Macroeconomics

Economics
Macroeconomics
Matrikulasi Magister Manajemen UKP
SILABUS
Mata Kuliah Economics pada matrikulasi program Magister Manajemen, dikelola
sebagai berikut:
Hari/Tgl
July 22, 2012
Durasi
Referensi
Rabu, 6 Mei 2015 Teori, Konsep, dan

Aplikasi Ekonomi Mikro
150 menit
Applied Economics, Griffiths and

Wall, 2013
Economics, McConnell, 2009
Kamis, 7 Mei
2015
Teori, Konsep, dan

Aplikasi Ekonomi Makro
150 menit
Applied Economics, Griffiths and

Wall, 2013
Economics, McConnell, 2009
Rabu, 20 Mei
2015
Pembahasan Kasus dan

Implementasi + Tugas
Mandiri
150 menit
Academic Journal, Media, etc.
Footer text here
Materi
Macroeconomics
Pengukuran Aktifitas Ekonomi Makro
Pengukuran dan Masalah-Masalah Ekonomi Makro
Inflasi dan Pengangguran
Konsumsi, Tabungan dan Investasi
Model Pengeluaran Agregate
Kebijakan Fiskal
Uang dan Lembaga Keuangan
Suku bunga dan Kebijakan Moneter
Perdagangan Internasional dan Neraca Pembayaran
July 22, 2012
Footer text here
Chapter 23
An Introduction to
Macroeconomics
McGraw-Hill/Irwin
Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Objectives
Long-run economic growth and short-run

fluctuations
GDP, inflation, and unemployment
Sustained increase in living standards
Savings and investment
Shocks and sticky prices
23-5
Performance and Policy
Real GDP
Corrects for price changes
Nominal GDP
Uses current prices
Unemployment
Inflation
Increase in overall level of prices
23-6
Performance and Policy
Can governments:
Promote economic growth?
Reduce severity of recession?
Is monetary or fiscal policy more effective

at mitigating recession?
Is there a tradeoff between inflation and
unemployment?
23-7
Economic Performance
Output growth
3.1% per year 1995-2005
Unemployment rate
4.6% in 2007
Inflation rate
2.7% in 2007
23-8
Economic Growth
Standard of living measured by output per

person
No growth in living standards prior to
Industrial Revolution
Modern economic growth
Output per person rises
Not experienced by all countries
23-9
GDP Per Person 2007

U.S. dollars based on purchasing power parity
23-10
United States
Canada
United Kingdom
Japan
France
South Korea
Saudi Arabia
Russia
Mexico
China
India
North Korea
Tanzania
Burundi
$45,845
$38,345
$35,134
$33,576
$33,187
$24,782
$23,243
$14,692
$12,774
$5,292
$2,659
$1,900
$1,256
$371
Zimbabwe
$188
Savings and Investment
Saving
Tradeoff current for future consumption
Investment
Financial investment
Economic investment
Banks and financial institutions
23-11
Shocks
Demand shocks and flexible prices

Price falls if demand low
Sales unchanged
Demand shocks and sticky prices

Maintain inventory
Sales change
Business cycles
23-12
Expectations
The future is uncertain

Expectations affect investment
Shocks
What happens is not what you expected
Demand shocks
Supply shocks
23-13
Demand Shocks
Flexible Prices
Price
$40,000
$37,000
$35,000
DH
DM
DL
900
23-14
Cars per week
Demand Shocks
Price
Fixed Prices
$37,000
DH
DL
700
23-15
900
1150
DM
Cars per week
Sticky Prices
Explain fluctuations is GDP
Average months between price changes
Coin-operated
Laundry Machine
Newspaper
Haircut
Taxi fare
Veterinary service
Magazine
23-16
46.4
29.9
25.5
19.7
14.9
11.2
Beer
Microwave Ovens
Milk
Electricity
Airline ticket
Gasoline
0.6
Computer software
4.3
3.0
2.4
1.8
1.0
5.5
Sticky Prices
Many prices sticky in short run

Consumers prefer stable prices
Firms want to avoid price wars
All prices flexible in long run

Firms adjust to unexpected, but permanent
changes in demand
23-17
Chapter 24
Measuring
Domestic Output
and National
Income
McGraw-Hill/Irwin
Chapter Objectives
Define and measure GDP

GDP and income relationships
The GDP price index
Nominal GDP vs. real GDP
Limitations of the GDP measure
24-19
National Income Accounting
Bureau of Economic Analysis

compiles National Income and
Product Accounts
Assess health of economy
Track long run course
Formulate policy
24-20
Gross Domestic Product
Measure of aggregate output

Monetary measure
Avoid multiple counting
Market value final goods
Ignore intermediate goods
Count value added
24-21
Exclude financial transactions

Public transfer payments
Private transfer payments
Stock (and bond) market transactions
Second hand sales

Sell used car to a friend
24-22
Two Approaches to GDP
Income approach
Count income derived from production

Wages, rental income, interest income,
profit
Expenditure approach
Count sum of money spent buying the

final goods
Who buys the goods?
24-23
Two Approaches to GDP

Consumption by
Households
Wages
Investment by
Businesses
Rents
+
+
Government
Purchases
Expenditures
By Foreigners
24-24
G
= D=
P
+
+
+
+
Interest
Profits
Statistical
Adjustments
Expenditure Approach
Personal consumption
expenditures (C)
Durable consumer goods
Nondurable consumer goods
Consumer expenditures for services
Domestic plus foreign produced
24-25
Gross private domestic investment

(I)
Machinery, equipment, and tools
All construction
Changes in inventories
Creation of new capital asset

Noninvestment transactions
24-26
Gross Investment
Depreciation
= Net Investment
Gross
Investment
Net
Investment
Depreciation
Increase
24-27
Stock of
Capital
Consumption
& Government
Spending
Stock of
Capital
January 1
Years GDP
December 31
Government purchases (G)

Expenditures for goods and services
Expenditures for social capital
Excludes transfer payments
Net exports (Xn)
Add exported goods

Subtract imported goods
NX = exports - imports
GDP = C+Ig+G+Xn
24-28
U.S. Economy
2007
in Billions
Receipts
Expenditures Approach
Allocations
Income Approach
Personal Consumption (C) $ 9734
Compensation
Gross Private Domestic
Rents
Investment (Ig)
2125
$ 7874
65
Interest
603
Government Purchases (G) 2690
Proprietors Income
1043
Net Exports (Xn)
Corporate Profits
1627
-708
Taxes on Production and

Imports
National Income
1009
$12,221
Net Foreign Factor Income (-)
96
Statistical Discrepancy (+)
29
Consumption of Fixed
Capital (+)
Gross Domestic Product $ 13,841
24-29
1687
$ 13,841
Comparative GDP
Selected Nations GDPs, 2007
GDP in Trillions of Dollars
0
10
12
United States
Japan
Germany
China
United Kingdom
France
Italy
Canada
Spain
Brazil
Russia
India
South Korea
Mexico
Australia
Source: World Bank
24-30
13
Components of National Income
Compensation of employees
Rents
Interest
Proprietors income
Corporate profits
Corporate income taxes
Dividends
Undistributed corporate profits
Taxes on production and imports

24-31
Income Approach
From national income to GDP

Net foreign factor income
Statistical discrepancy
Consumption of fixed capital
Other national accounts

Net domestic product (NDP)
National income (NI)
Personal income (PI)
Disposable income (DI)
DI = C + S
24-32
U.S. Income Relationships 2007

Gross Domestic Product (GDP)
Less: Consumption of Fixed Capital
Equals: Net Domestic Product (NDP)
Less: Statistical Discrepancy
Plus: Net Foreign Factor Income
Equals: National Income (NI)
Less: Taxes on Production and Imports
Less: Social Security Contributions
Less: Corporate Income Taxes
Less: Undistributed Corporate Profits
Plus: Transfer Payments
Equals: Personal Income (PI)
Less: Personal Taxes
Equals: Disposable Income (DI)
24-33
$ 13,841
1687
$ 12,154
29
96
$ 12,221
1009
979
467
344
2237
$ 11,659
1482
$ 10,177
Nominal vs. Real GDP

GDP is a dollar measure of
production
Using dollar values creates problems
Nominal GDP
Use prevailing price
Real GDP
Reflect changes in price

Use base year price
24-34
GDP Price Index

Use price index to determine real
GDP
Price
Index
In Given
Year
Real
GDP
24-35
Price of Market Basket

In Specific Year
Price of Same Basket
In Base Year
x 100
Nominal GDP
Price Index (in hundredths)
Chapter 26
Business
Cycles,
Unemployment,
and Inflation
McGraw-Hill/Irwin
Chapter Objectives
The business cycle and its phases

Measuring unemployment and
inflation
The types and impacts of
unemployment and inflation
26-37
The Business Cycle

Peak
Level of Real Output
Peak
Peak
Trough
Trough
Time
Durable and nondurable industries

affected differently
26-38
Causes of Business Cycles
Shocks and price stickiness

Supply and productivity shocks
Monetary shocks
Financial bursts and bubbles
Unexpected political events
Common link
Unexpected changes in spending
26-39
Unemployment
Twin problems of the business cycle

Unemployment
Inflation
Measurement of unemployment
Whos in the labor force
Problems with the unemployment rate

Part-time employment
Discouraged workers
Unemployment Rate
26-40
Unemployed
Labor Force
x 100
Unemployment
2007 data
Under 16
And/or
Institutionalized
(71.8 Million)
Not in
Labor Force
(78.7 Million)
Total
Population
(303.6 Million)
Employed
(146.0 Million)
Unemployed
(7.1 Million)
26-41
Labor
Force
(153.1 Million)
Source: Bureau of Labor Statistics
Unemployment
Types of unemployment
Frictional
Structural
Cyclical
Full employment defined

No cyclical unemployment
Natural rate of unemployment

Full employment rate
26-42
Unemployment
Natural rate of unemployment

1980s 6%
Today 4-5%
Aging labor force

Temp agencies and the internet
New welfare laws and work
requirements
Prison population has doubled
26-43
Cost of Unemployment
Foregone output
Potential output
GDP gap
(Actual output potential output)
Okuns Law
Each 1% above NRU creates negative
2% output gap
26-44
GDP (billions of 1996 dollars)
Unemployment
12,000
12,000
The GDP Gap
11,000
11,000
GDP gap
(positive)
10,000
10,000
9,000
9,000
Potential GDP
8,000
8,000
GDP gap
(negative)
7,000
7,000
6,000
6,000
Actual GDP
5,000
5,000
1985
1987
Unemployment
(percent of civilian
Labor force)
1985
1987
1989
1989
1991
1991
1993
1993
1995
1995
1997
1997
1999
1999
2001
2001
2003
2003
2005
2005
10 10
8
0
1985
The Unemployment Rate
1985 1987 1987
1989
1989
1991 1991
19931993
1995
1995
1997
1997
1999
1999
2001
2001
2003
2003
2005
2005
Source: Congressional Budget Office & Bureau of Economic Analysis

26-45
Unemployment
Unequal burdens
Occupation
Age
Race and ethnicity
Gender
Education
Duration
Noneconomic costs
26-46
Unemployment
Unemployment Rates in Five Industrial

Nations,1995-2005

26-47
Inflation
Rise in general level of prices

Consumer price index (CPI)
Market basket
300 goods and services
Typical urban consumer
2 year updates
CPI =
26-48
Price of the Most Recent Market

Basket in the Particular Year
Price estimate of the Market
Basket in 1982-1984
100
Inflation
Annual Inflation Rates in the United States,

1960-2007
Inflation Rate (percent)
15
10
0
1960
1970
1980
1990
2000

26-49
Inflation
Inflation Rates in Five Industrial Nations,
1995-2005

26-50
Inflation
Types of Inflation
Demand pull
Cost-push
Redistributive Effects
Nominal and real income
Growth in nominal income vs.
inflation rate
Anticipated vs. unanticipated
inflation
26-51
Inflation
Who is hurt by inflation?

Fixed-income receivers
Savers
Creditors
Who is unaffected or not hurt by

inflation?
Flexible-income receivers
Cost-of-living adjustments (COLAs)
Debtors
26-52
Anticipated Inflation
Nominal Interest Rate

Real Interest Rate
Inflation Premium
6%
11%
+
5%
Nominal
Interest
Rate
26-53
Real
Interest
Rate
Inflation
Premium
Other Inflation Issues
Deflation
Mixed effects
Arbitrariness
Cost-push inflation and real output
Demand-pull inflation and real
output
Hyperinflation
26-54
Chapter 27
Basic
Macroeconomic
Relationships
McGraw-Hill/Irwin
Chapter Objectives
Effect of changes in income on

consumption (and saving)
Other factors that affect consumption
Effect of changes in real interest rates on
investment
Other factors that affect investment
Changes in investment have a multiplier
effect on real GDP
27-56
Basic Relationships
Income and consumption

Income and saving
Disposable income (DI)
45line for reference
C = DI on the Line
S = DI - C
27-57
Income and Consumption

Consumption (billions of dollars)
10000
9000
05
45 Reference Line
C=DI
8000
04
03
01
7000
02
00
99
6000
Saving
In 1992
5000
4000
3000
83
2000
84
98
97
96
95
94
93
92
91
90
89
88
87
86
85
Consumption
In 1992
1000
45
0
0
2000
4000
6000
8000
10000
Disposable Income (billions of dollars)

27-58
Source: Bureau of Economic Analysis
Consumption and Saving
The consumption schedule

The saving schedule
Break-even income
Average propensity to consume
(APC)
Average propensity to save (APS)
Consumption
APC =
Income
27-59
APS =
Saving
Income
Marginal propensity to consume

(MPC)
Marginal propensity to save (MPS)
Change in Consumption
MPC =
Change in Income
Change in Saving
MPS = Change in Income
27-60

(1)
(4)
(5)
(6)
(7)
Level of
Average
Average
Marginal
Marginal
(2)
Output
Propensity Propensity Propensity Propensity
(3)
ConsumpAnd
to Consume to Save
to Consume to Save
Saving (S)
tion
Income
(APC)
(APS)
(MPC)
(MPS)
(1) (2)
(C)
(GDP=DI)
(2)/(1)
(3)/(1)
(2)/(1)
(3)/(1)
(1) $370
$375
$-5
1.01
-.01
(2)
390
390
1.00
.00
(3)
410
405
.99
.01
(4)
430
420
10
.98
.02
(5)
450
435
15
.97
.03
(6)
470
450
20
.96
.04
(7)
490
465
25
.95
.05
(8)
510
480
30
.94
.06
(9)
530
495
35
.93
.07
(10) 550
510
40
.93
.07
MPC + MPS = 1
27-61
.75
.25
.75
.25
.75
.25
.75
.25
.75
.25
.75
.25
.75
.25
.75
.25
.75
.25
MPC and MPS measure slopes

500
C
475
450
425
Saving $5 Billion
Consumption
Schedule
400
375
Dissaving $5 Billion
Saving
(billions of dollars)
45
27-62
370 390 410 430 450 470 490 510 530 550

50
Dissaving
Saving Schedule
S
25 $5 Billion
Saving $5 Billion
0
370 390 410 430 450 470 490 510 530 550
Average Propensity to Consume

Selected Nations, with respect to GDP, 2006
.80
.85
.90
.95
1.00
United States
Canada
United Kingdom
Japan
Germany
Netherlands
Italy
France
Source: Statistical Abstract of the United States, 2006
27-63
Nonincome determinants of
consumption and saving
Wealth
Borrowing
Expectations
Real interest rates
27-64
Other important considerations

Changes along schedules
Switch to real GDP

Schedule shifts
Stability
Taxation
27-65

C1
C0
C2
Saving
45
27-66

S2
S0
S1
Interest Rate and Investment
Expected rate of return (r)

The real interest rate (i)
Nominal rate less rate of inflation
Meaning of r = i
Investment demand curve
27-67
Investment Demand Curve
16%
14%
12%
10%
8%
6%
4%
2%
0%
$ 0
5
10
15
20
25
30
35
40
16
14
r and i (percent)
Expected
Rate of
Return (r)
Cumulative
Amount of
Investment
Having This
Rate of
Return or Higher
(I)
12
10
8
6
4
ID
2
0
5
10
15
20
25
30
35
Investment (billions of dollars)
27-68
40
Shifts of the curve

Acquisition, maintenance, and
operating costs
Business taxes
Technological change
Stock of capital goods on hand
Planned inventory changes
Expectations
27-69
r and i (percent)
Increase in
Investment Demand
Decrease in
Investment Demand
ID2 ID0

27-70
ID1
Investment Demand
Instability of investment
Durability
Irregularity of innovation
Variability of profits
Variability of expectations
27-71
Gross Investment Expenditure

Percent of GDP, Selected Nations, 2006
0
10
20
30
South Korea
Japan
Canada
Mexico
France
United States
Sweden
Germany
United Kingdom
Source: International Monetary Fund
27-72
The Multiplier Effect
More spending results in higher

GDP
Initial change in spending changes
GDP by a multiple amount
Multiplier =
27-73
Change in Real GDP

Initial Change in Spending
Causes of the initial change in

spending
Changes in investment
Other changes
Rationale
Dollars spent are received as income
Income received is spent (MPC)
Initial changes in spending cause a
spending chain
27-74

Increase in Investment of $5
Second Round
Third Round
Fourth Round
Fifth Round
All other rounds
Total
(2)
(3)
Change in
Change in
(1)
Saving
Change in Consumption
(MPC = .75) (MPC = .25)
Income
$ 5.00
$ 3.75
$ 1.25
3.75
2.81
.94
2.81
2.11
.70
2.11
1.58
.53
1.58
1.19
.39
4.75
3.56
1.19
$ 20.00
$ 15.00
$ 5.00
$20.00
$4.75
15.25
13.67
11.56
8.75
5.00
$1.58
$2.11
$2.81
I=
$5 billion
$3.75
$5.00
1
27-75
3
4
Rounds of Spending
All

Multiplier =
1
1 - MPC
-orMultiplier =
27-76
MPS
The Multiplier and the MPC

MPC
Multiplier
.9
10
.8
.75
.67
.5
27-77
3
2
Chapter 28
The Aggregate
Expenditures
Model
McGraw-Hill/Irwin
Chapter Objectives
Aggregate expenditures for a private

closed economy
Characteristics of equilibrium real GDP
in a private closed economy
Changes in equilibrium real GDP and the
multiplier
Adding the government and
international sectors
Recessionary and inflationary
expenditure gaps
28-79
Model Simplifications
Private closed economy

Consumption and investment only
Prices are fixed
Excess capacity exists
Unemployed labor exists
Disposable income = real GDP
No taxes
28-80
Model Simplifications
Investment demand vs. schedule
Investment
Demand
Curve
8
20
ID
20

28-81
Investment Schedule
r and i (percent)
Investment
Schedule
20
Ig
Real GDP (billions of dollars)
Equilibrium GDP
Real GDP = C + Ig
Aggregate expenditures
Equal to C + Ig
Aggregate expenditures schedule
Quantity goods produced = quantity

goods purchased
Disequilibrium
Only 1 equilibrium level of GDP
28-82
Equilibrium GDP
(2)
Real
(7)
(8)
Domestic (3)
(5)
(6)
Unplanned Tendency of
Output Con(1)
(4)
Investment Aggregate Changes inEmployment,
(and sumpEmploy- Income) tion Saving (S)
(Ig)
Expenditures Inventories Output, and
ment (GDP=DI) (C)
(1) (2)
(C+Ig)
(+ or -)
Income
in Billions of Dollars
In millions
28-83
(1) 40
$370
$375
$-5
20
$395
$-25
Increase
(2) 45
390
390
20
410
-20
Increase
(3) 50
410
405
20
425
-15
Increase
(4) 55
430
420
10
20
440
-10
Increase
(5) 60
450
435
15
20
455
-5
Increase
(6) 65
470
450
20
20
470
Equilibrium
(7) 70
490
465
25
20
485
+5
Decrease
(8) 75
510
480
30
20
500
+10
Decrease
(9) 80
530
495
35
20
515
+15
Decrease
(10) 85
550
510
40
20
530
+20
Decrease
Equilibrium GDP
530
(C + Ig = GDP)
510
Equilibrium
Point
490
470
450
C + Ig
C
Aggregate
Expenditures
Ig = $20 Billion
430
410
390
C = $450 Billion
370
45
370 390 410 430 450 470 490 510 530 550

28-84
Equilibrium GDP
Saving equals planned investment

Leakage
Injection
No unplanned inventory changes
28-85
Aggregate Expenditures (billions of dollars)
Changes in Equilibrium GDP

(C + Ig)1
(C + Ig)0
(C + Ig)2
510
490
Increase in
Investment by 5
Decrease in
Investment by 5
470
450
The
Multiplier
Effect
430
45
430
450
470
490
510

28-86
International Trade
Net exports and aggregate expenditures

Net exports schedule
Net exports and equilibrium GDP
Positive net exports
Negative net exports
International economic linkages

Prosperity abroad
Tariffs
Exchange rates
28-87
Net Exports and

Equilibrium GDP
C + Ig+Xn1
C + Ig
C + Ig+Xn2
Aggregate Expenditures
510
Aggregate
Expenditures
490 with Positive
Net Exports
Aggregate
Expenditures
with Negative
Net Exports
470
450
430
45
Net Exports Xn
(billions of
Dollars)
430
28-88
450
470
490
510

+5
0
-5
Positive Net Exports

450
470
Negative Net Exports
490
Xn1
Xn2
Real
GDP
Net Exports of Goods
Select Nations, 2006

Negative Net Exports
Positive Net Exports
+31
Canada
France
-45
Japan
+70
Italy
-27
+203
Germany
United Kingdom
-171
-881
-700
United States
200
150
100
50
50
100
150
200
250
Source: World Trade Organization

28-89
Adding the Public Sector
GDP = Cd + Ig + Xn + G
Lump sum taxes
Taxes affect disposable income
Consumption and the MPC
Leakages = Sd + M + T
Injections = Ig + X + G
Sd + M + T = Ig + X + G
28-90
Adding the Public Sector

(1)
(5)
Level of
(7)
Net Exports
(2)
Output
(Xn)
Aggregate
(4)
(6)
Consumpand
(3)
Investment Exports Imports Government Expenditures
tion
Income
(C+Ig+Xn+G)
Saving (S)
(Ig)
(G)
(C)
(GDP=DI)
(X)
(M)
(2)+(4)+(5)+(6)
in Billions of Dollars
(1) $370
28-91
$375
$-5
$20
10
10
20
$415
(2)
390
390
20
10
10
20
430
(3)
410
405
20
10
10
20
445
(4)
430
420
10
20
10
10
20
460
(5)
450
435
15
20
10
10
20
475
(6)
470
450
20
20
10
10
20
490
(7)
490
465
25
20
10
10
20
505
(8)
510
480
30
20
10
10
20
520
(9)
530
495
35
20
10
10
20
535
(10) 550
510
40
20
10
10
20
550
Government Spending Effect

C + Ig + Xn + G
C + Ig + X n
C
Government
Spending of
$20 Billion
$20 Billion Increase

in Government
Spending Yields an
In GDP
45
470
550

28-92
Lump Sum Tax Effect

C + Ig + Xn + G
Cd + Ig + Xn + G
$15 Billion Decrease

In Consumption From
a $20 Billion (MPC=.75)
Increase in
Taxes

in Taxes Yields a
$60 Billion Decrease
In GDP
45
490
550

28-93
Recessionary Expenditure Gap
GDP is below full employment
550
530
510
AE0
AE1
$5 Billion
Gap Yields
$20 Billion
GDP
Change
Recessionary
Expenditure
Gap = $5 Billion
490
Full
Employment
470
45
490
510
530

28-94
Inflationary Expenditure Gap
GDP is above full employment

AE2
550
530
AE0
Inflationary
Expenditure
Gap = $5 Billion
$5 Billion
Gap Yields
$20 Billion
GDP
Change
510
490
Full
Employment
470
45
490
510
530

28-95
The Complete Model
GDP and full employment

Multiplier effects
Government spending
Lump sum taxes
Recessionary gap
Policy options
Inflationary gap
Demand pull inflation
28-96
Chapter 29
Aggregate
Demand and
Aggregate
Supply
McGraw-Hill/Irwin
Chapter Objectives
Aggregate demand (AD)

Aggregate supply (AS)
How AD and AS determine equilibrium
price and real GDP
The AD-AS model
29-98
Aggregate Demand
Amount of real GDP purchased at each

price level
Why the downward slope?
Real-balances effect
Interest-rate effect
Foreign purchases effect
Consumption, investment, and net exports

29-99
Price Level
Aggregate Demand Curve
Aggregate
Demand
AD
Real Domestic Output, GDP
29-100
Aggregate Demand
Determinants of aggregate demand

Fixed variables along the demand curve
Change in fixed variable

Multiplier effect
Consumer spending variables:
Consumer wealth
Consumer expectations
Household borrowing
Personal taxes
29-101
Aggregate Demand
Investment spending variables

Real interest rates
Expected returns
Future business conditions
Technology
Degree of excess capacity
Business taxes
29-102
Aggregate Demand
Government spending
Net export spending variables
National income abroad
Exchange rates
29-103
Changes in Aggregate Demand
Price Level
Increase in
Aggregate
Demand
Decrease in
Aggregate
Demand
AD2
AD1
AD3

29-104
Aggregate Supply
Amount real GDP produced at each
price level
Three time horizons
Immediate short run
Few days to a few months
All prices fixed
Implicit price agreements
Contractual agreements
29-105
Price Level
Aggregate Supply
ASISR
Immediate-shortrun Aggregate
Supply
Qf

29-106
Aggregate Supply
Short run
Input prices fixed
Output prices variable
Real profit changes
Long run
All prices variable
Full employment GDP
All prices adjust
29-107
Aggregate Supply
Slope not constant: per unit production cost
and firm capacity
Price Level
Aggregate Supply
(Short Run)
Qf

29-108
Aggregate Supply
Price Level
ASLR
Long-run
Aggregate
Supply
Qf

29-109
Aggregate Supply
Determinants of aggregate supply
Change in input price
Domestic resource prices
Prices of imported resources
Change in productivity
Change in legal-institutional
environment
Business taxes and subsidies
Government regulation
29-110
Aggregate Supply
AS3
AS1
AS2
Price Level
Decrease in
Aggregate
Supply
Increase in
Aggregate
Supply
29-111
Equilibrium
Real Output
Demanded
(Billions)
Price Level
(Index Number)
Real Output
Supplied
(Billions)
$506
108
$513
508
104
512
510
100
510
512
96
507
514
92
502
Equilibrium Price Level and
Equilibrium Real GDP
29-112
Equilibrium
Price Level
AS
Equilibrium
100
92
AD
502
510 514

(Billions of Dollars)
29-113
Changes in Equilibrium
Increase in Aggregate Demand
Price Level
AS
Demand-Pull
Inflation
P2
P1
AD1
AD
Qf
Q1 Q2

29-114
Decrease in Aggregate Demand
Price Level
AS
P1
a
c
P2
Creates a
Recession
AD1
AD2
Q1 Q2 Q f

29-115
Decrease in aggregate demand
Recession and cyclical unemployment
Deflation?
Downward price inflexibility:

Fear of price wars
Menu costs
Wage contracts
Morale, effort, and productivity
Efficiency wages
Minimum Wage
29-116
Decrease in Aggregate Supply
Price Level
AS2
Cost-Push
Inflation
P2
P1
AS1
b
a
AD
Q1 Q f
29-117
Increases in Aggregate Supply
Full-Employment With Price-Level Stability
Price Level
AS1
P3
P2
P1
AS2
b
c
a
AD2
AD1
Q1
Q2Q3

29-118
Chapter 30
Fiscal Policy,
Deficits, and
Debt
McGraw-Hill/Irwin
Chapter Objectives
Purposes, tools, and limitations of fiscal

policy
Built-in stabilizers and the business cycle
The standardized budget and U.S. fiscal
policy
U.S. public debt
30-120
Fiscal Policy
Council of Economic Advisers (CEA)

Discretionary fiscal policy
Eliminate recessionary or inflationary gap
Countercyclical
Nondiscretionary fiscal policy

Passive or automatic
30-121
Fiscal Policy
Expansionary fiscal policy
Increased spending and/or lower taxes
Budget deficit
Contractionary fiscal policy

Lower spending and/or higher taxes
Budget surplus
Policy options?
30-122
Expansionary Fiscal Policy

Recessions
Decrease
Aggregate
Demand
Price Level
$5 Billion
Additional
Spending
AS
Full $20 Billion

Increase in
Aggregate Demand
P1
AD1
AD2
$490
$510

30-123
Contractionary Fiscal Policy

Reduce
Demand Pull
Inflation
$5 Billion
Initial Decrease
In Spending
Price Level
AS
Full $20 Billion

Decrease in
Aggregate Demand
P1
AD4
AD3
$510
$522

30-124
Built-In Stability
Automatic stabilizers
Taxes and transfers
Economic importance
Tax progressivity
Progressive tax system
Proportional tax system
Regressive tax system
30-125
Built-In Stability
Government Expenses, G
and Tax Revenues, T
Surplus
G
Deficit
GDP1 GDP2
GDP3
30-126
Evaluating Fiscal Policy
Standardized budget
Full-employment budget
Cyclical deficit
Recent U.S. fiscal policy
Budget deficits and projections
Social security considerations
30-127
and Tax Revenues, T

T
Cyclical deficit
Fiscal policy
neutral
$500
$450
GDP2
GDP1
(Year 2)
(Year 1)

30-128
and Tax Revenues, T

Standardized deficit
Expansionary fiscal
policy
$500
$475
$450
$425
T2
G
h
f
g
GDP4
GDP3
(Year 4)
(Year 3)

30-129
T1
Chapter 31
Money and
Banking
McGraw-Hill/Irwin
Chapter Objectives
The functions of money

Components of the money supply
What backs the money supply
The Federal Reserve and the U.S.
banking system
The functions and responsibilities of
the Federal Reserve
31-131
Functions of Money
Medium of exchange
Used to buy/sell goods
Unit of account
Goods valued in dollars
Store of value
Hold some wealth in money form
Money is liquid
31-132
Money Defined
M1
Currency
Checkable deposits
Institutions offering checkable

deposits
Commercial banks
Savings and loan associations
Mutual savings banks
Credit unions
31-133
Money Defined
M2
M1 plus near-monies
Savings deposits including money
market deposit accounts (MMDA)
Small time deposits
Money market mutual funds (MMMF)
31-134
M1
M2
Currency +
56%
M1
Checkable Deposits +
44%
18%
Money Defined
January 2008
Small Time Deposits +
16%
Money Market Mutual

Funds Held By Individuals +
14%
Savings Deposits,
Including Money Market +
Deposit Accounts
52%
Totals
Source: Federal Reserve System
$1,365
Billion
$7,499
Billion
31-135
Money Supply
Are credit cards money?

What backs the money supply?
Nothing!
Why is money valuable?

Acceptability
Legal tender
Relative scarcity
31-136
Money and Prices
Prices affect purchasing power of

money
Hyperinflation renders money
unacceptable
Stabilizing moneys purchasing
power
Intelligent management of the money
supply monetary policy
Appropriate fiscal policy
31-137
Chapter 33
Interest Rates and

Monetary Policy
McGraw-Hill/Irwin
Chapter Objectives
The equilibrium interest rate and the

market for money
Monetary policy
How the Fed controls the Federal
funds rate
How monetary policy affects GDP
and the price level
Effectiveness of monetary policy and
its shortcomings
33-139
Interest Rates
Price paid for the use of money

Many different interest rates
Speak as if only one interest rate
Determined by money supply and
money demand
33-140
Demand for Money
Why hold money?

Transactions demand, D1
Determined by nominal GDP

Independent of the interest rate
Asset demand, D2
Money as a store of value

Varies inversely with the interest rate
Total money demand, Dm

33-141
Rate of interest, i percent
Demand for Money

(a)
Transactions
demand for
money, Dt
(c)
Total
demand for
money, Dm
and supply
(b)
Asset
demand for
money, Da
10
Sm
7.5
=5
5
2.5
Dt
Da
Dm
0
50
100
150
200
Amount of money
demanded
50
100
150
200
Amount of money
demanded
50
100
150
200
250
300
Amount of money
demanded and supplied
33-142
Interest Rates
Equilibrium interest rate
Changes with shifts in money supply

and money demand
Interest rates and bond prices
Inversely related
Bond pays fixed annual interest
payment
Lower bond price will raise the interest
rate
33-143
Federal Reserve Balance Sheet
Assets
Securities
Loans to commercial banks
Liabilities
Reserves of commercial banks
Treasury deposits
Federal Reserve Notes outstanding
33-144
Federal Reserve Balance Sheet

February 14, 2008 (in Millions)
Assets
Securities
Loans to Commercial
Banks
All Other Assets
Total
Liabilities and Net Worth

$713,369
60,039
111,689
$885,097
Reserves of Commercial
Banks
Treasury Deposits
Federal Reserve Notes
(Outstanding)
All Other Liabilities and
Net Worth
Total
$ 11,312
4,979
778,937
89,869
$885,097
Source: Federal Reserve Statistical Release, H.4.1, February 14, 2008

33-145
Central Banks
Selected Nations
Australia:
Canada:
Euro Zone:
Japan:
Mexico:
Russia
Sweden:
United Kingdom:
United States:
Reserve Bank of Australia (RBA)

Bank of Canada
European Central Bank (ECB)
Bank of Japan (BOJ)
Banco de Mexico (Mex Bank)
Central Bank of Russia
Sveriges Riksbank
Bank of England
Federal Reserve System (the Fed)
(12 Regional Federal Reserve Banks)
33-146
Tools of Monetary Policy
Open market operations

Buying and selling of government
securities (or bonds)
Commercial banks and the general
public
Used to influence the money supply
When the Fed sells securities,

commercial bank reserves are
reduced
33-147
Open Market Operations
Fed buys $1,000 bond from a commercial

bank
New Reserves
$1000
$1000
Excess
Reserves
$5000
Bank System Lending
Total Increase in the Money Supply, ($5,000)
33-148
Open Market Operations
Fed buys $1,000 bond from the public

Check is Deposited
New Reserves
$1000
$800
Excess
Reserves
$4000
Bank System Lending
$200
Required
Reserves
$1000
Initial
Checkable
Deposit
Total Increase in the Money Supply, ($5000)

33-149
The reserve ratio

Changes the money multiplier
The discount rate

The Fed as lender of last resort
Short term loans
Term auction facility

Introduced December 2007
Banks bid for the right to borrow
reserves
33-150
Open market operations most important

Reserve ratio last changed 1992
Discount rate was a passive tool
Term auction facility is new
Guaranteed amount lent by the Fed
Anonymous
33-151
The Federal Funds Rate
Rate charged by banks on overnight loans

Targeted by the Federal Reserve
FOMC conducts open market operations
to achieve the target
Demand curve for Federal funds
Supply curve for Federal funds
33-152
Federal Funds Rate, Percent
The Federal Funds

Rate
Using Open Market Operations
4.5
Sf3
4.0
Sf1
3.5
Sf2
Df
Qf3
Qf1
Qf2
Quantity of Reserves
33-153
Monetary Policy
Expansionary monetary policy

Economy faces a recession
Lower target for federal funds rate
Fed buys securities
Expanded money supply
Downward pressure on other interest rates
Contractionary monetary policy

33-154
Taylor Rule
Rule of thumb for tracking actual

monetary policy
Fed has 2% target inflation rate
If real GDP = potential GDP and inflation is
2% then target federal funds rate is 4%
Target varies as inflation and real GDP vary
33-155
Monetary Policy
Affect on real GDP and price level

Cause-effect chain
Market for money
Investment and the interest rate
Investment and aggregate demand
Real GDP and prices
Expansionary monetary policy

Restrictive monetary policy
33-156
(a)
The market
for money
Sm1
Sm2
(c)
Equilibrium real
GDP and the
Price level
(b)
Investment
demand
Sm3
AS
10
P3
Price Level
Rate of Interest, i (Percent)
Monetary Policy and GDP
AD3
I=$25
AD2
I=$20
AD1
I=$15
P2
Dm
ID
0
$125
$150
$175
Amount of money
demanded and
supplied
$15
$20
$25
Amount of investment
Q1
Qf Q3
Real GDP
33-157
Expansionary Monetary Policy

CAUSE-EFFECT CHAIN
Problem: unemployment and recession
Fed buys bonds, lowers reserve ratio, lowers the

discount rate, or increases reserve auctions
Excess reserves increase
Federal funds rate falls
Money supply rises

Interest rate falls
Investment spending increases
Aggregate demand increases
Real GDP rises
33-158
CAUSE-EFFECT CHAIN
Restrictive Monetary Policy

Problem: inflation
Fed sells bonds, increases reserve ratio, increases
the discount rate, or decreases reserve auctions
Excess reserves decrease
Federal funds rate rises
Money supply falls

Interest rate rises
Investment spending decreases
Aggregate demand decreases
Inflation declines
33-159
Monetary Policy
Advantages over fiscal policy

Speed and flexibility
Isolation from political pressure
Recent U.S. monetary policy

Problems and complications
Recognition lag
Operational lag
Cyclical asymmetry
33-160
The Big Picture

Input
Resources
With Prices
Productivity
Sources
LegalInstitutional
Environment
Consumption
(Ca)
Aggregate
Supply
Levels of
Output,
Employment,
Income, and
Prices
Aggregate
Demand
Investment
(Ig)
Net Export
Spending
(Xn)
Government
Spending
(G)
33-161
The Mortgage Debt Crisis
Home mortgage default 2007

Banks write off bad loans
Reserves reduced
Fed as lender of last resort
Term auction facility
Fed lowered federal funds rate
Mortgage backed securities as a new
innovation
Bad incentives
33-162
Chapter 37
International
Trade
McGraw-Hill/Irwin
Chapter Objectives
Comparative advantage and the

gains from trade
Exports and imports
Economic effects of tariffs and
quotas
Arguments for protectionism
37-164
Some Key Facts
U.S. trade deficit in goods

$815 billion in 2007
U.S. trade surplus in services

Canada largest U.S. trade partner

Trade deficit with China
Exports are 12% U.S. output

Dependence on oil
37-165
World Exports
Percentage Share of World Exports,
Selected Nations, 2007
0
Germany
United States
China
Japan
France
Netherlands
United Kingdom
Italy
10
12
9.20
8.59
8.02
5.38
4.06
3.83
3.71
3.40
Source: World Trade Organization
37-166
Economic Basis for Trade
Nations have different resource

endowments
Labor-intensive goods
Land-intensive goods
Capital-intensive goods
37-167
Comparative Advantage
Assumptions
Two nations
Same size labor force
Constant costs in each country
Different costs across countries
U.S. absolute advantage in both
Opportunity cost ratio
Slope of the curve

Coffee sacrificed per ton of wheat
37-168
45
45
(a) United States
40
35
35
30
30
Coffee (Tons)
Coffee (Tons)
40
25
20
25
20
15
15
12
10
10
5
4
5
0
(b) Brazil
10
15 18 20
Wheat (Tons)
25
30
B
5
8 10
15
Wheat (Tons)
20
37-169
Self-sufficiency output mix
Specialization and trade
Produce good with lowest domestic
opportunity cost
Opportunity cost 1 ton wheat
1 pound of coffee in U.S.
2 pounds of coffee in Brazil
37-170
Terms of trade
U.S. 1W = 1C
U.S. will sell 1W for more than 1C
Brazil 1W = 2C
Brazil will pay less than 2C for 1W
Settle between the two
Depends on supply/demand factors
Assume 1W = 1.5C
37-171
Gains from trade
Trade possibilities line
Slope equals terms of trade
Improved options
Complete specialization
More of both goods
More efficient resource allocation
37-172
Economic Basis for Trade

45
45
(a) United States
(b) Brazil
40
40
35
25
20
15
12
10
Trading
Possibilities Line
25
20
15
10
5
4
5
0
30
Coffee (Tons)
Coffee (Tons)
30
35
Trading
Possibilities Line
W
5
10
15 18 20
Wheat (Tons)
25
30
B
5
w w
8 10
15
Wheat (Tons)
20
37-173
Trade with increasing costs

Concave production curve
Resources not perfectly
substitutable
Incomplete specialization
The case for free trade

Promote efficiency
Promote competition
37-174
Supply and Demand Analysis
World price
Domestic price with no trade
World price > domestic price
Export surplus
Export supply curve
World price < domestic price

Import shortage
Import supply curve
37-175

(a) U.S. Domestic
Aluminum Market
Sd
Price (Per Pound; U.S. Dollars
Surplus = 100
(b) U.S. Export Supply

and Import Demand
1.50
1.50
Surplus = 50
1.25
1.25
1.00
1.00
.75
Shortage = 50
.50
0
75
100
125
Quantity of Aluminum
(Millions of Pounds)
U.S.
Import
Demand
.75
x
.50
Dd
Shortage = 100
50
U.S.
Export
Supply
150
0
50
100
37-176

(b) Canadas Export Supply
and Import Demand
(a) Canadas Domestic

Aluminum Market
1.50
1.50
Surplus = 100
Sd
1.25
1.25
Surplus = 50
1.00
1.00
.75
.50
Shortage = 50
0
50
75
100
Dd
125
150
.75
Canadian
Export
Supply
q
Canadian
Import
Demand
.50
t
0
50
100
37-177
International Equilibrium
Import demand = Export supply

U.S.
Export
Supply
1.00
.88
Canadian
Export
Supply
Equilibrium
U.S.
Import
Demand
.75
Canadian
Import Demand
0
50
100
37-178
Trade Barriers
Tariffs
Revenue tariff
Protective tariff
Import quota
Nontariff barrier (NTB)
Voluntary export restriction
(VER)
37-179
Trade Barriers
Economic impact of tariffs

Direct effects
Decline in domestic consumption

Increase in domestic production
Decline in imports
Tariff revenue
Indirect effects
37-180
Trade Barriers
Economic Effects of a Tariff or Quota

Sd
Price
Sd + Q
Pd
Pt
Pw
Dd
c d
Quantity
37-181
Terimakasih

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Economics

July 22, 2012

Rabu, 6 Mei 2015 Teori, Konsep, dan

Applied Economics, Griffiths and

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Applied Economics, Griffiths and

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Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Long-run economic growth and short-run

Performance and Policy

Performance and Policy

Is monetary or fiscal policy more effective

Standard of living measured by output per

GDP Per Person 2007

Savings and Investment

Banks and financial institutions

Demand shocks and flexible prices

Demand shocks and sticky prices

The future is uncertain

Cars per week

Many prices sticky in short run

All prices flexible in long run

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Define and measure GDP

National Income Accounting

Bureau of Economic Analysis

Gross Domestic Product

Measure of aggregate output

Gross Domestic Product

Exclude financial transactions

Second hand sales

Two Approaches to GDP

Count income derived from production

Count sum of money spent buying the

Two Approaches to GDP

Gross private domestic investment

Creation of new capital asset

Government purchases (G)

Net exports (Xn)

Add exported goods

Personal Consumption (C) $ 9734

Gross Private Domestic

Government Purchases (G) 2690

Net Exports (Xn)

Taxes on Production and

Net Foreign Factor Income (-)

Statistical Discrepancy (+)

Gross Domestic Product

Components of National Income

Taxes on production and imports

From national income to GDP

Other national accounts

U.S. Income Relationships 2007

Nominal vs. Real GDP

Reflect changes in price

GDP Price Index

Price of Market Basket

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

The business cycle and its phases

The Business Cycle