Read the given passage carefully and answer the questions that follow. Certain words are printed in bold to help you locate them while answering some of these.

That Americans don’t save enough money is a truism. But why don’t they? The answer is a complex mix of macroeconomics (incomes have stagnated for many workers over the last few decades), culture (Americans are notoriously conspicuous spenders), and policies (two-thirds of workers are at companies without retirement plans). But another ___________ is the challenge of giving up the gratification of immediate spending for the security of future savings. A new paper finds that two biases prop up many people’s disinclination to save: "present bias" and "exponential-growth bias."

Present bias is a straightforward idea. People claim they’re willing to embrace all manners of self-control—saving money, working out, cleaning their room—provided that they don’t have to do so immediately. Academics use the terms such as “hyperbolic discounting” or “time-inconsistency” to designate this habit. The only distinction between saving next week and saving right now is the passage of time, and yet it makes all the difference in the attitude. Researchers in this study found the same attitudinal difference among their participants. When they asked people if they preferred $100 today, $120 in 12 months, or $144 in 24 months, they found that about half of respondents took less money if they could have it immediately.
The second bias that the researchers consider, exponential growth bias, isn’t a cognitive bias, perhaps, so much as a failure of math. They found that 75 percent of participants in their study didn’t understand compound interest, the principle that even small annual growth over a long period of time yields surprisingly great returns. It’s intuitive to most young people that saving $100 now is better than saving $100 the year before they retire. But most people underrate the benefits of compounding interest. Saving $1 at the age of 20 is twice as valuable in retirement as saving $1 at the age of 40.