The distinction between microeconomics and macroeconomics is
A. determined by economists in a clear and concise manner.
B. narrowly drawn, and microeconomic analysis often relies on macroeconomic tools.
C. often blurred because aggregates are made up of individuals and firms.
D. clearly drawn, and there is no overlap between them.
Answer: C
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In the figure above, if the marginal propensity to import increased, the aggregate expenditure lines would ________ and the multiplier would ________ in value
A) become less steep; fall B) become less steep; rise C) become steeper; rise D) not change; fall E) not change; rise
Which of the following provides the best explanation for diseconomies of scale?
a. the firm is too small to take advantage of specialization. b. large management structures may be bureaucratic and inefficient. c. if there are too many employees, the work place becomes crowded and people become less productive. d. average fixed costs are rising.
According to the classical view,
a. velocity is constant, which means changes in price will cause changes in price or quantity. b. quantity is constant, which means changes in the money supply could cause either changes in velocity or changes in prices. c. velocity and price are constant so that changes in the money supply causes changes in quantity. d. velocity and quantity are constant so that changes in the money supply cause changes in prices. e. velocity is constant while quantity is variable so that changes in the money supply change both price and quantity.
If increases in government spending lead to inflation, the value of the multiplier is reduced
a. True b. False Indicate whether the statement is true or false