PENGANTAR ILMU EKONOMI MAKRO

CHAPTER 2MARKET 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 EquilibriumQD =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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Price on factor markets (wages, rents, interest)

Supply of factors: Labour, land, capital

Demand for factors

CONSUMERS BUSINESSES (firms)

Supply of goodsDemand for goods

What

How

For whom

Price on product markets

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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 exchangeWhat is money?Fungsi uang:1. The means of exchange/ a medium of exchange2. Unit of account3. 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 investasi

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2.3. THE ECONOMIC ROLE OF GOVERNMENT

a. To increase efficiencySistem ekonomi pasar pada pelaksanaannya mengalami kegagalan (market failure) oleh karena itu pemerintah perlu campur tangan dalam perekonomian

b. To promote equityPasar tidak selalu melakukan distribusi sumberdaya secara adil, maka perlu campur tangan pemerintah. Bentuk campur tangan misalnya dalam penarikan pajak, subsidi

c. To foster macroeconomic growth and stability1) Growth: sumber pertumbuhan, LPE, pertumbuhan dan kualitas

pembangunan, kebijakan fiskal dan moneter2) Stability of economic: indikator stabilitas, kebijakan pemerintah untuk

stabilitas ekonomi, dst.

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Government Can Remedy The Shortcoming of The Market

Market Failure Government Intervention Examples of Govt Policy

1. Inefficiency:• monopoly• externalitas• public goods

Encourge competition Intervene in marketsEncourge beneficial activities

Antitrust laws, deregulation,…Antipolution laws, ect.Build ligthouse, public ed.

2. Inequality (ketidakmerataan)

Redistribution income Progressive tax, transfer programs

3. Macroeconomic Problems:

• high inflation and employment

• slow of economic growth

Macroeconomic policies Stimulate growth

Fiscal & Monetary policy• Investment in education• Raise national saving

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CHAPTER 20OBJECTIVES AND INSTRUMENT OF MACROECONOMIC

(THE GOALS OF MACROECONOMIC POLICIES)

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INTRODUCTION

The birth of macroeconomics (ME)1. Founded by John Maynard Keynes 1930an2. 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 growth

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OBJECTIVES AND INSTRUMENTS OF MACROECONOMIC

No. Objectives of MEP Instruments/Tools

1 Output: rapid growth of output Monetary policy

2 Employment Fiscal policy

3 Price level stability Monetary policy

4 Exchange rates stability Monetary policy

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INTERNATIONAL LINKAGES

1. All nation participate in the world economy: trade and finance (export and import)

2. Trade policies: tariffs, quotas, etc3. International financial management (foreign

exchange rates)4. Exchange rates represents the price of its own

currency in terms of the currencies of other nations

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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 periodAS = 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 negatif

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3. Macroeconomic Equilibrium

AS

P

B C

E

AD

Q

QCQEQB

P1

PE

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

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3. The causes of Shifting in AD

AS

P

F

E

AD

Q

QFQE

PF

PE

The causes of shipfting in AD:Increase aggregate spendingExp: increase in military spending, etc

AD1

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4. The causes of shipting in AS

AS

P

G

E

AD

Q

QEQG

PG

PE

The causes shifting in AS. The cost of production increaseIncrease 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 goals

AS1

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5. Long-run Economic Performance

AS

AD

AD

AS

P

QQ-2000Q-1900

P-1900

P-2000

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

2 T 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 GDP

a. 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 inter-Production

( 2 )

Value added (Wages,

Profit, ets)(3) = (1-2)

Wheat 23 0 23

Flour 53 23 30

Baked dough 110 53 57

Final product (Bread)

190 110 80

Total 190

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

Expenditure Approach Earning Approach

Components of GDP Earning or costs as soyrces of GDP

Consumption ( C ) + Gross Private Domestic Investment ( I ) + Government Purchases ( G ) + Net Export (X-M)

Wages, salaries, & other labor Income + Interest, rent, & other property Income + Indirect taxes + Depreciation + Profits

Equals: Gross Dom Product Equals: Gross Dom Product

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3. THE PROBLEM OF DOUBLE COUNTING

We 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 ACCOUNTS

1. Nominal GDP (GDP at market prices/current prices)2. 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/PGDP deflator = (Nominal GDP/real GDP) = general prices

= index number of prices3. 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

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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 2. Investment and capital formation ( I )• physical investment (additional capital stock)• financial investment (using money to buy stock, or to open saving account3. Government expenditure ( G )• payroll expenditures on its employees• gross investment/public goods• office equipment, etc. (excluded; transfer payment4. Net exports ( X-M): it is measurement of inter linkages

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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) + TrOr:NI = w + r + i + πGDP = NI + Depreciation + Indirect TaxesNotes: w = wages, r = rent, i = interest, π = profitSee diagram below

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Net Export

Government Expenditure

Investment

Consumption

Depreciation

Indirect Taxes

National Income

Direct Taxes

Net business savingTransfer payment

GDP National Income ( NI )

Disposible Income ( DI )

DI

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7. BEYOND THE NATIONAL ACCOUNT

1. Omitted non market activities: meals, loundering, child care services, ect

2. Omitted environment demages3. Calculation is normally in averages, ect

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