LEARNING MATERIALS OF THE FIRST AND SECOND MEETING

Unit 1
Economics1

Economics is the study of the production, distribution, and consumption of wealth in

human society, but this perspective is only one among many different definitions. Economics
is also the study of people (as consumers) making choices about which products and goods to
buy. Indiana University says that economics is a social science that studies human behavior.
It has a unique method for analyzing and predicting individual behavior as well as the effects
of institutions such as firms and governments, clubs, and even religions.

Other expert defines that economics is the study of choices. Though some believe that
economics is driven purely by money or capital, the choice is much more expansive. If the
study of economics is the study of how people choose to use their resources, analysts must
also consider all of their possible resources, of which money is but one. In practice, resources
can encompass everything from time to knowledge and property to tools. As such, economics
helps illustrate how people interact within the market to realize their diverse goals.

Beyond defining what these resources are, the concept of scarcity is also an important
consideration. These resources (no matter how broad the category) is limited, which is the
source of tension in the choices people and society make: Their decisions are a result of the
constant tug of war between unlimited wants and desires and limited resources. Many people
break down the study of economics into two broad categories: microeconomics and
macroeconomics.

The Dictionary of Economics defines microeconomics as “the study of economics at

the level of individual consumers, groups of consumers, or firms,” Microeconomics is the
analysis of the decisions made by individuals and groups, the factors that affect those
decisions, and how those decisions affect others.

Microeconomics deals with economic decisions made at a low, or micro, level. From
this standpoint, microeconomics is sometimes considered the starting point for the study of
macroeconomics, as the former takes a more bottom-up approach to analyze and understand
the economy. The prefix micro- means small, and, not surprisingly, microeconomics is the
study of small economic units. The field of microeconomics is concerned with: (1) Consumer
decision making and utility maximization; (2) Firm production and profit maximization; (3)
Individual market equilibrium; (4) Effects of government regulation on individual markets;
(5) Externalities and other market side effects

Microeconomics concerns itself with the behavior of individual markets, such as the
markets for oranges, cable television, or skilled workers, as opposed to overall markets for

1
Written by Moffatt. Mike Moffatt is an economics writer and instructor who has written hundreds of articles
and taught at both the university and community collegelevels. This article was updated July 02, 2019.

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produce, electronics, or the entire workforce. Microeconomics is essential for local
governance, business, personal finance, specific stock investment research, and individual
market predictions for venture capitalists.

In contrast to microeconomics, macroeconomics considers similar questions but at a

larger scale. The study of macroeconomics deals with the sum total of the decisions made by
individuals in a society or nation such as, “How does a change in interest rates influence
national savings?” It looks at the way nations allocate resources such as labor, land, and
capital.

Macroeconomics can be thought of as the big-picture version of economics. Rather

than analyzing individual markets, macroeconomics focuses on aggregate production and
consumption in an economy. Topics that macroeconomists study include: (1) Effects of
general taxes, such as income and sales taxes, on output and prices; (2) Causes of economic
upswings and downturns; (3) Effects of monetary and fiscal policy on economic health; (4)
Effects of and process for determining interest rates; (5) Causes for the pace of economic
growth

To study economics at this level, researchers must be able to combine different goods
and services produced in a way that reflects their relative contributions to aggregate output.
This is generally done using the concept of the gross domestic product, where goods and
services are weighted by their market prices.

What do Economists do? Economists do many things, such as: conduct research,
monitor economic trends, collect and analyze data, study, develop, or apply economic theory.

Economists hold positions in business, government, and academia. An economist’s focus

may be on a particular topic, like inflation or interest rates, or her approach might be broader.
Using their understanding of economic relationships, economists might be employed to
advise businesses, nonprofits, labor unions, or government agencies. Many economists are
involved in the practical application of economic policy, which could include a focus on
several areas from finance to labor or energy to health care.

Some economists are primarily theoreticians and may spend a majority of their days
deep in mathematical models to develop new economic theories and discover new economic
relationships. Others may devote their time equally to research and teaching, holding a
position as a professor to mentor the next generation of economists and economic thinkers.

A. Vocabulary Building
Excercise 1: Dictionary Study

Find out the meaning of the following words in an English-Indonesian Dictioary as they
apply in the text.

English Indonesian English Indonesian

1. consuption of wealth 18. opposed
2. expert 19. larger scale

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3. though 20. deal with
4. driven ourely 21. agregate production
5. expansive 22. upswings
6. consider 23. downturns
7. incompass 24. interest rate
8. realize 25. economics growth
9. diverse 26. weighted
10. beyond 27. hold
11. scarcity 28. labor union
12. source of tension 29. government agencies
13. constant tug of war 30. involved
14. break down 31. health care
15. affect 32. discover
16. stand point 33. devote
17. former 34. equally

B. Comprehensive Questions
Exercise 2: True or False.

Decide whether the following statements are true or false according to the reading text. Write
T for True and F for false. Please correct the false statements.

1. ( ……….) Economics is merely the study of the production, distribution, and

consumption of wealth in human society.

2. ( ………..) According to Indiana University economics is a social science that studies

human behavior.

3. ( ………. ) Some people believe that economics is driven genuinely by money or

capital.

4. (………. ) Analysts consider that resources can include everything from time to
knowledge and property to devices.

5. ( ………..) The illustration of economics can be perceived by how people interact within
the market to realize their different goals.

6. ( ……….) The concept of scarcity in resources is very important consideration, no

matter how limited it is.

7. ( ……… ) Microeconomics and macroeconomics are parts of two catagories of the

study of economics.

8. ( ………) Individual market balance is one of the domain of microeconomics

9. ( ……… ) We do not need microeconomics before studying macroeconomics.

10. ( ………) Macroeconomics have concern with some total of the decision
made by individual.
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11. ( ………) Macroeconomics pays attention on total production and
consumption in an economy.

12. ( ……...) One of the topics of studying macroeconomics is effect of monetary and fiscal
policy on economic health.

13. ( ………) To apply the concept of the gross domestic product, researchers do not need
the combination of different goods and services in macroeconomics.

14. ( ………) Conducting research, collecting and analyzing data, paying attention on
inflation or interest are some main duties of economists.

15. ( ……..) Some other main duties of economists are developing new economic theories
and finding new economic relationships.

Exercise 3: Understanding details of the texts

Answer the following questions briefly. Based your answer on the text of the reading.
1. What is economics in a broad sense?
2. In practice, what is economics?
3. Why does money or capital become one of important resources in economics?
4. Why the concept of scarcity is important consideration in economics?
5. What is meant by microeconomics?
6. What are microeconomic concerned with?
7. What is macroeconomic and what is it concerned with?
8. What are the topics of studying macroeconomics?
9. What do researchers do in studying economics at the level of macroeconomics?
10.What are the main duties of economists ?

Exercise 4: Sentence completion.

Apply words or phrases to complete the following sentences in order to make good sense.

A. money or capital F. groups of consumers K. interect

B. total production G. analyzed data L. inflation
C. different H. human behavior M.individual consumers
D. market prices I. economic theory N. goods and services
E. scarcity J. the big picture O. consumption of wealth

1. Economics is a social science which studies _________, which involve production,

distribution and __________

2. Some believe that economics require _________,besides the concept of _______ can be
an important consideration.

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3. Economics can assist to describe how people _________ within the market to
understand their _________ goals.

4. Microeconomic is the study of economics at the level of _________ as well as

________ or company.

5. Macroeconomics can be perceived as ________version of economics which focuses on

__________ and consumption in an economy.

6. To combine different ________ that reflects their contribution to acumulate output,

reseschers usually use the concept of the gross domestic product, where goods and
services are determined by their ________

7. Conduct research, monitor economic trends, collect and _________, develop or apply
_________ are things that economists perform.

8. Most of economists pay attention on _________ and interest rates.

C. Parts of Speech : Nouns

Akar kata benda (noun) dalam bahasa Inggris seringkali dapat diketahui dari bentuk
katanya, terutama dari akhiran yang dipakai. Jika kata benda itu berasal dari kata sifat
(adjective), kata benda tersebut berakharan -r.ess,-(i)ty;-ce, atau -cy.

Perhatikan table berikut:

Proses Pembentukan Hasil Bentukan

Adjective + ness great + ness greatness
Adjective + i divers+(i) ty diversity
Adjective + an /n ce account + ance accountance
Adjective + (n)cy intimate + ey intimacy

Bila kata benda itu berasal dari kata kerja (verb), kata benda tersebut biasanya berakhiran :
-ment, -ion, -ence, -er/-or, atau -ce.

Perhatikan table berikut.

Proses Pembentukan Hasil Bentukan

Verb + ment agree + ment agreement
Verb + ion collect + ion collection
Verb + ence or ance appear + ance appearance
Verb + er or or employ +er employer
Verb + ee examine + ee examine + ee

Exercise 5 : Derivation (1)

Write the roots of the following words in the provided space.

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 Nouns Roots Nouns Roots

1. agreement 11. cooperation

2. information 12. action

3.destruction 13. appearance

4. diversity 14. sameness

5. civilization 15. production

6.communication 16. traveler

7. accountance 17.friendship

8. strength 18.greatness

9. freedom 19. organization

10. government 20.historian

Exercise 6 : Derivation (2)

Fill in the spaces with the appropriate words forms related to the provided words.

Verb Noun Adjective Meaning

protect
expense
productive
compare
discrimination
useful

Exercise 7: Words in Context

Apply the appropriate word forms in the following sentences. Change the grammatical forms
of the words if necessary.

1. Protect

a. We need to _______ our global environment and preserve its finite resources for the
good of all.

b. The _______ of home industry against foreign competition should be done in order to
create the welfare of the home producers.

c. A code of ethics is one of the ________issues to eliminate world poverty.

2. Expense

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 a. Living cost in a big city like Jakarta is very high. It needs a lot of money for
daily____

b. Individuals, business organizations, families ______ their money for their daily eeds.

c. The poor always think that sending their children to study at university is too ______
for them.

3. Productive

a. High qualified human beings can be very _______ in a very good working
atmosphere.

b. We cannot deny that property is one of the _______ of transnational

corporation.

c. To _______ better and more qualified goods and services, some companies require
employees who are skillful and competent.

4. Compare

a. Research on the concept of scarcity is an important consideration that can be used by

economists who used a ________ approach.

b. It is very difficult to _______ the income of indigenous merchant bourgeoisie and

Chinese merchants in small scale trade and their commonly productions.

c. The ________ between income of unskillful workers and income of

professionals is very deep in Indonesia.

5. Discrimination

a. Goad government and good social structure are going to make welfare and
peaceful society without _________

b. We all hope that the change in governmental system from a centralized system toward
decentralized system will be able to improve welfare of the whole society and to
eliminate ________ service.

c. We must build a culture of peace together that doesn't _______ communities of

Black, minority, ethnic, migrant and indigenous people.

6. Useful

a. Markets grow and spread to all part of the world. They are very _______ far traders
to meet buyers and sell their goods for them.

b. Money was found to be the effective _________ for trading.

c. We can _________ money to buy our daily needs.

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Exercise 8: Word search

Find words or phrases in the reading text which fit their meaning of the following sentences.

1. Giving or sending out to a number of persons or places (_d________________)

2. Producers or persons who use good or services which directly satisfy their needs and
desires (_c_____________)

3. A person with special knowledge, skills, or trainings (_e____________)

4. Wealth, supplies of good, raw materials, human capital which a person or country has or
can utilize (_r____________)

5. Ability or quality of being judged to consider and act accordingly

( d____________)

6. State of being balanced ( e___________)

7. The policy adopted by the authority of a country that controls either the interest rate
payable on very short-term borrowing or the money supply, or the interest rate to ensure
price stability and general trust in the currency (_i_____________).

8. The means by which a government adjusts its spending levels and tax rates to monitor and
influence a nation's economy (_i_______________)

9. The amount a lender charges for the use of assets expressed as a percentage of the principal
(_i________________).

10. An organized group of workers who unite to make decisions about conditions affecting
their work. (_l_____________).

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