ba 3300 notes #4

Question 1

Standard Oil and American Tobacco Company are examples of _______________.

Answer 1

monopolies

Question 2

AT&T, Verizon, T-Mobile ; American, Southwest, Delta, United are examples of ____________.

Answer 2

Oligopolies

Question 3

determines the cost of short-term (interbank) borrowing. Used to stimulate the economy or prevent it from overheating. Aside: yield curve inversion signals “bad” long-term outlook.

Answer 3

Federal Funds Rate

Question 4

outright purchases or sales of securities (quantitative easing). Used to adjust the Federal Reserve’s holdings of long-term (mortgage-backed) securities, mostly since 2008

Answer 4

Permanent OMOs

Question 5

used to address reserve needs that are deemed to be transitory in nature (repos). Supports effective policy implementation and the smooth functioning of short-term U.S. dollar funding markets.

Answer 5

Temporary OMOs

Question 6

Advertising and marketing efforts can create market power even when a product is virtually indistinguishable from the one of a competitor (e.g., Starbucks and beer industry).

Answer 6

Brand loyalties

Question 7

Equals 0 under perfect competition and approaches 1 for large price markups.

Answer 7

Lerner Index = (P − MC)/P

Question 8

Share of the market held by the X largest firms.

Answer 8

Concentration ratios