When we study macroeconomics,
A) we model tens of thousands of individual supply and demand curves
B) we determine thousands of prices and quantities
C) we employ aggregation to reduce the number of markets we need to understand
D) we add up all the demand and supply curves that are obtained in microeconomics
E) we add up the prices of all goods and services produced in the economy

Question

Quizplus · Accepted Answer

In macroeconomics, we employ the technique of aggregation to reduce the number of markets we need to understand. This means that we group similar markets together and study them as a single entity, such as the labor market or the housing market, to analyze the overall behavior of the economy as a whole. This is more efficient than modeling tens of thousands of individual supply and demand curves or determining thousands of prices and quantities.

When We Study Macroeconomics