Question

Which one of the following statements is incorrect?

 1) Scarcity is a universal phenomenon that arises because resources are limited

 2) Microeconomics is the branch of economics which studies how individual decision-makers behave and interact with each other

 3) Macroeconomics is the branch of economics which studies the functioning and performance of a society's economy as a whole (often with a focus on levels of and changes in aggregate measures such as the unemployment rate, inflation rate, and Gross Domestic Product growth rate).

 4) Macroeconomics focuses on the individual unit (i.e., it examines the "trees")

Answer 1

Macroeconomics is that branch of economics which studies the behaviour of the economy as a whole. It tries to capture different aggregate variables like unemployment rate, economic growth rate, inflation rate, interest rate, General price level, etc and tries to find the obvious Relations between these Aggregate variables to study the behaviour of the Economy. It's true that that Macroeconomics has microeconomic foundations but it's not true that Macroeconomics focuses on the individual unit. It studies the aggregate behaviour that is the behaviour of all the individuals in the economy taken together.

Scarcity is a universal phenomenon that arises because resources are limited is correct.

Microeconomics is the branch of economics which studies how individual decision-makers behave and interact with each other is also correct.

Forth statement is incorrect for the reason given above.

Hence option 4 is correct.