When firms exit a monopolistically competitive industry:
a. the average total cost curves of remaining firms will shift upward
b. the demand curves of remaining firms are increased at each level of output.
c. the remaining firms will decrease production.
d. the average revenue received by remaining firms will decrease at each level of output.
b
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If the aggregate supply curve is flat,
a. contractionary fiscal or monetary policy will reduce inflation with little effect on real GDP. b. contractionary fiscal or monetary policy will cause significantly less inflation. c. expansionary fiscal or monetary policy will add significantly to real GDP will little effect on inflation. d. expansionary fiscal or monetary policy will add little to real GDP but will increase inflation significantly.
What evidence does the Volcker disinflation provide concerning the importance of inflation expectations to the costs of disinflation?