The correct option is 2 and 3 only.
Explanation
Economics is broadly divided into two branches: Microeconomics and Macroeconomics. Microeconomics deals with the behavior of individual economic units (such as a consumer, a firm, or an industry) and the determination of relative prices. Macroeconomics deals with the economy as a whole, focusing on aggregates like national income, total employment, and the general price level.
Statement-wise Analysis:
- Statement 1 is Incorrect: The determination of a country's total output (National Income or GDP) is a subject matter of Macroeconomics. Microeconomics focuses on the output of an individual firm or a specific industry, not the aggregate output of the entire economy.
- Statement 2 is Correct: Macroeconomics studies the aggregate effects of the forces of demand and supply. It analyzes Aggregate Demand (AD) and Aggregate Supply (AS) to determine the equilibrium level of income, output, and employment in the economy.
- Statement 3 is Correct: In Microeconomics, the analysis is often based on the assumption of Partial Equilibrium. It assumes that macro variables (such as the total volume of employment, total output, or the general price level) remain constant while analyzing the behavior of individual markets. For instance, when studying the price determination of a specific good, the general inflation rate is assumed to be unchanged.
Key Takeaway:
Microeconomics operates on the assumption that macro variables are constant (ceteris paribus) to study individual markets, whereas Macroeconomics assumes micro variables (like relative prices) are constant to study economy-wide aggregates.