For a Macroeconomist, the Case for Aggregation Is Based on Two

question 134

Multiple Choice

For a macroeconomist, the case for aggregation is based on two principles-(1) the composition of demand and supply may not matter for some purposes and (2)

• A)during fluctuations markets normally move together.
• B)individual markets allocate resources efficiently.
• C)inflation, unemployment, and growth never go together.
• D)individual markets distribute income efficiently.

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Definitions:

Scale

The size or level of activity of a company or operation, or the capacity to adjust the size or level of activity.

Increasing Returns

A condition in economics when an increase in the scale of production leads to a greater proportional increase in output.

Isoquants

Curves that represent combinations of inputs that produce the same level of output, used in production theory.

Output

Output refers to the quantity of goods or services produced by a firm, industry, or economy within a certain period.