Question

Which of the following is true about mental accounting? Multiple Choice In mental accounting, people frame assets as belonging to current wealth, current income, or future income. Mental accounting theory suggests that credit cards decouple the purchase from the payment by separating and delaying the payment. One consequence of mental accounting is that small windfalls (e.g. a $50 lottery win) are generally treated as 'current income' that is likely to be spent, whereas large windfalls (e.g. a $5,000 bonus at work) are considered 'wealth All of the above statements are true.

Answer 1

Correct Answer:

D

All of the given statements are true regarding the mental accounting and it is the important part of behavioral economic principles.