Question : The aggregate demand and aggregate supply model is used in:
Option 1: Microeconomics
Option 2: Macroeconomics
Option 3: Econometrics
Option 4: Industrial organization
Correct Answer: Macroeconomics
Solution : The correct answer is (b) Macroeconomics.
The aggregate demand and aggregate supply (AD-AS) model is a fundamental framework in macroeconomics. It is used to analyze and understand the overall behavior of an economy. The model examines the relationship between the aggregate demand for goods and services and the aggregate supply of output in an economy. It helps to explain how changes in factors such as consumption, investment, government spending, and net exports affect the overall level of output, employment, and prices in the economy. The AD-AS model is used to analyze business cycles, inflation, and economic growth at the macroeconomic level.
