MACROECONOMICS

BY:
Miyasto
FACULTY OF ECONOMICS, DIPONEGORO
UNIVERSITY
 REFERENCES
Farmer, Roger E.A. 2002. Macroeconomics. South-
Western Thomson Learning, New York.
McEarchern, William A., Macroeconomics A
Contemporary Introduction. South –Western
Colledge Publishing, New York.
Mankiw, Gregory N. 2007. Macroeconomics.
Thomson South-Western, United States
Parkin, Michael. 2010. Macroeconomics. Pearson,
New York
Samuelson, Paul A and Nordous William D. 2011.
Economics. McGraw-Hill, New York.

3
 COURSE CONTENT
Session Topics Sub Topics

1 Overview 1. Central Question In

Macroeconomics
2. Preview & Outline
3. Measurenment Of
Macroeconomic Variable
4. Prerequisite & Recipes
2 Demand and Supply
Side Economics
1. Supply Side Economics
(Classical Aproach)
2. Demand Side Economics
(Keynesian Approach)

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 COURSE CONTENT
Session Topics Sub Topics

3 Measuring Economic 1. Measures of National

Activity Product
2. The Problems of Double
Counting
3. From GDP to Disposable
Income

4, 5 National Income 1. Aggregate Expenditure in

Equilibrium Demand Side Equilibrium
2. The Two Approach of
National Income Equilibrium
3. Multiplier Effect
4. Inflationary & Deflationary
Gap
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 COURSE CONTENT
Session Topics Sub Topics

6 The Role of 1. The Role of Investment

Withdrawal and 2. The Role of Government
Expenditure
Injection for The 3. The Role of Net Export
National Income
Equilibrium

7, 8 Commodity Market 1. The Two Approach for

Driving Commodity Market
Equilibrium (IS Curve)
2. Fiscal Policy & The
Implication to the
Commodity Market
Equilibrium
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 COURSE CONTENT
Session Topics Sub Topics

9, 10 Money Market 1. Money Demand

2. Money Supply
3. Money Market Equilibrium
(LM Curve)
4. Monetary Policy
11 Open Economy
1. Exchange Rate &
International Monetary
System
2. Balance of Trade
3. Balance Of Payment (BOP)
4. Problems of BOP
5. Monetary & Fiscal Policy in
the Open Economy
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 COURSE CONTENT
Session Topics Sub Topics
1. Market for Resources
12, 13 Agregate Supply 2. Short Run and Long Run
Agregte Supply
3. Change in Aggregate Supply
4. Economic Growth

14 Inflation, 1. Inflation
Unemployment and 2. Unemployment
Policy Recomendation

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 MACROECONOMICS VS
MICRECONOMICS
MACROECONOMICS MICROECONOMICS
Analysis-> Economic Analysis -> Economic
behaviour -> Aggregate behaviour individually

S P
P
E S
E
P0 P0

D
D
0
Y0 Y 0 Q0 Q
PRIMARY MICROECONOMICS
ISSUES

1. WHAT DEMAND & SUPPLY

2. HOW PRODUCTION THEORY

3. FOR WHOM DISTRIBUTION

THEORY
PRIMARY MACROECONOMICS
ISSUES

1. UNEMPLOYMENT
2. INFLATION
3. ECONOMIC GROWTH

4. BUSINESS CYLES
 PRIMARY PROBLEMS OF
ECONOMY

1. ECONOMIC GROWTH
2. ECONOMIC INSTABILITY
3. UNEMPLOYMENT &
INFLATION

4. BALANCE OF TRADE &

BALANCE OF PAYMENT
MACRO ECONOMICS
ENVIRONMENT

ASSUMPTIONS

SUPPLY SIDES DEMAND SIDES

ECONOMICS ECONOMICS
1. CLASSIC
2. NEO CLASSIC
THEORY 1. KEYNESIAN
2. NEO KEYNESIAN

POLICY

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 AGGREGATE SUPPLY &
MONETARY DEMAND
POLICY OUTPUT
(REAL GDP)

FISCAL
POLICY AGGREGATE
DEMAND
EMPLOYMENT &
UNEMPLOYMENT
OTHER
POLICY INTERACTION OF
AGGREGATE SUPPLY
AND DEMAND:

PRICE LEVEL
AND COST PRICE AND
INFLATION
AGGREGATE
POTENTIAL SUPPLY
OUTPUT
FOREIGN TRADE

CAPITAL, LABOR,
TECNOLOGY

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 FLOW OF INCOME

BUSINESS
SECTORS

COMMODITY FACTORS
MARKET MARKET

INJECTION:
HOUSEHOLD
• INVESTMENT
2. GOVERNMENT
WITHDRAWAL:
• SAVING SECTORS
EXPENDITURE • TAX
3. EXPORT • IMPORT
MACROECONOMICS ISSUES

ECONOMIC
GROWTH

BALANCE OF
ECONOMIC TRADE &
INSTABILITY BALANCE OF
PRIMARY PAYMENT
ISSUES

INFLATION &
UNEMPLOYMENT
 MEASURING
ECONOMINC
GROSS ACTIVITY
DOMESTIC
PRODUCT NET
(GDP) DOMESTIC
PRODUCT PERSONAL
(NDP) INCOME
(PI)
GROSS
NATIONAL
PRODUCT
(GNP) NATIONAL
INCOME
(NI)
DISPOSABLE
NET INCOME
NATIONAL (DI)
PRODUCT
(NNP)
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GDP,NDP VS GNP, NNP

GDP-> MEASURE OF ALL FINAL GOODS AND

SERVICES WITHIN THE COUNTRY
IN 1 YEAR
Y = C + I + G + NX

NDP -> GDP MINUS ALLOWANCE FOR

DEPRECIATION OF CAPITAL
GNP -> MEASURE OF THE VALUE OF FINAL
GOOD AND SERVIVES PRODUCED BY
DOMESTICALLY OWNED FACTORS OF
PRODUCTION
NNP -> GNP MINUS ALLOWANCE FOR
DEPRECIATION OF CAPITAL
GDP,NDP VS GNP, NNP

NI -> TOTAL PAYMENTS TO FACTORS

PRODUCTION
NI = NNP – INDIRECT TAX

PI -> A MEASURE OF INCOME BEFORE

TAXES HAVE BEEN DEDUCTED
NI – UP – CT - PPF + I
NI = NATIONAL INCOME
UP = UNDISTRIBUTED PROFIT
CT = CORPORATE TAX
PPF = PAYMENT FOR PENSION FUND
I = INTEREST

DI -> INCOME AVAILABLE FOR HOUSEHOLD TO

SPEND.
DI = PI – INCOME TAX + TRANSFER PAYMENT