The principal function of the reserves that banks are required to maintain is to
What will be an ideal response?
constrain their ability to create money.
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Who still has to economize?
A) The senior citizen who receives a 10% discount at the local coffee shop B) The day-after-Christmas shopper who enjoys sales of up to 70% on holiday merchandise C) Bill Gates D) All of the above. E) None of the above.
When the United States exports a good, U.S. consumer surplus ________ and U.S. total surplus ________
A) increases; increases B) increases; decreases C) decreases; increases D) decreases; decreases
Unbiasedness and small variance are desirable properties of estimators
However, you can imagine situations where a trade-off exists between the two: one estimator may be have a small bias but a much smaller variance than another, unbiased estimator. The concept of "mean square error" estimator combines the two concepts. Let be an estimator of ?. Then the mean square error (MSE) is defined as follows: MSE( ) = E( – ?)2. Prove that MSE( ) = bias2 + var( ). (Hint: subtract and add in E( ) in E( – ?)2.) What will be an ideal response?
Elasticity measures
a. whether a price increase causes quantity demanded to increase or decrease b. the strength of an economy's tendency to recover from recession c. the responsiveness of decision makers to changes in prices, income, or other variables d. the profitability of investment in an industry e. the long-run flexibility of prices in the economy