Which of the Following Is an Example of Money Illusion

question 98

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.

---

Definitions:

Inferiority

A feeling of being lower in status or quality than others.

Third Person

A point of view in communication or literature where the narrator or presenter refers to all participants using third-person pronouns like he, she, it, or they.

Second Person

A point of view in literature where the narrator addresses the reader directly using 'you.'

Business Writing

The professional communication of ideas, instructions, or concepts in a clear, concise, and appropriate manner for a business context.