In determining the beginning of recessions, the NBER Business Cycle Dating Committee looks for evidence of decline in:

Refer to the above figure. Suppose that the economy was originally at point A, and then it reached point C by means of a fiscal policy action. Which of the following is correct?

A) Point C is both a short-run equilibrium and a long-run equilibrium that could have been attained through an increase in government spending. B) Point C is a short-run equilibrium that could have been attained through a reduction in government spending, but in the long run the economy will end up at point B. C) Point C is a short-run equilibrium that could have been attained through a tax cut, but in the long run the economy will end up at point B. D) Point C is a long-run equilibrium that could have been attained through a tax increase, although reaching this point first required a short-run equilibrium at point B.

How does the exit of firms from a monopolistically competitive market affect the demand curves faced by the existing firms?

What will be an ideal response?