College

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

1. The effect of federal government spending on the national unemployment rate
- Macroeconomics

2. The effect of a cigarette tax on the quantity of cigarettes sold
- Microeconomics

3. The effect of an increase in the money supply on the rate of inflation
- Macroeconomics

Answer :

Final answer:

The effect of federal government spending on the national unemployment rate and the effect of an increase in the money supply on the rate of inflation are topics in macroeconomics, while the effect of a cigarette tax on the quantity of cigarettes sold is a topic in microeconomics.

Explanation:

In the study of economics, the topics you mentioned would likely be studied in both microeconomics and macroeconomics, but with a different focus. The effect of federal government spending on the national unemployment rate and the effect of an increase in the money supply on the rate of inflation are topics that fall under macroeconomics. These topics deal with the overall economy and how government policies impact it as a whole.

On the other hand, the effect of a cigarette tax on the quantity of cigarettes sold would be studied in microeconomics. This topic focuses on individual markets and how decisions by consumers and producers affect the specific market for cigarettes.

Learn more about Microeconomics and Macroeconomics here:

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The correct answers are the following:

Microeconomics

  • The effect of a cigarette tax on the quantity of cigarettes sold

Macroeconomics

  • The effect of federal government spending on the national unemployment rate
  • The effect of an increase in the money supply on the rate of inflation

Microeconomics is defined as the study of the individual decisions reached by economic agents (households/individuals, firms and public sector entities) in the markets of products services and factors of production.

Macroeconomics is the study of the economy as a whole, using aggregate indicators that are the result of accummulating thousands or millions of the individual decisions studied in the micro approach, and which measure the behaviour of the whole economy of a certain country, region, or even the whole world (depending on the level of aggregation used!)