Neuronal Cause Of 'Money Illusion': Inflation Felt To Be Not So Bad As A Wage Cut
Thursday, March 26, 2009 - 21:35
in Mathematics & Economics
Many people view a rise in their income as a good thing, even when the increase is completely negated again by inflation. Researchers have discovered the cerebro-physiological cause underlying this so-called "money illusion." This effect is of great practical relevance in that it explains, for instance, why financial policy and inflation can have a beneficial effect on employment and economic growth.