Macro Economics

Source : Dosen saya -» Bapak Adi Kuswanto (Dosen Teori Ekonomi 2)

What is Macro Economics?

What macroeconomics is about?
It is the study of aggregate economics activity.
-» the growth of people's income and living standars
-» fluctuations in unemployment
-» inflation
-» changes in the value of money

Three big questions for macroeconomics :
-) what determines the growth rate of real GDP?
-) what causes fluctuations in the rate of economics growth and of unemployment?
-) what determines the average level of prices and the rate at which they rise?

Real GDP ( a measure of living standar) -» a measure of the quantity of the goods and services bought with the income of all the individuals the economy.

Rapid growing economy -» Rising living standard

Slow growing economy -» living standard declines -» unemployment becomes a serious problems

Unemployment rate is the percentage of the labor force that either out of work and seeking jobs or on temporary layoff.

Unemployment rate is high, it takes a long time to find the job.

Inflation -» a process of rising prices (money steadly loses value)

In addition to three big questions, macroeconomics has to answer three questions :
-) what determines interest rate?
-) what determines balance of payment of one country with the rest of the world?
-) what determines the value of the dollar abroad?

Interest rate rises -» borrowers suffers
BOP Deficits -» Domestic currency depreciates

Depression : a persistent period of very low economic activity with very high unemployment and high excess capacity.

»Stabilizing the Economic«

Three broad questions concering economic stabilization policy :
-» what are tools of stabilization policy?
-» what should policy try to archieve?
-» what can stabilization policy achieve?