AACSB: Analytical Thinking
Topic: Microeconomics and Macroeconomics
31) Why an economy contracts during slowdowns and the analysis of appropriate policies is studied
under ________.
A) macroeconomics
B) microeconomics
C) agricultural economics
D) international economics
Answer: A
Difficulty: Easy
AACSB: Application of Knowledge
Topic: Microeconomics and Macroeconomics
32) The impact of carbon taxes on the energy usage of individual households and firms is studied under
________.
A) microeconomics
B) macroeconomics
C) normative economics
D) positive economics
Answer: A
Difficulty: Medium
AACSB: Application of Knowledge
Topic: Microeconomics and Macroeconomics
33) The relationship between the unemployment rate and inflation is studied under ________.
A) microeconomics
B) macroeconomics
C) behavioral economics
D) international economics
Answer: B
Difficulty: Medium
AACSB: Application of Knowledge
Topic: Microeconomics and Macroeconomics
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34) The relationship between a firmʹs advertising expenditure and its profit is studied under ________.
A) microeconomics
B) macroeconomics
C) behavioral economics
D) international economics
Answer: A
Difficulty: Medium
AACSB: Application of Knowledge
Topic: Microeconomics and Macroeconomics
35) How does microeconomics differ from macroeconomics?
Answer: Microeconomics is the study of how individuals, households, firms, and governments make
choices, and how those choices affect prices, the allocation of resources, and the well‐being of other agents.
In contrast, macroeconomics is the study of the economy as a whole. The scope of macroeconomics
extends to the study of economy‐wide phenomena, like the growth rate of an economy, the national
unemployment rate, or the inflation rate.
Difficulty: Easy
AACSB: Analytical Thinking
Topic: Microeconomics and Macroeconomics
36) A recent news report stated that the unemployment rate in the country of Lithasia had increased from
10.2 percent to 18.2 percent between 2003 and 2013 and that the government has adopted strict fiscal
measures to expand employment. Would this report be considered microeconomic or macroeconomic
analysis?
Answer: This report pertains to macroeconomics. Macroeconomics refers to the study of an economy as a
whole. Macroeconomics covers economy‐wide phenomena, like the growth rate of a countryʹs total
economic output, the inflation rate, or the unemployment rate.
Difficulty: Medium
AACSB: Application of Knowledge
Topic: Microeconomics and Macroeconomics
37) Students in a class are discussing how a firm that does not face any competition in a market should
decide how many units of output to supply in the market. Would this discussion be considered
microeconomic or macroeconomic analysis?
Answer: Microeconomics is the study of how individuals, households, firms, and governments make