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Policy-ineffectiveness proposition. The policy-ineffectiveness proposition (PIP) is a new classical theory proposed in 1975 by Thomas J. Sargent and Neil Wallace based upon the theory of rational expectations, which posits that monetary policy cannot systematically manage the levels of output and employment in the economy.
Money illusion. In economics, money illusion, or price illusion, is a cognitive bias where money is thought of in nominal, rather than real terms. In other words, the face value (nominal value) of money is mistaken for its purchasing power (real value) at a previous point in time. Viewing purchasing power as measured by the nominal value is ...
The mathematical first order conditions for a maximum of the consumer problem guarantee that the demand for each good is homogeneous of degree zero jointly in nominal prices and nominal wealth, so there is no money illusion. When the prices of goods change, the optimal consumption of these goods will depend on the substitution and income effects.
Money illusion: The tendency to concentrate on the nominal value (face value) of money rather than its value in terms of purchasing power. [106] Moral credential effect Occurs when someone who does something good gives themselves permission to be less good in the future. Non-adaptive choice switching
OCLC. 62532514. The General Theory of Employment, Interest and Money is a book by English economist John Maynard Keynes published in February 1936. It caused a profound shift in economic thought, [1] giving macroeconomics a central place in economic theory and contributing much of its terminology [2] – the "Keynesian Revolution".
The Baumol–Tobin model is an economic model of the transactions demand for money as developed independently by William Baumol (1952) and James Tobin (1956). The theory relies on the tradeoff between the liquidity provided by holding money (the ability to carry out transactions) and the interest forgone by holding one’s assets in the form of non-interest bearing money.
The curse of knowledge, also called the curse of expertise [1] or expert's curse, is a cognitive bias that occurs when a person who has specialized knowledge assumes that others share in that knowledge. [2] For example, in a classroom setting, teachers may have difficulty if they cannot put themselves in the position of the student.
Illusory superiority. In social psychology, illusory superiority is a cognitive bias wherein people overestimate their own qualities and abilities compared to others. Illusory superiority is one of many positive illusions, relating to the self, that are evident in the study of intelligence, the effective performance of tasks and tests, and the ...