Assume that in a monopolistically competitive industry, firms are earning economic profit. This situation will
A. attract other firms to enter the industry, causing the existing firms' profits to shrink.
B. cause firms to standardize their product to limit the degree of competition.
C. reduce the excess capacity in the industry as firms expand production.
D. make the industry allocatively efficient as each firm seeks to maintain its profits.
Answer: A
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When the Fisher Effect holds, a one-percentage-point increase in the long-run money growth rate, because it ________ expected inflation, causes ________ in the nominal interest rate in the long run
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