If a monopolistically competitive firm lowers its price and, as a result, its total revenue decreases then
A) the output effect of the price change was less than the price effect.
B) the output effect of the price change was greater than the price effect.
C) the firm's demand curve must have decreased.
D) the substitution effect of the price change was greater than the income effect.
Answer: A
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The real-balances, interest-rate, and foreign purchases effects all help explain:
A. why the aggregate demand curve is downsloping. B. why the aggregate supply curve is upsloping. C. shifts in the aggregate demand curve. D. shifts in the aggregate supply curve.
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