The Self-Control Hypothesis Suggests That People

question 39

Multiple Choice

The self-control hypothesis suggests that people:

• A)base their spending decisions (and consequently their saving decisions)on spending decisions of others.
• B)want to save, but lack the discipline to refrain from consuming.
• C)substantially decrease their saving when the real interest rate increases.
• D)control their spending in order to save more when the real interest rate increases.

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Definitions:

Market Value

Market value is the current price at which an asset or service can be bought or sold in a marketplace, reflecting the value that market participants assign to it.

Shares

Represent units of ownership interest in a corporation or financial asset, providing a means for corporations to raise capital.

Rights Offering

An offering where existing shareholders are given the right to purchase additional shares at a discounted price before the new shares are offered to the public.

Subscription Price

The fixed price at which existing shareholders can buy more shares of the company stock, typically during a rights offering.