General Equilibrium Models

General Equilibrium Models are analytical tools used in economics to understand how various markets—like goods, services, and resources—interact simultaneously. They assess how the supply and demand in one market affect others, seeking a balanced state where everything in the economy is in harmony. Think of it as a big, interconnected system where changes in one part ripple through and influence the whole. These models help predict how policy shifts, technological advances, or external shocks impact the entire economy, providing a comprehensive picture of economic dynamics.