Answer:
1. B
2. B
3. A
Explanation:
1. The effect of a large government budget deficit on the economy's price level: is Macroeconomics.
2. The effect of an increase in the money supply on the rate of inflation: is Macroeconomics.
3. The effect of government regulation on a monopolist's production decisions: is Microeconomics.
Generally, Economics can be classified into two (2) categories, namely;
1. Macroeconomics can be defined as the study of behaviors, performance and factors that affect the entire economy. Hence, it focuses on aggregate phenomena such as price level, economic growth, Gross Domestic Product (GDP), inflation, unemployment and national income levels with respect to the central bank, demand or supply shocks, government policies, aggregate spending and savings.
2. Microeconomics can be defined as the study of the effect of price and quantity levels through interactions between individual buyers and sellers in various markets.
Hence, it is focuses on analyzing or evaluating the decisions of consumers (buyers) and those of firms (sellers) such as methods of production, pricing; and the manner in which government policies affect those decisions.
