Alex and Barbara Are Asked to Estimate the Size of a Crowd

question 70

Multiple Choice

Alex and Barbara are asked to estimate the size of a crowd. Alex is asked whether the crowd is bigger or smaller than 10,000 whereas Barbara is asked whether the crowd is bigger or smaller than 2,000. The fact that Alex would give a larger estimate could best be explained by

• A) the representativeness heuristic.
• B) mental set.
• C) the anchoring bias.
• D) self-imposed limitations.
• E) cognitive maps.

Analyze the implications of economic theories on fiscal and monetary policy.

Understand the concepts of rational expectations and their impact on policy effectiveness.

Grasp the fundamentals of supply-side economics, including the role of tax rates.

Understand the impact of changes in the money supply on inflation and economic stability.

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