The local banking industry currently has a Herfindahl-Hirschman index (HHI) value of 1945 and two of the competing banks have considered merging. Because the merger would raise the HHI by 155 points, the Federal Trade Commission would likely
A) challenge the merger.
B) not challenge the merger.
C) allow the merger as long as the HHI did not increase by more than 155 points as promised.
D) allow the merger under the condition that the HHI remain at the premerger level of 1875.
A
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The above figure shows Bob's utility function. He currently has $100 of wealth, but there is a 50% chance that it could all be stolen. Bob will buy theft insurance to cover the full $100
A) as long as it does not cost more than $25. B) as long as it does not cost more than $50. C) as long as it does not cost more than $70. D) at any price.
Assume that the expectation of a recession next year causes business investments and household consumption to fall, as well as the financing to support it. If the nation has low mobility international capital markets and a fixed exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls and real GDP rises. b. The real risk-free interest rate rises and real GDP remains the same. c. The real risk-free interest rate and real GDP remain the same. d. The real risk-free interest rate falls and real GDP falls. e. There is not enough information to determine what happens to these two macroeconomic variables.
Economic models are NOT used to
A) explain economic phenomena. B) predict economic phenomena. C) understand economic phenomena. D) describe all economic phenomena in finest detail.
Policies focused on putting people to work by reducing the costs to their employers would be considered
A. supply-side policies. B. demand-side and supply-side policies. C. demand-side policies. D. monetary policies.