Determine whether each of the following topics would more likely to be studied in microeconomics or...

Determine whether each of the following topics would more likely to be studied in microeconomics or macroeconomics.

	Microeconomics	Macroeconomics
How a change in interest rates by the Federal Reserve impacts unemployment
The government's decision on how much to spend on public projects
The effect of government regulation on a business firm’s costs and prices

Solutions

Expert Solution

Topic 1 - Macroeconomics
Change in interest rate is the part of monetary policy that affects investment & then employment. Therefore, it should be studied in macroeconomics.

Topic 2 - Macroeconomics
Government spending is the part of fiscal policy that affects aggregate demands. Hence, it should be studied in macroeconomics.

Topic 3 - Microeconomics
Firm’s cost structure and related changes are firm specific issues. So, it should be studied in microeconomics.

Rahul Sunny answered 1 year ago

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