The Money Illusion

What if I told you about an economic theory that assumed every person in the economy understood economic terms and kept up to date with the state of the economy? To be exact, what if I told you about a theory that assumed everyone in the economy based their decisions on the rate of inflation? You’d (rightly) say that was a daft and unrealistic assumption completely out of touch with how real people think. The reason for this is due to what is known as the Money Illusion. Continue reading “The Money Illusion”