A boy Deepak said to his friend Pranjal “If the buyers and sellers in each market take their decisions following only their own self-interest, economists will NOT need to think of the wealth and welfare of the country as a whole separately”. Do you agree with Deepak?

No

The correct answer is option 2: No

While it's true that individual decisions made in markets based on self-interest can lead to efficient outcomes in terms of resource allocation, it doesn't necessarily ensure overall wealth and welfare of the country as a whole.

Adam Smith, the founding father of modern economics, had suggested that if the buyers and sellers in each market take their decisions following only their own self-interest, economists will not need to think of the wealth and welfare of the country as a whole separately. But economists gradually discovered that they had to look further.

 Economists found that first, in some cases, the markets did not or could not exist. Secondly, in some other cases, the markets existed but failed to produce equilibrium of demand and supply. Thirdly, in a large number of situations the State or the people as a whole had decided to pursue certain important social goals unselfishly like employment, administration, defence, education and health for which some of the aggregate effects of the microeconomic decisions made by the individual economic agents needed to be modified. For these purposes macroeconomists had to study the effects in the markets of taxation and other budgetary policies, and policies for bringing about changes in money supply, the rate of interest, wages, employment, and output.

Macroeconomics has, therefore, deep roots in microeconomics because it has to study the aggregate effects of the forces of demand and supply in the markets. However, in addition, it has to deal with policies aimed at also modifying these forces, if necessary, to follow choices made by society outside the markets. In a developing country like India such choices have to be made to remove or reduce unemployment, to improve access to education and primary health care for all, to provide for good administration, to provide sufficiently for the defence of the country and so on