If two firms that split a market equally decide to merge and form a monopoly, by how much does the Herfindahl index rise as a result of this merger?
a. 50
b. 250
c. 2500
d. 5000
d
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Total expenditures can be written as C + I + G + (X ? IM).
Answer the following statement true (T) or false (F)
Refer to the given diagram. Assume that nominal wages initially are set on the basis of the price level P 2 and that the economy initially is operating at its full-employment level of output Q f . In the short run, an increase in the price level from P 2 to P 3 will:
A. change aggregate supply from AS 2 to AS 3 .
B. increase real output from Q 1 to Q 2 .
C. change aggregate supply from AS 2 to AS 1 .
D. increase real output from Q f to Q 2 .
When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and reserve-related (central bank) transactions remain the same. b. The GDP Price Index and reserve-related (central bank) transactions remain the same. c. The GDP Price Index falls, and reserve-related (central bank) transactions become more negative (or less positive). d. There is not enough information to determine what happens to these two macroeconomic variables. e. The GDP Price Index rises, and reserve-related (central bank) transactions remain the same.