The term "shock":
A.
Always refers to an unexpectedly bad event
B.
Always refers to an increase in inflation
C.
Does not tell us whether what has happened is unexpectedly bad or unexpectedly good
D.
Always refers to a decrease in real GDP and an increase in unemployment
C.
Does not tell us whether what has happened is unexpectedly bad or unexpectedly good
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Suppose that two clothing manufacturers, Frederick's Fashions and Stephan's Styles, announce that they plan to merge. The Herfindahl-Hirschman index is currently 1,500. After the merger, the HHI will rise to 1,560. This market is
A) highly concentrated and so the government will definitely challenge the merger. B) moderately concentrated and because the merger increases the HHI by more than 50 points, the government will definitely challenge the merger. C) moderately concentrated, but because the merger increases the HHI by less than 100 points, the government will probably not challenge the merger. D) competitive and so the government will not challenge the merger.
If a change passes the cost-benefit test, then
A) it is a Pareto improvement. B) it may be a Pareto improvement. C) it is not a Pareto improvement. D) total surplus is maximized.