The concept of 'Mental Accounting' in behavioural economics refers to:
A. Only the formal accounting systems of firms
B. Only the national accounts
C. The perfect fungibility of all money
D. The tendency of individuals to categorise and treat money differently depending on its source or intended use
Answer: Option D
Solution (By JKSSB Mock Tests)
Mental accounting describes the cognitive processes whereby individuals separate their wealth into non-fungible mental accounts, leading to behaviour that violates the principle of fungibility assumed in standard theory.
Explanation:
Issuing currency notes is the function of the central bank. Stock exchanges provide liquidity, facilitate price discovery and help mobilise savings for productive investment.
Explanation:
Public enterprises are owned wholly or substantially by the government and include departmental undertakings, public corporations and government companies. A purely private limited company is not a public enterprise.
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