Which of the following can best be characterized as a subject of microeconomics?

• A. The causes of inflation in the entire economy
• B. The measurement of a country's gross domestic product (GDP)
• C. The impact of monetary policy on national unemployment
• D. The pricing strategies of a local coffee shop

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the distinction between microeconomics and macroeconomics. Microeconomics focuses on individual agents such as households, firms, and markets, while macroeconomics deals with the economy as a whole, including aggregate variables like inflation, GDP, and unemployment.
2. Step 2: Analyze each option to determine whether it deals with individual economic units or the overall economy. For example, 'causes of inflation in the entire economy' relates to aggregate price levels, which is a macroeconomic topic.
3. Step 3: Recognize that 'measurement of a country's gross domestic product (GDP)' involves national economic output, which is also a macroeconomic subject.
4. Step 4: Note that 'the impact of monetary policy on national unemployment' concerns government policy effects on the overall labor market, again a macroeconomic issue.
5. Step 5: Identify that 'the pricing strategies of a local coffee shop' involves decisions made by a single firm in a specific market, which is a classic example of a microeconomic topic.