Bart, a Single Taxpayer, Has Recently Retired

question 19

Multiple Choice

Bart, a single taxpayer, has recently retired. This year, he received $24,000 in pension payments and $5,000 of Social Security payments. What amount must Bart include in his gross income for the Social Security payments?

• A)$4,250
• B)$2,500
• C)$1,500
• D)$750
• E)$0

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Definitions:

System 2

A term often associated with dual-process theories of mind, representing the analytical, deliberate, and logical mode of thinking.

Framing Effects

Cognitive biases where people's decisions are influenced by the way information is presented, rather than just the information itself.

Anchoring

Anchoring is a psychological phenomenon wherein an individual relies too heavily on an initial piece of information, or 'anchor,' to make subsequent decisions.

Heuristics

Simple, efficient rules, either hard-coded by evolutionary processes or learned, which help in making decisions, forming judgments, or solving problems.