An Individual Would Suffer Lower Losses from an Unexpectedly Higher

question 11

Multiple Choice

An individual would suffer lower losses from an unexpectedly higher inflation rate if

• A)she held much currency and owned few bonds.
• B)she held much currency and owned many bonds.
• C)she held little currency and owned few bonds.
• D)she held little currency and owned many bonds.

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Definitions:

Festinger and Carlsmith

Researchers known for their study on cognitive dissonance, demonstrating how experiencing inconsistency among beliefs or behaviors leads to discomfort, which individuals are motivated to reduce.

Cognitive Dissonance Theory

A psychological theory suggesting that individuals experience discomfort when holding two or more conflicting cognitions (beliefs, attitudes) and are motivated to reduce this discomfort.

Festinger

Refers to Leon Festinger, a psychologist best known for his cognitive dissonance theory, which explores the discomfort felt by individuals when their beliefs or behaviors are inconsistent.

Cognitive Consistency

A psychological theory suggesting that individuals are motivated to maintain consistency among their cognitions, leading to changes in attitudes, beliefs, or behaviors when inconsistencies occur.