The General Equilibrium Theory is used extensively in economic policy issues to analyze stock markets and exchange rates. It provides a comprehensive framework for analyzing the interrelationships among different markets and how they affect each other. It assumes that all markets are perfectly competitive and that all agents are price takers. It also assumes that all markets are in equilibrium, meaning that supply equals demand in every market. This theory can help understand how changes in one market, such as the stock market, can affect other markets, such as the foreign exchange market.
Have you ever had to dissect a complicated business scenario and were confused as to where to begin,...
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