Suppose You Are Working as an Intern at a Large

question 3

Multiple Choice

Suppose you are working as an intern at a large financial firm with an annual salary of $30 000, but you are guaranteed a salary increase to $85 000 at the end of the internship. In general, we can expect that

• A) your current level of saving falls and your supply of financial capital to the economy rises in anticipation of the higher future income.
• B) your current level of saving rises in anticipation of the higher future income.
• C) your current level of saving rises because there is a positive relationship between household saving and future income.
• D) your current level of saving is certain to be positive.
• E) your current level of saving falls and your supply of financial capital to the economy decreases in anticipation of the higher future income.

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Definitions:

Cocktail Party Effect

The ability to focus one's attention on a single conversation in a noisy environment, ignoring other conversations.

Eyewitness Testimony

Evidence provided by individuals who were present during a specific event or crime, recounting their observations and recollections.

Misinformation Effect

An occurrence where an individual's ability to accurately remember specific events diminishes because of information encountered after the event.

Encoding

The initial process of transforming sensory input into a form or format that can be stored in memory.