Microeconomics:
a. provides an overall view of the economy and how it functions
b. explores the behavior of individual consumers and firms when confronted with scarcity.
c. examines the aggregate behavior of consumers and firms when confronted with scarcity.
d. is a "positive" science, whereas macroeconomics is a "normative" science.
b
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To offset the effect of households and firms deciding to hold less of their money in checking account deposits and more in currency, the Federal Reserve could
A) raise the required reserve ratio. B) buy Treasury securities. C) raise the discount rate. D) lower bank taxes.
If the expected return on bonds increases, all else equal, the demand for bonds increases, the price of bonds ________, and the interest rate ________
A) increases; decreases B) increases; increases C) decreases; decreases D) decreases; increases
If the interest rate rises, a profit-maximizing firm will tend to
a. invest in more projects (such as new plants) with payoffs in the future. b. invest in fewer projects with payoffs in the future. c. increase both current output and future output. d. reduce both current output and future output.
From the early 1980's through the 1990's, the nominal interest rate
a. fell because the Fed got inflation under control. b. fell because the Fed let inflation get out of control. c. rose because the Fed got inflation under control. d. rose because the Fed let inflation get out of control.