Economics (Per. Fin.): Rational Decision Making & Retirement

What is the process of evaluating marginal benefits (MB or gains) of a decision against marginal costs (MC or costs) of a decision, based on the assumption that the selected decision is one in which MB > MC?

• Irrational Choices

• Thinking at the Margin

• Rational Decision Making

• Investing

What is the formula for a rational decision?

• MB = OC

• MB > MC

• MB < MC

• OC = MC

What is an incentive?

• ruthless, cold-hearted, & unfeeling behavior

• a reward or punishment

• lack of sympathy

• inhumane & soulless treatment

When should you start planning for your retirement?

• when you turn 21

• as soon as possible & the younger, the better

• when you get married

The government's retirement plan is known as _____________?

• IRA

• Social Security

• 401k

• the government doesn't have a retirement plan

How much of your preretirement income will you be paid under Social Security (if it still exists)?

• 60%

• 40%

• 80%

• 100%

What is 40% of $100,000 per year in earnings?

• $400,000

• $10,000

• $4,000

• $40,000

Average retirement last _______ years

• 18 years

• 20 years

• 10 years

• 30 years

What is a 401k Plans?

• government retirement plan which is tax deferred

• individual retirement plan to which you & your employer contribute

• teacher retirement plan & defined contribution plan

• tax deferred savings plan & defined contribution plan

True/False: In a 401k, only the employer contributes to the plan for the employee.

• True

• False