Jul
1
Money Illusion and the Housing Market: Do People Often Pay More Attention to Price Tags Than to Real Value?
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As Fed Chairman Bernanke acknowledged on June 22, “…inflation has picked up in recent months.” With the increasing probability of inflationary expectations and actual inflation returning, it is an opportune time to review the concept of money illusion and the difference between nominal and real money. People tend to think of our fiat currency in nominal rather than real terms.