Which of the Following Is an Example of Precommitting to Decisions

question 18

Multiple Choice

Which of the following is an example of precommitting to decisions using heuristics as a decision-making tool?

• A) Using deadlines.
• B) Focusing on small steps.
• C) Paying bills automatically.
• D) Defining where you want to be financially.

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Definitions:

Saving

The portion of income not spent on current consumption but rather set aside for future use.

Borrowing

The act of obtaining funds from another party with the promise to repay the principal amount along with interest or other charges.

Actual Inflation Rate

The percentage increase in the general price level of goods and services in an economy over a period of time, as measured by the consumer price index or other methods.

Real Rate

The real rate is the interest rate adjusted for inflation, providing a more accurate measure of the true return on an investment or the true cost of borrowing.