The Correct Answer is option 2 : The output of the economy is the sum of total output of individual producers.
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"The individual demand in the economy is the sum total of the aggregate demand of the consumers." This statement is incorrect. In economics, aggregate demand (AD) represents the total demand for goods and services in an economy at a given price level and in a given period. It includes the demand of all consumers, businesses, government, and foreign buyers. While microeconomics studies individual demand, it doesn't imply that individual demand is equal to aggregate demand.
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"The output of the economy is the sum of total output of individual producers." This statement is true. In macroeconomics, the total output of an economy, often measured by Gross Domestic Product (GDP), is indeed the sum of the total output of individual producers. Each producer's output contributes to the overall output of the economy.
- There is no relation between micro and macro economics as they are 2 different branches of economics. This is incorrect.
This statement is incorrect. Microeconomics and macroeconomics are indeed different branches of economics, but they are closely related and interconnected. Microeconomics deals with the behavior and decisions of individual economic units such as households, firms, and markets. It focuses on topics such as individual consumer behavior, production decisions by firms, and market equilibrium. Macroeconomics, on the other hand, studies the economy as a whole. It examines aggregate economic phenomena such as total output (GDP), unemployment, inflation, and the overall performance of the economy.
While microeconomics and macroeconomics focus on different levels of analysis, they are interconnected. For example, individual consumer behavior influences aggregate demand, and firm production decisions affect overall output and employment levels in the economy. Therefore, there is a strong relationship between microeconomics and macroeconomics.
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