Putting money into mental categories can:
A. help people organize their expenditures.
B. cause irrational behavior.
C. cause people to take risks they wouldn't otherwise take.
D. All of these are true.
Answer: D
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When the market value of the dollar rises relative to other currencies around the world, we say that
A) the supply of dollars has increased. B) the dollar has appreciated. C) the dollar has depreciated. D) the demand for dollars has increased.
In the two-period model, the budget constraint is kinked for all of these reasons, except
A) the real interest rate is greater than zero. B) there are costs to banks from lending and borrowing. C) there is asymmetric information in the credit market. D) there is limited commitment in the credit market.
Fractional reserve banking is a system in which
A) depository institutions pay a fraction of advertised interest rates. B) a fraction of banking services must be provided by depository institutions. C) depository institutions hold a fraction of total deposits in reserve. D) the money supply is a set fraction of the U.S. gold reserves.
The head tax is regressive
a. True b. False Indicate whether the statement is true or false