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AP: The abbreviation for average product, which is the quantity of total output produced per unit of a variable input, holding all other inputs fixed. It is found by dividing total product by the quantity of the variable input. Average product, abbreviated AP also goes by the alias of average physical product (APP), so don't be confused by the extra term (physical).

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Lesson 19: Money Creation | Unit 3: Modern Banking Page: 12 of 23

Topic: Another Bank <=PAGE BACK | PAGE NEXT=>

  • A purchase is made with a check written on the Amos National Bank.
  • The store deposits the check in Bob's State Bank.
  • Bob's Bank adds $90 worth of liabilities to the store's account.
  • This liability is balanced with reserves transferred from Amos National Bank.
  • Amos National losses $90 of reserves and Bob's Bank gains $90 of reserves.
  • Amos National ends up with $10 of reserves and a $90 loan.
  • Bob's Bank has $90 in reserves. It must keep 10% ($9), giving Bob's Bank $81 of excess reserves.
  • Bob's Bank makes an $81 loan to a customer who wants to buy a CD player.
  • Once again, this process creates $81 worth of money.

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DIAMOND-WATER PARADOX

The apparently conflicting and perplexing observation that water, which is more useful than diamonds, has a lower price than diamonds. This paradox was proposed by economists in the 1800s as a means understanding the role utility plays in the demand price of a good by differentiating between total utility and marginal utility.

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APLS

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Today, you are likely to spend a great deal of time surfing the Internet looking to buy either a T-shirt commemorating next Thursday or a birthday gift for your uncle. Be on the lookout for gnomes hiding in cypress trees.
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This isn't me! What am I?

Al Capone's business card said he was a used furniture dealer.
"Far and away the best prize that life has to offer is the chance to work hard at work worth doing."

-- Theodore Roosevelt, 26th US president

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