Assume That Congress Is Considering Revising Its Approach to Welfare

question 49

Multiple Choice

Assume that Congress is considering revising its approach to welfare and to this end is hearing a range of testimony. A member of Congress who uses the availability heuristic would be most likely to

• A) want to experiment with numerous possible approaches to see which of these seems to work best.
• B) want to cling to approaches to welfare that seem to have had some success in the past.
• C) refuse to be budged from his or her beliefs despite persuasive testimony to the contrary.
• D) base his or her ideas on the most vivid, memorable testimony given, even though many of the statistics presented run counter to this testimony.

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Definitions:

SIVs

Structured Investment Vehicles, which are pool investment entities created to finance long-term assets with short-term debt, known for their role in the financial crisis due to liquidity issues.

Credit Default Swap

A financial derivative that allows an investor to "swap" or offset their credit risk with that of another investor.

Par Value

The face value of a bond or a stock, as stated by the issuing company, which may differ from its market value.