Assume That Investment Opportunities Are Less in High-Wealth Countries and More

question 47

Multiple Choice

Assume that investment opportunities are less in high-wealth countries and more in low-wealth countries. Now, if all barriers to international financial transactions are removed, borrowers in _____ countries lose and lenders in _____ countries gain.

• A)high-wealth; low-wealth
• B)low-wealth; high-wealth
• C)high-wealth; high-wealth
• D)low-wealth; low-wealth

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Definitions:

Framing Error

A cognitive bias where the context or way in which information is presented affects decision-making or judgement.

Auction Fever

Auction fever describes the emotional excitability and competitive bidding that can lead individuals to pay more for items in auctions than they are worth or had intended to spend.

Satisficing

A decision-making strategy that aims for an acceptable or satisfactory solution, rather than the optimal one.

Overconfidence

A cognitive bias where an individual's subjective confidence in their judgments is greater than their objective accuracy.