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If macroeconomics is principles agreed upon by people to form a system, why do we agree to terms that allow so much suffering via financial woes?

Economics Dec 15, 2020

If macroeconomics is principles agreed upon by people to form a system, why do we agree to terms that allow so much suffering via financial woes?

Expert Solution

The formation of an economic system is based on some macroeconomic principles and models that are suitable for the economy with the available resources and technology. These models have some assumptions and limitations with real-life examples.

The process of policymaking involves the role of government and banking system to set prices of products and the credit supply in the economy. To some extent, we can accept the given economic policy. But, due to market fluctuations and business cycles problems like- unemployment, job shifting, financial crisis, etc will arise quickly.

All the estimated values of economic variables are changeable in macroeconomics study.

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