Please read and answer the following question Which of the following questions d
ID: 1142702 • Letter: P
Question
Please read and answer the following question
Which of the following questions do you think would be studied by a macroeconomist or a microeconomist? (one of these two).
A. What should the European Central Bank do about increasing prices in Europe?
B. What happens to the price of ice cream in the summer?
C. Should you take out a student loan to pay for college?
D. What happens when the US government cuts taxes and pays for these tax cuts by borrowing money?
E. What would happen to the prices of computers if Apple and Microsoft merged into a single firm?
Explanation / Answer
Microeconomics studies economy of an individual or a firm. However, Study of an economy as a whole is covered under macroeconomics.
A. What should the European Central Bank(ECB) do about increasing prices in Europe?
Macroeconomics. Central bank policies are covered under macroeconomics as it affects entire economy of a country/countries.
B. What happens to the price of ice cream in the summer?
Microeconomics. Study of demand-supply of an individual firm is a part of microeconomics.
C. Should you take out a student loan to pay for college?
Microeconomics. Study of individual choice is a part of microeconomics. However, interest rates determined by banks may influence this decision.
D. What happens when the US government cuts taxes and pays for these tax cuts by borrowing money?
Macroeconomics. Tax policies are a part of fiscal policy and tax policies are covered under macroeconomics as it affects entire economy of a country/countries.
E. What would happen to the prices of computers if Apple and Microsoft merged into a single firm?
Microeconomics. Study of demand-supply of an individual firm and also mergers and aquisitions is a part of market structures in microeconomics.
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