MACRO ECONOMICS

Dini Hariyanti

What

• Oiku

• Nomos

Why • Scarcity

How • Choice

Solve • Opportunity

LR • HR

• NR

Time

Place

Needs

Utility

Eco

Acc

Who : Circular Flow Diagram

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Personal Consumption Expenditures

Personal consumption expenditures (C) are expenditures by consumers on the following:

Durable goods: Goods that last a relatively long time, such as cars and household appliances.

Nondurable goods: Goods that are used up fairly quickly, such as food and clothing.

Services: The things that we buy that do not involve the production of physical things, such as legal and medical services and education.

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Investment (I)

Investment refers to the purchase of new capital.

def1: spending on [the factor of production] capital. def2: spending on goods bought for future use.

Includes: business fixed investment

spending on plant and equipment that firms will use to produce other goods & services

residential fixed investment spending on housing units by consumers and landlords

inventory investment the change in the value of all firms’ inventories

Total investment by the private sector is called gross private domestic investment. It includes the purchase of new housing, plants, equipment, and inventory by the private (or non-government) sector.

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5/8/2013

Government Spending (G)

G includes government spending on goods

and services.

G excludes transfer payments

Assume government spending and total taxes

are exogenous:

and G G T T

Net Exports (NX)

Net exports (EX – IM) is the difference

between exports (sales to foreigners of

country produced goods and services) and

imports (country purchases of goods and

services from abroad). The figure can be

positive or negative.

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Micro - Macro

Economics Behavior

Manajerial

Micro

Macro

The Core of Macroeconomic Theory

Keynessian Model BOP (Eksternal)

The Market for

Goods and Services (AE = Y)

• Planned aggregate

expenditure

Consumption (C)

Investment (I)

Government spending (G)

Net exports (NX)

• Aggregate output (income) (Y)

• Equilibrium output

(income) (Y*)

IS Curve

(Fiscal Policy)

ER Policy

NX Policy

Connections

between the

goods market

and the money

market

r* Y*

•Aggregate demand curve

Growth (g)

Inflation (л)

In Long Run

Theory of Liquidity

Preference

• Aggregate supply curve

The Labor Market

• The S of Labor

• The DL for Labor

• Employment and unemployment

The Money Market (Ms = Md)

• The supply of money

• The demand for money

• Equilibrium interest rate (r*)

LM Curve

(Monetary

Policy)

Equilibrium price level (P*)

AD

= AS

GROSS DOMESTIC PRODUCT BY EXPENDITURES

AT 2000 CONSTANT PRICES (Billions of Rp)

GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN AT 2000

CONSTANT PRICES (Billions of Rp)

The average contributions of each GDP components

from the demand side (2012)

GDP Components Contribution

Consumption Expenditures : Household 2.8

Consumption Expenditures : Government 0.5

Gross Fixed Capital Formation 2.1

Export of Goods and Services 3.4

Import of Goods and Services -2.7

Total 6.0

Average Sector by Rank of Contribution

to GDP Growth (Q3 2012)

Sector

Contribution

Agriculutre, Livestocks and Fisheries 0.5

Mining and Quarriying 0.2

Manufacturing Industry 1.1

Electricity, Gas and Water Supply 0.1

Construction 0.5

Trade, Hotel and Restaurant 1.2

Transportation and Comunication 1.2

Finance, Real estate and business 0.6

Services 0.6

Total 6.0

GDP Growth by Expenditure

Description 2011 Q1-12 Q2-12 Q3-12

Consumption Expenditures : Household 4.7 4.9 5.2 5.7

Consumption Expenditures :

Government

3.2 5.9 7.4 -3.2

Gross Fixed Capital Formation 8.8 10.0 12.3 10.0

Export of Goods and Services 13.6 7.8 2.2 -2.8

Import of Goods and Services 13.3 8.0 10.9 -0.5

GDP 4.7 6.5 6.4 6.2

Real GDP Growth 1980 - 2017

From GDP to Disposable Income

GDP, GNP, NNP, National Income, Personal Income, and Disposable Personal

Income,

GDP

Plus: receipts of factor income from the rest of the world

Less: payments of factor income to the rest of the world

Equals: GNP

Less: depreciation

Equals: net national product (NNP)

Less: indirect taxes minus subsidies plus other

Equals: national income

Less: corporate profits minus dividends

Less: social insurance payments

Plus: personal interest income received from the government and consumers

Plus: transfer payments to persons

Equals: personal income

Less: personal taxes

Equals: disposable personal income

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