Identify whether each of the following topics would be primarily a concern of microeconomics or macroeconomics:
a. The decision by a household to eat in rather than go out for dinner this evening.
b. The unemployment rate increased from 4.5% to 4.8%.
c. A decision by the Federal Reserve Bank to decrease the supply of money in the economy.
d. The general level of prices increased by 5% last year.
e. The price of bicycles increased by $30 last year.
f. The family restaurant chain closed down after losing much of its customer base to fast-food competitors over the last few years.
Microeconomic topics: a, e, and f
Macroeconomic topics: b, c, and d
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A vertical long-run aggregate-supply curve represents
a) both the classical dichotomy and monetary neutrality. b) the classical dichotomy but not monetary neutrality. c) neither the classical dichotomy nor monetary neutrality. d) monetary neutrality but not the classical dichotomy.
Assume the economy is closed and that it is operating at full employment. Which statement is TRUE when the size of the budget deficit decreases?
A) The increased amount of public goods will crowd out privately produced goods. B) A reduction in the growth of productivity, and a reduction in society's standard of living will occur. C) The interest rate will decrease, leading to an increase in investment and capital formation. D) Demand and supply of credit will increase.