Money Illusion

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August 31, 2024 5 min read Definitions
Money Illusion: Mistaking Nominal for Real Changes
Economics Behavioral Finance Money Illusion Nominal vs. Real Inflation Behavioral Economics Economic Psychology
An in-depth exploration of the concept of Money Illusion, where individuals misinterpret nominal changes in wages and prices as real gains, without accounting for inflation.
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August 25, 2024 3 min read Definitions
Money Illusion: The Misunderstanding of Purchasing Power
Economics Behavioral Economics Money Illusion Purchasing Power Inflation Cognitive Bias Economic Misconceptions
Money Illusion refers to the cognitive bias where individuals mistakenly believe that an increase in their nominal income equates to an increase in their real purchasing power, neglecting the effect of inflation.
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