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Chapter 1: Q2 (page 17)

Indicate whether each of the following statements applies to microeconomics or macroeconomics.

The unemployment rate in the United States was 3.7 percent in December 2018.

a. A U.S. software firm laid off 15 workers last month and transferred the work to India.

b. An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise.

c. U.S. output, adjusted for inflation, increased by 2.3 percent in 2017.

d. Last week, Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point.

e. The consumer price index rose by 2.2 percent from November 2017 to November 2018.

Short Answer

Expert verified
  1. Microeconomics
  2. Microeconomics
  3. Macroeconomics
  4. Microeconomics
  5. Macroeconomics

Step by step solution

01

Difference between microeconomics and macroeconomics

Microeconomics deals with the microscopic aspect of economic behavior. It studies the economic decisions made by an individual economic entity, such as a particular firm, industry, or household.

On the other hand, macroeconomics studies the economic behavior of economic agents as an aggregate. It includes the study of national income, total employment/unemployment, aggregate supply, wage level, the economy's price level, interest rates, and many more. In short, it studies the aggregate nature of microeconomics.

02

Explanation for part (a)

It talks about the economic decision of a particular firm. The statement tells about the economic decision made by a specific firm for a certain group of workers. Therefore, it will come under microeconomics.

03

Explanation for part (b)

The statement shows the change in the price of a particular industry because of bad weather. The price of the orange industry has increased, and the reason behind it is also specific. It shows microeconomic behavior. Hence, it will come under microeconomics.

04

Explanation for part (c)

The statement shows a change in the output after adjusting the inflation rate. The economic decision will impact the whole of the economy. This comes under aggregate behavior. Thus, it is related to macroeconomics.

05

Explanation for part (d)

The statement talks about the economic decision of a particular bank on interest rates. Thus, it will also come under microeconomics. It reveals the economic decision by a single entity on a particular rate of interest. The behavior will come under microeconomics.

06

Explanation for part (e)

The statement explains the change in the consumer price index from the year 2017 to 2019. It depicts the economic behavior of a price index, which will cause an impact on the whole economy. It is shown by the aggregate nature of the statement. Thus, it will come under macroeconomics.

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Most popular questions from this chapter

What are economic resources? What categories do economists use to classify them? Why are resources also called factors of production? Why are they called inputs? t are economic resources? What categories do economists use to classify them? Why are resources also called factors of production? Why are they called inputs?

Why is money not considered to be a capital resource in economics? Why is entrepreneurial ability considered a category of the economic resource, distinct from labor? What roles do entrepreneurs play in the economy?

Make (a) a positive economic statement of your choice and then (b) a normative economic statement relating to your first statement.

For each of the following situations involving marginal cost (MC) and marginal benefit (MB), indicate whether it would be best to produce more, fewer, or the current number of units.

a. 3,000 units at which MC = \(10 and MB = \)13.

b. 11 units at which MC = \(4 and MB = \)3.

c. 43,277 units at which MC = \(99 and MB = \)99.

d. 82 units at which MC < MB.

e. 5 units at which MB < MC.

Referring to the table in problem 5, suppose improvement occurs in the technology of producing forklifts but not in the technology of producing automobiles. Draw the new production possibilities curve. Now, assume that a technological advance occurs in producing automobiles but not in producing forklifts. Draw the new production possibilities curve. Now, draw a production possibilities curve that reflects technological improvement in the production of both goods.

Production Alternatives

Type of Production

A

B

C

D

E

Automobiles

0

2

4

6

8

Forklifts

30

27

21

12

0
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