Principles of Macroeconomics Coursework Example
Principles of Macroeconomics
Indirect and direct financing paths are the two different paths that farms seek funding to enable payment for their resources so to enhance their production through loanable funds market. In the case of indirect financing it occurs in situations where savers deposit their funds into banks, the funds are then loaned to the borrowers by the banks. Direct funding happens whenever borrowers seek savers directly so that they can obtain funds. Therefore, direct finance is achieved through the contracts which specify terms and conditions related to the loans thus the contracts are referred as securities (Mateer and Coppock).
The short-run aggregate curves assume that the capital level is fixed that is one cannot build another new factory. However, it's possible to increase the utilization of factors of production that are existing. Moreover, the long run aggregate curves are determined by all factors meant for production such as labor productivity, size of the available workforce, education level and the size of capital stock. The difference between the aggregate curves is that the short run aggregate curves are based on the assumption that factors that led to aggregate supply are held constant whereas in the case of long run they are not held constant. As a result of all determinants being held constant, the Short-run curves are sloped thus upward sloping. In contrast, the Long Run Aggregate curves are vertical as in the case of the Long run there lacks a correlation between the actual level of production as well as the price level in the economy (Mateer and Coppock).
Keynesianism comprises of different macroeconomics theories regarding how in the short run especially in the cases of recessions the aggregate demand influences the economy's output. According to the Keynesian, the demand is not equal to the economy's productive level thus influenced...
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