The Two Interconnected Concepts That Lie at the Heart of Many

question 90

Multiple Choice

The two interconnected concepts that lie at the heart of many financial crises are:

• A) rational expectations and leverage.
• B) irrational expectations and forecasting.
• C) forecasting and leverage.
• D) irrational expectations and leverage.

---

Definitions:

Content Effects

The impact that the subject matter has on the processing and outcome of cognitive tasks.

Formal Reasoning

Reasoning about problems with explicit premises, finite solutions, and well-defined operations.

Americans

Residents or citizens of the United States, often referring to their culture, society, or characteristics.

Situated Cognition

A belief that one’s culture and one’s everyday surroundings and tasks set both boundaries and possibilities for the cognitive tasks that are practiced, and therefore strengthened, during the normal course of daily living.