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September 29, 2008

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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