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  4. Terms Beginning With I
  5. Inflation Illusion

Inflation Illusion

Definition of 'Inflation Illusion'

This occurs when people confuse nominal changes in inflation with real changes. Peoples welfare depends on real variables, not nominal variables.

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Related Terms

Money IllusionInflation AccountingAccommodatory Monetary PolicyBusiness CycleConsumer Price IndexCurrent Cost AccountingFactor ModelFiscal DragFishers EquationFlight From MoneyGeneral InflationHyperinflationIndexationInflation RateInflation-Adjusted BudgetInternational (or Open) Fisher TheoryMenu Costs of InflationMoney Rate of ReturnNet Present ValuePure Inflation

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