Mateo Has $2,000 in Cash, Which He's Saving to Spend

question 16

Multiple Choice

Mateo has $2,000 in cash, which he's saving to spend on a trip over spring break.. However, during the holiday season he spends $400 of that cash on gifts to avoid using his credit card, thus avoiding interest charges. He gradually replaces the $400 over the next two months. An economist would say this behavior is:

• A)rational.
• B)irrational.
• C)utility minimizing.
• D)not observable.

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Definitions:

Fugitive Slaves

Refers to escaped slaves who fled from one state to another or to Canada, especially after the passing of laws like the Fugitive Slave Act of 1850 in the US.

Rush-Bagot Treaty

An agreement between the United States and Britain in 1817 that significantly reduced naval armaments on the Great Lakes, marking an early example of arms control efforts.

Naval Forces

Military forces primarily responsible for warfare at sea, including the operation of ships and submarines, often crucial for a nation's defense, power projection, and maintaining control over sea lanes.

Great Lakes

A group of five large, interconnected freshwater lakes on the border between the United States and Canada, comprising Lakes Superior, Michigan, Huron, Erie, and Ontario.