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Fiscal physics

From Greg Mankiw‘s blog:

From a freshman physics quiz given at Princeton a few days ago:

Problem 1. A famous thought experiment in economics involves dealing with a financial crisis by dropping money from a helicopter.

Ben Bernanke, Federal Reserve Chairman and former Princeton Economics Professor, decides to try this out over his old hometown. With his helicopter flying 1.0×10^1 m above the center of Fine Tower and in the direction of Nassau Hall, Ben gently releases a briefcase containing $1 million. Using the information that (i) Fine Tower is 6.0 × 10^1 m high, (ii) Nassau Hall is 1.5 × 10^1 m high and (iii) the centers of the two buildings are 3.0 × 10^2 m apart, and ignoring air resistance as you normally would:

a. [2 pts] How fast should Ben’s helicopter fly so that the briefcase lands in the center of the roof of Nassau Hall?

b. [1 pt] How long is the briefcase in the air?

c. [1 pt] How fast is the briefcase moving when it hits the roof of Nassau Hall?

d. [1 pt] How much faster would the financial relief have reached Nassau Hall if the briefcase had contained $2 million instead?

Thanks to Princeton Professor Shivaji Sondhi for sending this along.

Greg is an economics professor at Harvard.

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One Response to “Fiscal physics”

  1. From 2003 to 2005, Mankiw was the chairman of President Bush’s Council of Economic Advisors. Funny how he does not list that in his profile on his blog.

    He may well be the source of McCain’s lies in the debate about how high corporate taxes are:
    http://krugman.blogs.nytimes.com/2008/08/24/the-tax-foundation-is-not-a-reliable-source/

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