Macroeconomics is mainly concerned with two topics. What are these two topics and how are they related to each other?
What will be an ideal response?
Macroeconomics is concerned with long-run economic growth and short-run changes in the levels of employment and output. These short-run fluctuations are known as business cycles. Long-run economic growth and business cycles are related to each other because they happen simultaneously. We tend to observe, however, positive growth trends in the long run, but a great deal of variability in the short run.
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Spending on the war in Afghanistan is essentially categorized as government purchases. How do decreases in spending on the war in Afghanistan affect the aggregate demand curve?
A) They will shift the aggregate demand curve to the right. B) They will shift the aggregate demand curve to the left. C) They will move the economy up along a stationary aggregate demand curve. D) They will move the economy down along a stationary aggregate demand curve.
A market in which a single firm can produce, at a lower cost than multiple firms, the entire quantity of output demanded is called:
A. diseconomies of scale. B. government intervention. C. a natural monopoly. D. price gouging.
Refer to Figure 5.6. Which diagram shows an increase in income with bread being inferior and soup being normal?
A. A
B. B
C. C
D. D
The financing of investment spending is often made possible by
A. consumer spending. B. money supply creation. C. borrowing. D. tax reductions.