Do you agree with the following statements? Give reasons. 5) Macro-Economics is a partial equilibrium analysis.

Do you agree with the following statements? Give reasons.

5) Macro-Economics is a partial equilibrium analysis.

ANSWER:

The above statement is not correct. Macroeconomics is a general equilibrium analysis. It studies all the economic variables simultaneously and also takes into account the functional relationship of these variables.  This approach assumes “everything depends on everything else”. On the other hand, partial equilibrium is the method of study in microeconomics.

No comments: