Question

Give reasons or Explain the following statements

Microeconomics is useful to the government.

Answer 1

Microeconomics proves helpful to the government in formulating price and employment policies. Microeconomic theories help in analysing the effectiveness and implications of various policies. It helps in the determination and adjustment of the foreign exchange rate, thereby, proves useful in the formulation of policies at the international front. In this way, it helps the government in planning. Moreover, microeconomic theories form the base for formulating policies with regard to social welfare.