A) A recent news report stated that the unemployment rate in the country Lithasia had increased from 10.2% to 18.2% from 2003 to 2013 and that the government has adopted strict fiscal measures to expand employment
Would this report be considered microeconomic or macroeconomic analysis?
b) Students in a class are discussing how a monopolist should determine his profit-maximizing output. Would this discussion be considered microeconomic or macroeconomic analysis?
a) This report will pertain to macroeconomics. Macroeconomics refers to the study of an economy as a whole. Macroeconomics covers economy-wide phenomena, like the growth rate of a country's total economic output, the inflation rate, or the unemployment rate. The report suggests that the total unemployment rate in Lithasia has increased from 10.2% to 18.2% from 2003 to 2013. This estimation is a measure of the economy-wide aggregate unemployment, and is covered under macroeconomics.
b) Microeconomics is the study of how individuals, households, firms, and governments make choices. The students are discussing how a single monopolist should determine its profit-maximizing output. This is a discussion of an individual entity and so is considered microeconomic analysis.
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The figure above shows the market for a good with an external benefit. If the market is competitive and the government takes no action, the equilibrium quantity is ________ units and the equilibrium price is ________ per unit
A) 8; $150 B) 8; $300 C) 10; $250 D) 10; $100 E) 10; $150
Suppose the economy experiences a recessionary gap. Policymakers who believe that government is too big would favor which of the following policies to close the gap?
A) decreases in transfer payment B) decreases in income tax rates C) increases in government purchases D) increases in interest rates