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KALDOR-HICKS IMPROVEMENT: Based on the Kaldor-Hicks efficiency criterion, the notion that an action improves efficiency if the willingness to pay of those benefiting exceed the willingness to accept of those harmed. In other words, if those gains exceed those losses, or the benefits exceed the costs, then social welfare is improved and undertaking the action provides a net benefit to society. In other words, the winners can, in principle, compensate the losers for their loss, and still come out ahead. The actual compensation, however, is required. A contrasting condition for attaining efficiency is the Pareto improvement.
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Lesson 18: Banking | Unit 3: Reserve Banking
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Page: 17 of 24
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- The concept of fractional-reserve banking, which implies that deposits are used for loans and that banks must keep reserves to back deposits.
- The three types of reserves:
- Legal reserves, which are vault cash and deposits with the Federal Reserve.
- Required reserves, which are the vault cash and deposits with the Federal Reserve that regulators say a bank must keep for daily transactions.
- Excess reserves, which are any legal reserves over and above required reserves.
- That banking sort of evolved from the goldsmithing profession.
- How Fred stumbled upon the depository function of modern banks.
- How Fred discovered the lending function of modern banks.
- How Fred discovered modern fractional-reserve banking.
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AVERAGE FACTOR COST, PERFECT COMPETITION Total factor cost per unit of factor input employed by a perfectly competitive firm in the production of output, found by dividing total factor cost by the quantity of factor input. Average factor cost, abbreviated AFC, is generally equal to the factor price. However, using the longer term average factor cost makes it easier to see the connection to related terms, including total factor cost and marginal factor cost.
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GREEN LOGIGUIN
[What's This?]
Today, you are likely to spend a great deal of time flipping through mail order catalogs hoping to buy either a flower arrangement with daisies and carnations for your uncle or a coffee cup commemorating next Thursday. Be on the lookout for telephone calls from long-lost relatives.
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Ragnar Frisch and Jan Tinbergen were the 1st Nobel Prize winners in Economics in 1969.
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"Courage is the ladder on which all the other virtues mount." -- Claire Boothe Luce, diplomat, writer
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Y
Income, Nominal Gross National Product
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