Chapter 1: Q 13 (page 16)
Write a sentence contrasting positive and normative economic analysis.
Inflation will lead to falling in aggregate demand is a positive statement whereas the decrease in price levels will cause the aggregate demand to rise.
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Suppose that the U.S. federal government has borrowed \(500 billion to expand its total spending on goods and services across the entire economy in an effort to boost by \)500 billion the aggregate production by the nation's firms. Would we apply microeconomic or macroeconomic analysis to analyze this policy action?
Suppose that the government has raised by $10 a per-carat tax rate it imposes on diamonds in an effort to influence the production of these particular goods by each of the firms that produce them and purchases by individual consumers. Would we apply microeconomic or macroeconomic analysis to analyze this policy action?
Given the function , complete the following schedule and plot the curve.
| y | x |
| -4 | |
| -2 | |
| 0 | |
| 2 | |
| 4 |
In a single sentence, contrast microeconomics and macroeconomics. Next, categorize each of the following issues as either a microeconomic issue, a macroeconomic issue, or not an economic issue.
(a) The national unemployment rate.
(b) The decision of a worker to work overtime or not.
(c) A family’s choice to have a baby.
(d) The rate of growth of the money supply.
(e) The national government’s budget deficit.
(f) A student’s allocation of study time across two subjects.
Why might the rationality assumption explain why even a chicken farmer who has absolutely no humanitarian concern for chickens might seek to maintain very comfortable conditions for the birds?
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