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Question
Match the following
| Group A | Group B | ||
| 1) | Microeconomics | a) | Harrod and Domar |
| 2) | Macroeconomics | b) | Partial equilibrium |
| 3) | Theory of growth | c) | Principles of economics |
| 4) | Lord Keynes | d) | General equilibrium |
| e) | General theory of employment, interest and money | ||
| f) | Business economics | ||
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Solution
| Group A | Group B | ||
| 1) | Microeconomics | b) | Partial equilibrium |
| 2) | Macroeconomics | d) | General equilibrium |
| 3) | Theory of growth | a) | Harrod and Domar |
| 4) | Lord Keynes | e) | General theory of employment, interest and money |
Explanation:
1- Microeconomics uses the method of partial equilibrium. According to the method, equilibrium is achieved in one market assuming that there is no change in the other markets. For example, while analysing the equilibrium of an individual producer (optimising his/her cost of production), we assume that there exists no change in the other markets (labour and capital markets).
2- Macroeconomics uses the method of general equilibrium, as it studies the equilibrium in different markets simultaneously. It studies the inter-relationship of all units of the economy and assumes that all the macroeconomic variables are interdependent.
3- The theory of growth was jointly propounded by economists Harrod and Domar. This theory helps us in understanding the causes of underdevelopment and accordingly what strategies can be adopted to accelerate growth and development process.
4- Lord Keynes published the famous book ‘General theory of employment, interest and money.’ In this book, he used the macroeconomics approach in studying economic problems. After that, macroeconomics became an important approach in economic analysis.
