Ockham's razor is the principle that states
A. irrelevant detail should not be included in a model.
B. costs which have been incurred cannot be avoided.
C. we must forgo something when making a decision.
D. supply creates its own demand.
Answer: A
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Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and one million dollars in required reserves
Given this information, we can say First National Bank has ________ million dollars in excess reserves. A) three B) nine C) ten D) eleven
Suppose that you work for the Federal Reserve. Unemployment is starting to climb and one of your colleagues has presented an argument in favor of increasing the money supply to stimulating spending and reduce unemployment. Present a counterargument of why reducing unemployment could be detrimental to the economy.
What will be an ideal response?
If actual income is $300 billion, potential income is $350 billion, the total surplus is $20 billion, and tax revenue increases with income, then the cyclical deficit can be any of the following except:
A. zero. B. $20 billion. C. $1 billion. D. $10 billion.
Your favorite holiday is Halloween and each year you decorate your yard with pumpkins, skeletons, and tombstones, and you install a noise machine which blasts haunting sounds 24 hours a day. It is such a spectacle that hundreds of people drive by your house each day to gawk at the display. The noise and traffic disturb your neighbors who sue you, and you are required to take down your display permanently. This is an example of
A. the free-rider problem. B. an injunction. C. a liability rule. D. the Coase theorem.