Microeconomics differs from macroeconomics in that:
a. microeconomics studies individual decision making while macroeconomics examines aggregate decision making.
b. microeconomics studies aggregate decision making while macroeconomics examines individual decision making.
c. microeconomics utilizes positive economic analysis while macroeconomics utilizes normative economic analysis.
d. microeconomics is concerned with consumer behavior while macroeconomics is concerned with firm behavior.
Question 2Other things equal, investment spending will increase when:
a. interest rates are lowered.
b. firms operate under full capacity.
c. corporate taxes are increased.
d. capacity utilization is low.
e. the cost of capital rises.
Question 3Macroeconomics primarily examines:
a. the behavior of individual households and firms.
b. how prices are determined within individual markets.
c. the output levels that maximize the profits of business firms.
d. broad issues such as national output, employment and inflation.
Question 4Lower interest rates on business loans usually result in a(n):
a. decrease in aggregate demand.
b. decrease in aggregate supply.
c. decrease in investment spending.
d. increase in government spending.
e. increase in aggregate expenditures.
Question 5Microeconomics primarily models:
a. the overall economy.
b. the behavior of firms but not households.
c. the behavior of households but not firms.
d. the behavior of both firms and households and how they interact in the marketplace.
Question 6Which of the following is true of the disposable income of the households?
a. An increase in the average price level lowers the disposable income of the households.
b. Disposable income refers to the purchasing power of nominal income.
c. An increase in direct taxes will lower the disposable income of the households.
d. A decrease in government transfers will increase the disposable income of the households.
e. Disposable income refers to the net private transfers of the household sector.
Question 7Microeconomics:
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.
Question 8Which of the following economic changes will decrease household expenditures?
a. Population growth
b. Lower income taxes
c. An appreciation of the domestic currency
d. Increased consumer confidence
e. A higher domestic price level
Question 9The determination of prices in the market for automobiles is primarily a concern of:
a. positive economics.
b. normative economics.
c. microeconomics.
d. macroeconomics.
Question 10Which of the following is not a component of the aggregate expenditures of a country?
a. Investment
b. Government spending
c. Net exports
d. Consumption
e. Transfer payments
Question 11Measuring the rate of inflation is primarily a concern of:
a. positive economics.
b. normative economics.
c. microeconomics.
d. macroeconomics.
Question 12_____ represents the relation between total expenditures, or total spending, and the price level.
a. Gross National Product
b. Inflation
c. Real Gross Domestic Product
d. Aggregate supply
e. Aggregate demand
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