Abe Just Got His Driver's License

question 146

Multiple Choice

Abe just got his driver's license. He loves to speed around town going more than 20 miles per hour above the speed limit. He believes that he can speed through red lights due to his perfect timing. This is an example of ________.

• A) underestimation
• B) the personal fable
• C) self-serving bias
• D) the imaginary audience

---

Definitions:

Interest Rate

The part of a loan that is added as interest for the borrower, normally expressed as an annual percentage of the existing loan balance.

Reserve Ratio

The reserve ratio is the fraction of total deposits that a bank is required to hold in reserve and not loan out, acting as a regulatory tool to ensure the stability of the banking system.

Bank Reserves

Funds that banks hold to meet immediate withdrawal demands and regulatory requirements.

Money Supply

The total amount of money—coins, currency, and bank deposits—circulating in an economy.