Fred Is on a Popular TV Game Show Where You

question 25

Multiple Choice

Fred is on a popular TV game show where you can win $1,000,000. He is currently at $16,000 and is not totally certain if he knows the answer to the $32,000 question. His decision could be influenced if the host says "You can take the $16,000 and go home, and that's a lot of money," or "$32,000 is way more money than $16,000." There is a tendency for the contestants to do whatever the host suggests, and Fred will probably be no different. This is the effect of __________

• A) an availability heuristic.
• B) a representativeness heuristic.
• C) an additive strategy.
• D) framing.

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Definitions:

Rate Of Interest

The percentage charged on a loan or paid on an investment over a specific period, usually annually.

Monthly Payments

Regular payments made once a month, typically in the context of loans or mortgages.

Loan

A sum of money borrowed by an individual, business, or other entity from a lender that is expected to be paid back with interest over a specified time period.

Compounded Monthly

Compounded monthly refers to the process of adding interest to the principal sum of a loan or deposit, where the interest that accrues is calculated and added monthly, leading to exponential growth.