Suppose you had to find the effect of seatbelt rules on road accident fatalities. Would you choose to run a randomized experiment or would it make sense to use natural experiments here? Explain
What will be an ideal response?
It would be difficult (and, in many people's view, unethical) to conduct a randomized experiment. Instead, the study should use a natural experiment. You can study data on the causes of road accident fatalities in cities where seatbelt rules were not enforced, or in cities that have recently adopted new, more stringent seat belt laws. Controlling for other factors like an increase in the number of cars, etc., you can then look at similar data when seatbelt rules have been implemented.
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According to the bank reserve equation, the largest factor supplying reserves to the banking system is
A) Federal Reserve purchases of government securities. B) Treasury currency outstanding. C) float. D) currency in circulation.
If the reserve ratio is 15 percent, and banks do not hold excess reserves, and people hold only deposits and no currency, then when the Fed sells $25.5 million worth of bonds to the public, bank reserves
a. increase by $25.5 million and the money supply eventually increases by $382.5 million. b. increase by $25.5 million and the money supply eventually increases by $170 million. c. decrease by $25.5 million and the money supply eventually decreases by $382.5 million. d. decrease by $25.5 million and the money supply eventually decreases by $170 million.
In economics, the term foreign exchange trading means
A) buying and selling foreign goods. B) buying and selling foreign services. C) buying and selling foreign assets (such as, real estate). D) buying and selling foreign currencies.