Macro exam 3 Assignment Example | Topics and Well Written Essays - 750 words

Macro exam 3 - Assignment Example In any market, money flows from the buyer to the seller, the money will therefore move from the household to the firms. However, as indicated earlier, market for goods and services are not the only markets available lest the firms would have all the money in a given field. The firm therefore has to pay for the factors of production to have the finished product i.e. the automobile. The factors of production for example capital needs to be in place. To manufacture the automobile, there are the machines which need to be bought and the labor that will do the work. Therefore in the second phase of the model, the household will give labor, capital and land to the firms while the money flows back to the household. The model is circular due to the flow of money from the households to the firms and back. The main goals of any given economy include economic growth, reduction of the number of unemployed people in the given economy or country and low inflation. A country’s increase in the standard of peoples living is used to define a growth in the economy. This is done by enhancing production and ensuring that the economy is self-sustaining. A high rate of unemployment is seen in a country or society where many people want to get jobs where they are employed or are earning an income but they do not get it. Lack of economic growth is depicted by rise in unemployment levels in a given country among other factors. When inflation hits a given country, the price of goods and services shoot up. Using the price index, it is possible to measure the price level and establish whether there is inflation of prices or not. The peoples’ standard of living is determined by the economic growth in the specific region. If there is no economic growth, the peoples’ standard of living will be low. There were various reasons that led to the culmination of the great depression. These include; - the crisis in the agricultural sector that led to the