noun[mass noun] Economics
Belief that money has a fixed value in terms of its purchasing power, so that, for example, changes in prices represent real gains and losses.
- Ignoring the effects of this productivity growth is akin to money illusion in periods of inflation.
- The implications of wage stickiness and the possibility of a money illusion have been discussed at least since Keynes.
- While deflation is in place, the money illusion will cause profits to be overstated, as in Japan today, which moderates the level of bankruptcies.
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