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    10 Introduction To Macroeconomics

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    Mono Basiran
    Principles of economics - Introduction to Macroeconomics

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    10 Introduction To Macroeconomics

    Uploaded by

    Mono Basiran
    240 views11 pages
    Principles of economics - Introduction to Macroeconomics

    Original Title

    10 Introduction to Macroeconomics

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    © © All Rights Reserved

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    PPT, PDF, TXT or read online from Scribd

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    Principles of economics - Introduction to Macroeconomics

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    240 views11 pages

    10 Introduction To Macroeconomics

    Uploaded by

    Mono Basiran
    Principles of economics - Introduction to Macroeconomics

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    You are on page 1of 11

    PRINCIPLES OF ECONOMICS Third Edition All Rights Reserved

    © Oxford Fajar Sdn. Bhd. (008974-T), 2013 10– 1


    CHAPTER 10
    INTRODUCTION TO
    MACROECONOMICS

    PRINCIPLES OF ECONOMICS Third Edition All Rights Reserved


    © Oxford Fajar Sdn. Bhd. (008974-T), 2013 10– 2
    DIFFERENCE BETWEEN
    MICROECONOMICS AND
    MACROECONOMICS
    MICROECONOMICS MACROECONOMICS
     Studies on individual  Studies on national income
    income  Analyzes total employment
     Analyzes demand for and in the economy
    supply of labour  Deals with aggregate
     Deals with household and decisions
    firms decisions  Studies overall price level
     Studies on individual prices  Analyzes aggregate
     Analyzes demand and demand and aggregate
    supply of goods supply

    PRINCIPLES OF ECONOMICS Third Edition All Rights Reserved


    © Oxford Fajar Sdn. Bhd. (008974-T), 2013 10– 3
    MACROECONOMIC GOALS
    Full Employment

    Economic Growth
    Price Stability

    FOUR
    MAJOR
    GOALS

    Equitable Distribution of Income


    PRINCIPLES OF ECONOMICS Third Edition All Rights Reserved
    © Oxford Fajar Sdn. Bhd. (008974-T), 2013 10– 4
    GROWTH
    GROWTH FISCAL
    FISCAL
    MONETARY
    MONETARY
    POLICY
    POLICY POLICY
    POLICY
    POLICY
    POLICY

    Contractionary
    Contractionary Expansionary
    Expansionary Contractionary
    Contractionary Expansionary
    Expansionary

    PRINCIPLES OF ECONOMICS Third Edition All Rights Reserved


    © Oxford Fajar Sdn. Bhd. (008974-T), 2013 10– 5
    THE CONFLICTING
    MACROECONOMIC

    To achieve full employment


    and maintain price stability.

    To achieve economic To achieve economic


    growth and a equilibrium growth and maintain
    in balance of payments. price stability.

    PRINCIPLES OF ECONOMICS Third Edition All Rights Reserved


    © Oxford Fajar Sdn. Bhd. (008974-T), 2013 10– 6
    COMPONENTS OF
    MACROECONOMY
    Supply of Factor of Production

    Payment for Factor of Production

    Taxes
    Taxes
    GOVERNMENT
    GOVERNMENT
    Transfer
    payment, Payments
    wages

    Purchase of goods and services


    Payments for goods and services

    Export Export

    Import Import

    PRINCIPLES OF ECONOMICS Third Edition All Rights Reserved


    © Oxford Fajar Sdn. Bhd. (008974-T), 2013 10– 7
    AGGREGATE DEMAND AND
    AGGREGATE SUPPLY
    AGGREGATE SUPPLY
    Overall Price Index - Refers to the total
    quantity of output
    supplied at alternative
    AS price levels during a given
    time period, ceteris
    paribus.

    AGGREGATE DEMAND
    P*
    - Refers to the total
    quantity of output
    demanded at alternative
    AD price levels during a given
    time period, ceteris
    paribus.

    Y* Yf Real GDP

    PRINCIPLES OF ECONOMICS Third Edition All Rights Reserved


    © Oxford Fajar Sdn. Bhd. (008974-T), 2013 10– 8
    AGGREGATE DEMAND AND
    AGGREGATE SUPPLY (cont.)
    AGGREGATE DEMAND AGGREGATE SUPPLY
    Price Price AS2 AS0
    AS1
    A B

    B A
    AD1
    AD2 AD0
    Quantity
    Quantity

     Movement along AD curve  Movement along AS curve


      in price level   Real GDP   in price level   Real GDP
    (Point B  A) (Point A  B)
      in price level   Real GDP   in price level   Real GDP
    (Point A  B) (Point B  A)

    PRINCIPLES OF ECONOMICS Third Edition All Rights Reserved


    © Oxford Fajar Sdn. Bhd. (008974-T), 2013 10– 9
    AGGREGATE DEMAND AND
    AGGREGATE SUPPLY (cont.)
    AGGREGATE DEMAND AGGREGATE SUPPLY
    Price Price AS2 AS0
    AS1
    A B

    B A
    AD1
    AD2 AD0
    Quantity Quantity

    Shifts of the aggregate demand curve to Shifts of the aggregate supply curve
    right (AD0 to AD1) to right (AS0 to AS1)
    Income increases  Interest rate decreases
    Interest rate decreases  Cost decreases
    Government expenditures increases
     Productivity increases
    Taxation decreases
    Wealth increases  Taxation decreases
    Investment increases

    PRINCIPLES OF ECONOMICS Third Edition All Rights Reserved


    © Oxford Fajar Sdn. Bhd. (008974-T), 2013 10– 10
    THE END

    PRINCIPLES OF ECONOMICS Third Edition All Rights Reserved


    © Oxford Fajar Sdn. Bhd. (008974-T), 2013 10– 11

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