(Table 1: Econia's Consumer Price Index and Salary Data, 2008

question 16

Multiple Choice

(Table 1: Econia's Consumer Price Index and Salary Data, 2008 and 2018) Table 1 provides data on Econia's Consumer Price Index (CPI) and average salaries for two years. Junko says that Econia's workers are twice as prosperous as they were before, but Marko disagrees. Who is suffering from the money illusion and why? $\begin{array}{c}\text { Table 2: Income and Consumer Price Index Data for Four Cities, } 2008 \text { and } 2018\\\begin{array}{|c|c|c|c|c|}\hline \quad \quad \quad & \text { City A } \quad \quad \quad & \text { City B } \quad \quad \quad & \text { City C } \quad \quad \quad & \text { City D } \quad \quad \\\hline \begin{array}{c}2008 \text { average } \\\text { income }\end{array} & \$ 40,000 & \$ 70,000 & \$ 85,000 & \$ 100,000 \\\hline 2008 \text { CPI } & 120 & 130 & 90 & 100 \\\hline \begin{array}{c}2018 \text { average } \\\text { income }\end{array} & \$ 65,000 & \$ 100,000 & \$ 160,000 & \$ 160,000 \\\hline 2018 \text { CPI } & 150 & 150 & 160 & 170 \\\hline\end{array}\end{array}$

• A) Junko is suffering from the money illusion because she is considering only nominal values and not real values.
• B) Junko is suffering from the money illusion because she should focus only on the CPI and not on salaries to make the determination.
• C) Marko is suffering from the money illusion because he is focused only on the CPI and not on salaries.
• D) Marko is suffering from the money illusion because he is considering real values rather than nominal values.

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Definitions:

Civil Rights Acts

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Civil War Amendments

Amendments added to the U.S. Constitution after the American Civil War, specifically the 13th, 14th, and 15th Amendments, which abolished slavery, extended citizenship rights, and granted voting rights regardless of race.

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The period following the Civil War in the United States, during which the Southern states were reorganized and reintegrated into the Union from 1865 to 1877.

In re Gault

A landmark 1967 U.S. Supreme Court decision that granted juveniles accused of crimes the same due process rights as adults, including the right to legal counsel, the right to notice of the charges, the right to confront witnesses, and the right to remain silent.