The Reds head to the Etihad Stadium boasting an unbeaten record and a six-point lead over the chasing pack.
Defending champions City are a point further back on second-placed Tottenham, with Pep Guardiola’s side having endured an uncharacteristic wobble in December.
Were they to come unstuck again on home soil against Liverpool, then they would be left 10 points off the pace.
That would be some gap to bridge, but Carragher has been quick to point out that no silverware is handed out in January and that the Reds would be far from over the line.
The Anfield legend told talkSPORT: “If Liverpool were to win it would open up a huge lead.
“But it wouldn’t be over, there’s still a long way to go.
“If a team with the quality of Man City can lose that ground in a month to six weeks, there’s no doubt it could happen to Liverpool as well.
“[If it ends in a draw] I think seven points would be a very good lead for Liverpool, but it can quickly be turned around in two or three games. There’s still an awful long way to go.
“If City lose it puts them in a very difficult position, but if they win it I think they’re right back in it.
“However, the confidence Liverpool would gain from winning and with the team in that position, what an opportunity that would be to win their first Premier League title.
“Liverpool beat Manchester City three times in 2018, so we should have great belief to go there an actually win the game.
“It will be difficult, of course it will, because City are a top side and they have been there and done it before.”
Liverpool’s recent record against City makes for impressive reading, with three victories enjoyed over the Blues last season – in Premier League and Champions League competition.
They were beaten 5-0 with 10 men during their last top-flight trip to the Etihad, but that is the only reversal they have endured in their last 11 meetings with a fellow title hopeful.