Pengantar Ilmu Ekonomi Makro 6

PENGANTAR ILMU EKONOMI MAKROCHAPTER 2 MARKET AND GOVERNMENT IN A MODERN ECONOMY (Pasar dan Peranan Pemerintah dalam Perekonomian)

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INTRODUCTION Pada tahun 1900an muncul doktrin Laissez-faire , artinya: leave us alone (biarkan aku sendiri), atau: hold that government interfere as little as possible in economic . Ini adalah doktrin kebebasan ekonomi (sistem ekonomi pasar) Sistem ekonomi pasar melahirkan kegagalan pasar (market failure), seperti: inefficiency, inequality, macroeconomic problem, etc) Karena terjadi kegagalan pasar, maka setelah tahun 1900an muncul welfare state , yaitu sebuah doktrin yang menghendaki perlunya campur tangan pemerintah dalam perekonomian. Misalnya: pajak, subsidi, JPS, pensiun, dst

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2.1. PASAR DAN PEREKONOMIANa. Pasar (market): market is a mechanism through which buyers and sellers interact to set prices and exchange goods and services b. Market Equilibrium QD =QS, menghasilkan harga dan jumlah keseimbangan c. Jenis-jenis pasar (bisa dilihat dari beberapa sisi, misalnya: derajat persaingan, jenis barang, dst) d. Pasar dapat menyelesaikan 3 masalah ekonomi: What, how, and for whom e. Penentuan harga dalam sistem ekonomi pasar (lihat bagan berikut):Mekanisme pasar adalah bentuk organisasi ekonomi di mana pembeli dan penjual bertemu dan berinteraksi melalui pasar untuk memecahkan tiga masalah ekonomi yang mendaar

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Supply of factors: Labour, land, capital

Price on factor markets (wages, rents, interest)

Demand for factors

What CONSUMERS How For whom BUSINESSES (firms)

Demand for goods

Price on product markets

Supply of goods

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2.2. TRADE, MONEY, AND CAPITALa. Trade (Perdagangan) Kenapa ada perdagangan: untuk apa: apa manfaat perdagngan (gain from trade, specialization and division of labor); b. Money: Lubricant of exchange What is money? Fungsi uang: 1. The means of exchange/ a medium of exchange 2. Unit of account 3. Store of value (wealth) 4. Standard of defered payment c. Capital Jenis-jenis modal: bangunan, mesin dsb Capital formation Human capital Fungsi modal Perbedaan modal dengan investasi5

2.3. THE ECONOMIC ROLE OF GOVERNMENTa. To increase efficiency Sistem ekonomi pasar pada pelaksanaannya mengalami kegagalan (market failure) oleh karena itu pemerintah perlu campur tangan dalam perekonomian To promote equity Pasar tidak selalu melakukan distribusi sumberdaya secara adil, maka perlu campur tangan pemerintah. Bentuk campur tangan misalnya dalam penarikan pajak, subsidi To foster macroeconomic growth and stability 1) Growth: sumber pertumbuhan, LPE, pertumbuhan dan kualitas pembangunan, kebijakan fiskal dan moneter 2) Stability of economic: indikator stabilitas, kebijakan pemerintah untuk stabilitas ekonomi, dst.

b.

c.

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Government Can Remedy The Shortcoming of The Market

Market Failure 1. Inefficiency: monopoly externalitas public goods

Government Intervention Encourge competition Intervene in markets Encourge beneficial activities Redistribution income Macroeconomic policies Stimulate growth

Examples of Govt Policy Antitrust laws, deregulation, Antipolution laws, ect. Build ligthouse, public ed. Progressive tax, transfer programs Fiscal & Monetary policy Investment in education Raise national saving

2. Inequality (ketidakmerataan) 3. Macroeconomic Problems: high inflation and employment slow of economic growth

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CHAPTER 20OBJECTIVES AND INSTRUMENT OF MACROECONOMIC (THE GOALS OF MACROECONOMIC POLICIES)

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INTRODUCTIONThe birth of macroeconomics (ME) 1. Founded by John Maynard Keynes 1930an 2. Central ME questions: (a). Why do output and employment sometimes fall, and how can employment be reduced (b) What are the sources of inflation , and how can it be keft under control; and (3) How can a nation increase its rate of economic growth9

OBJECTIVES AND INSTRUMENTS OF MACROECONOMICNo. 1 2 3 4 Objectives of MEP Output: rapid growth of output Employment Price level stability Exchange rates stability Instruments/Tools Monetary policy Fiscal policy Monetary policy Monetary policy

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INTERNATIONAL LINKAGES1. All nation participate in the world economy: trade and finance (export and import) 2. Trade policies: tariffs, quotas, etc 3. International financial management (foreign exchange rates) 4. Exchange rates represents the price of its own currency in terms of the currencies of other nations11

AGGREGATE SUPPLY AND DEMAND (AS AND AD)1. AS refers to the total amount/quantity of goods and services that the nation s business willingly produce and sell in given period AS = f(Price, Level, Prod Capacity of the ec, costs level) AS dan P memiliki hubungan positif 2. AD refers to the total amount that different sector in economy willingly spend in given period (sektor perekonomian: consumers, business, government, foreigners), AD = f(Price level, Monetary Policy, Fiscal Policy, etc) AD dan P memiliki hubungan negatif12

3. Macroeconomic EquilibriumP AS

B P1 E PE

C

Equilibrium consequences: -. Terjadi output dan harga keseimbangan -. Terdapat employment -. Terjadi international trade

AD

Q QB QE QC

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3. The causes of Shifting in ADP AS

PF E PE

F

The causes of shipfting in AD: Increase aggregate spending Exp: increase in military spending, etcAD1

AD

Q QE QF

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4. The causes of shipting in ASAS1 P AS

PG

G E

PE

AD

The causes shifting in AS. The cost of production increase Increase of the world price of crude oil, rate of electricity, etc. The consequences of it is decline of output, employment, inflation, etc. it lead to determination of macroeconomic goalsQ

QG

QE

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5. Long-run Economic PerformanceP AS

P-2000

The causes of price increase in the long run (P1900-P2000):

AD

AS P-1900

AD Q Q-1900 2T Q-2000 20 T

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CHAPTER 21MEASURING ECONOMIC ACTIVITY (NATIONAL PRODUCT/INCOME)

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1. GROSS DOMESTIC PRODUCT (GDP) Definition: it is the sum of the dollar values of consumption ( C ), gross investment ( I ), government purchases of goo and services ( G ), and net export (X-M) produced within a nation during a given year (Samuelson), 2002:434). GDP = C + I + G + (X-M) The purpose of measuring GDP is to measure the overall performance of an economy

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2. THE METHOD OF MEASURING GDPa. Production Approach (value added approach) value added is the different between a firmsales and its purchases of materials (cost of intermediate product) from after firms. State of Production Sales Receipts (1) Cost of interProduction (2) 0 23 53 110 Value added (Wages, Profit, ets) (3) = (1-2) 23 30 57 80 19019

Wheat Flour Baked dough Final product (Bread) Total

23 53 110 190

b. Expenditure approach, and ( C ) Earning/cost approach

Expenditure Approach Components of GDP Consumption ( C ) + Gross Private Domestic Investment ( I ) + Government Purchases ( G ) + Net Export (X-M) Equals: Gross Dom Product

Earning Approach Earning or costs as soyrces of GDP Wages, salaries, & other labor Income + Interest, rent, & other property Income + Indirect taxes + Depreciation + Profits Equals: Gross Dom Product

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3. THE PROBLEM OF DOUBLE COUNTINGWe defined GDP as the total production of final goods and services. A final product (goods) is one that is produced and sold for consumption or investment. GDP excludes intermediate goods (i.e. goods that are used up to produced other goods). GDP therefore includes bread but not wheat, and home computers but not computer chips. If bread and wheat sumed in the economic activity, the double counting is happened.

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4. DETAILS OF THE NATIONAL ACCOUNTS1. 2. Nominal GDP (GDP at market prices/current prices) Real GDP (GDP at constant prices): is multiplying the quantities of goods by fixed set of prices, or Q = real GDP = Nominal GDP divided by GDP deflator = PQ/P GDP deflator = (Nominal GDP/real GDP) = general prices = index number of prices The kinds of price indexes: - Consumers price index (CPI), atau IHK - Producers price index (PPI or IHP) is the price index of goods sold at the wholesale level (such as steel, wheat, oil, ect) (Samuelson, 2002:774) - GDP deflator

3.

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5. COMPONENT OF GDP1. Consumption ( C ) durable goods: automobiles, motorcycles, etc nondurable goods: food, drink, etc services (medical care, bank, etc Investment and capital formation ( I ) physical investment (additional capital stock) financial investment (using money to buy stock, or to open saving account Government expenditure ( G ) payroll expenditures on its employees gross investment/public goods office equipment, etc. (excluded; transfer payment Net exports ( X-M): it is measurement of inter linkages23

2.

3.

4.

6. FROM GDP TO DISPOSIBLE INCOME (DI)GDP = C + I + G + (X M) NI = National Income = GDP (Depreciation + Indirect Taxes) DI = Disposible Income = NI (Direct Taxes + Net Business Saving) + Tr Or: NI = w + r + i + GDP = NI + Depreciation + Indirect Taxes Notes: w = wages, r = rent, i = interest, = profit See diagram below24

Net Export

Depreciation

Government Expenditure

Indirect Taxes

Direct Taxes InvestmentNet business saving

Transfer payment

National Income Consumption

DI

GDP

National Income ( NI )

Disposible Income ( DI )

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7. BEYOND THE NATIONAL ACCOUNT1. Omitted non market activities: meals, loundering, child care services, ect 2. Omitted environment demages 3. Calculation is normally in averages, ect

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