When the Rate of Inflation Is High, People Usually Transfer

question 177

True/False

When the rate of inflation is high, people usually transfer money from interest-bearing accounts into checking accounts more often than when inflation is low. This is an example of a menu cost.

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Definitions:

Framing

The way information is presented or communicated, which influences how it is perceived and interpreted.

Anchoring Effect

A cognitive bias where individuals rely too heavily on an initial piece of information (the "anchor") when making decisions.

Sunk Costs

Costs that have already been incurred and cannot be recovered, and should not affect future decision-making processes.

Discrimination Learning

A cognitive process where an organism learns to respond differently to various stimuli because they are associated with different outcomes.