If an industry consists of only four firms with equal market shares, then the Herfindahl index

When taxes increase, the interest rate

a. increases, making the change in aggregate demand larger. b. increases, making the change in aggregate demand smaller c. decreases, making the change in aggregate demand larger. d. decreases, making the change in aggregate demand smaller.

Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.

A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower