Discuss some of the fundamental differences between microeconomics and macroeconomics
Microeconomics studies the decisions of individuals and firms, the ways in which these decisions interact, and their influence on the allocation of a nation's resources and the distribution of income. Macroeconomics looks at how entire economies behave and studies the pressing social problems of economic growth, inflation, and unemployment. In short, whereas microeconomics focuses on the decisions of individual units, no matter how large, macroeconomics concentrates on the behavior of entire economies, no matter how small. Although they focus on different subjects, microeconomics and macroeconomics rely on virtually identical tools.
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
Wealth is the same as:
A. savings. B. capital gains. C. assets. D. net worth.
Which of the following is NOT true when there are large economies of scale such that one firm can produce at a lower average cost than can be achieved by multiple firms?
A) This situation produces a natural monopoly. B) Proportional increases in output yield proportionally small increases in total cost. C) The long-run average cost curve of the firm will increase at a low level of output. D) There will only be one firm in this industry.
Because human wants are insatiable and unlimited while available resources are limited, people are said to face the problem of
A) microeconomics. B) social interest versus self-interest. C) macroeconomics. D) why to produce. E) scarcity.