Tutor profile: Rachel E.
How can we get our working memory to work for ourself?
Working memory is that part of your memory system that allows you to keep information actively in “consciousness,” either because you are learning something for the first time, or are trying to recall something you learned in the past. Theoretically, you could keep information in working memory indefinitely if you thought about it and nothing else, but obviously this would not be a very feasible task. The trick is for you to keep information for as long as you need it or be able to haul it into working memory when you need it. Psychology has three simple tricks to help your working memory: 1. Chunking- by organizing large amounts of information into a smaller number of units (the “magical number of 7 plus or minus 2”), you will be able to store the information much more efficiently but then you have to use step #2; 2. Encoding so you can retrieve- you have to be able to pull up the organizational framework you created at the time of encoding if you’re going to be able to use it later, so you need to follow the adage “If you don’t encode, you can’t retrieve,”; 3. Using “deep” processing- According to levels of processing theory, the more meaning you put into what you’re trying to remember, the better your chances of remembering it. Even putting a list of words you need to remember into a sentence, rather than just memorizing them through rote, will give you that deeper processing edge. At the same time, though, we know from eyewitness memory research, people’s memory is highly unreliable. We are likely to forget small details, or change the small details of experiences to fit with what we had expected to have happen. The classic eyewitness memory research asked participants to estimate the speed of two cars involved in an accident. If they were asked how fast the cars were going when they “smashed” into each other, participants estimated the speed as higher than if asked how fast they were going when they “contacted” each other. Similarly, people can be misled into thinking that an item was on a word list when it in fact was not. If you read a list of words that all relate to the category “sweet” (but don’t actually include “sweet”), people will think that the word “sweet” was on the list. Relying on your own, or other people’s, eyewitness memory is a risky proposition. If you need to remember something that’s happening in front of you, either write it down or snap a picture with your smartphone!
Your car needs to be repaired. You have already paid $500 to have the transmission fixed, but it still doesn't work properly. You can sell your car " as is" for $2,000. If your car were fixed, you could sell it for $2,500. your car can be fixed with a guarantee for another $300. Should you repair your car? Why?
Yes, because the marginal benefit of fixing the car is $ 2,500- $2,000 = $500.0, and the marginal cost is $300.00. The original repair payment is not relevant.
Comment on whether an increase in the rate of increase would reduce investment
>An increase in the rate of interest will increase the cost of borrowing to firms. >A higher interest rate increases the opportunity cost of investment. >A higher interest rate may encourage firms to place profits in financial institutions rather than invest/increase reward to firms from saving. >Consumer expenditure may fall with a higher interest rate which may reduce firms' profits. >Lower profits may reduce firms' ability and willingness to invest. >Investment involves spending on capital goods. >If firms expect the yield to exceed the rate of interest they will still invest/firms may be optimistic about the future. >Firms may not expect the rise in the rate of interest to last. >Banks may not pass on the rate increase to their customers. >Other factors may be favourable to investment, eg low corporation tax. >In real terms the rate of interest may have fallen. >Depends on the initial rate of interest. >Depends on the size of the increase.
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