Unit 3 TEST REVIEW

What is the cognitive bias where people prefer to avoid losses rather than acquiring equivalent gains?

• Endowment effect

• Loss aversion

• Sunk cost fallacy

• Overconfidence

Which cognitive bias involves continuing an endeavor once an investment in money, effort, or time has been made?

• Herd mentality

• FOMO

• Sunk cost fallacy

• Confirmation bias

What is the term for the bias where people value things more highly simply because they own them?

• Endowment effect

• Overconfidence

• Loss aversion

• Herd mentality

Which bias describes the fear of missing out on something others are experiencing?

• Confirmation bias

• FOMO

• Sunk cost fallacy

• Endowment effect

What is the cognitive bias where people tend to conform to the actions or beliefs of a larger group?

• Herd mentality

• Overconfidence

• Loss aversion

• Endowment effect

Which bias involves favoring information that confirms one's preexisting beliefs or hypotheses?

• Overconfidence

• Confirmation bias

• FOMO

• Sunk cost fallacy

What is the term for the bias where people have excessive confidence in their own answers or abilities?

• Loss aversion

• Endowment effect

• Overconfidence

• Herd mentality

Which of the following best describes the difference between gross pay and net pay?

• Gross pay is the amount earned before deductions like taxes and insurance, while net pay is the amount left after deductions.

• Gross pay is the final paycheck amount you receive after all deductions, while net pay is the amount earned before any deductions.

• Gross pay includes only salary, while net pay includes all bonuses and overtime pay.

• Gross pay and net pay are the same; both represent the amount of money you take home after deductions.

Which of the following would be considered a tax deduction?

• educational expenses

• donations to charitable places

• children or parent you are caregiver for

• all of these would be considered a possible tax deduction

Why would a person want to include tax deductions when filing their taxes each year?

• To increase the total amount of taxes they owe to the government.

• To reduce their taxable income, which can lower the amount of taxes they have to pay.

• To ensure they receive a larger refund from the government.

• To make sure they pay the maximum amount of taxes required by law.