Micro And Macro
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Economists implicitly assumed that both markets were in equilibrium—such that costs would alter to equalize supply and demand—or that in the occasion of a transient shock, corresponding to a financial disaster or a famine, markets would quickly return to equilibrium. In different phrases, economists believed that the examine of particular person markets would adequately explain the behavior of what we now call aggregate variables, equivalent to unemployment and output. The extreme and prolonged world collapse in economic exercise that occurred during the nice Depression modified that. It was not that economists had been unaware that aggregate variables may very well be unstable. They studied business cycles—as economies frequently changed from a condition of rising output and employment to reduced or falling growth and rising unemployment, regularly punctuated by extreme adjustments or economic crises.
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