The problem of scarcity means that people face trade-offs. Which of the following trade-offs are the concern of microeconomics?
A. Trade-offs faced by firms in what goods to produce
B. Trade-offs faced by consumers in the purchase of goods
C. Trade-offs faced by workers between work and leisure
D. all of the above
D. all of the above
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Explain how an increase in government expenditure designed to increase aggregate demand can increase potential GDP and aggregate supply
What will be an ideal response?
Suppose that in Mysore, the reserve—deposit ratio is
res = 0.5 - 2 i, where i is the nominal interest rate. The currency—deposit ratio is 0.2 and the monetary base equals 100. The real quantity of money demanded is given by the money demand function L(Y, i) = 0.5Y - 10i, where Y is real output. Currently, the real interest rate is 5% and the economy expects an inflation rate of 5%. The money multiplier equals A) 2.00. B) 2.40. C) 3.00. D) 4.00.