I present a macroeconomic model of monopolistic and monopsonistic firms facing general demand and labor supply functions. Small costs of changing prices support large output fluctuations when nominal demand changes; this holds in both partial equilibrium and macroeconomic contexts, and for both monopolistic and competitive firms. A monopolistic economy may exhibit multiplier effects, but need not allow bigger business cycles than a competitive economy. Small menu costs have large welfare consequences only in monopolistic economies, but the welfare costs of symmetric fluctuations are on average trivial in any case.