To determine whether these topics are more closely related to microeconomics or macroeconomics, we can analyze each one individually.
a) The effect of a large government’s budget deficit on the economy’s price level
This topic falls under macroeconomics. Macroeconomics focuses on the behavior and performance of an economy as a whole. It studies aggregate indicators such as national income, overall price levels, and government policies’ broader effects on the economy. A large government budget deficit can influence inflation, interest rates, and overall economic growth, all of which are macroeconomic concerns.
b) The effect of government regulation on a monopolist’s price
In contrast, this topic is categorized under microeconomics. Microeconomics looks at individual markets, the behavior of consumers and firms, and the allocation of resources. When we examine how government regulations impact a monopolist, we are investigating the behavior of a single market structure and how it affects pricing and output decisions. This falls squarely within the realm of microeconomic analysis.
In summary, topic (a) is macroeconomic, while topic (b) is microeconomic.