Which of the Following Is an Example of Money Illusion

question 167

Multiple Choice

Which of the following is an example of money illusion?

• A) An individual is willing to work more hours when the nominal wage rises by 5 percent and the overall price level rises by 4 percent.
• B) An individual is willing to work more hours when the nominal wage rises by 5% and the overall price level rises by 7 percent.
• C) An individual will neither increase nor decrease the number of hours she is willing to work when the nominal wage rises by 5 percent and the overall price level rises by 5 percent.
• D) none of the above.

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The agreed-upon price for a futures contract that is set to settle in April, representing the price of an asset at that future date.