible causes of price stickiness: menu costs, money illusion, imperfect information with regard to price changes, and fairness concerns.

Chapter 8 tackles the reasons for unemployment, which the authors say is partly due to animal spirits such as concerns for fairness and the money illusion.

The leading proponent was Scott Sumner, with his blog "The Money Illusion.

The existence of money illusion is disputed by monetary economists who contend that people act rationally (i.e. think in real prices) with regard to their wealth.

Wasn't it Keynes - with his theory of money illusion - who pointed out that what the workers were impressed was money wages but not real wages.

In economics, money illusion, or Price Illusion, refers to the tendency of people to think of currency in nominal, rather than real, terms.

On the other hand there is no theoretical foundation to explain the relationship, and the best explanation academics came up with is that investors collectively suffer from 'money illusion'.

The results provide some evidence that workers are not suffering from money illusion as where areas with prices are higher by 10% than another area also have wages 10% higher.

The failure to see stocks as a good inflation hedge is part of "money illusion," which occurs when investors confuse nominal, or reported, prices with real, or inflation-adjusted, ones.