PB202 Macroeconomics

Sophian bin Sout Mazliza binti Roslan 2011

enter here

[ [ [ [

Learning Outcome [LO] Course Learning Outcome [CLO] Contents Group Discussion

] ] ] ]

page 3 page 4 page 5 page 24

PB202 Macroeconomics Introduction to Macroeconomic

PB202 Macroeconomic

Learning Outcome [LO]

Upon completion of this course, student should be able to: 1. apply precisely the knowledge of basic macroeconomic theory in the world of economy issue 2. calculate precisely the national income accounting and prepare the national income equilibrium determination in economic sector 3. write briefly in group the information on the tools of fiscal and monetary policy that impact to the economic system based on case study given. 4. determination effectively the impact of macroeconomic problems to the economic system in current economic trend.

Menu Page [ PB202 Macroeconomic ]

Course Learning Outcome [CLO]

1. apply accuracy the knowledge of basic macroeconomic theory in the world of economy issue 2. calculate precisely the national income accounting and prepare the national income equilibrium determination in economic sector 3. write briefly in group the information on the tools of fiscal and monetary policy that impact to the economic system based on case study given. 4. determination effectively the impact of macroeconomic problems to the economic system in current economic trend.

Menu Page [ PB202 Macroeconomic ]

Contents

Topic 1: INTRODUCTION TO MACROECONOMIC

1.1 Learn macroeconomic on general 1.1.1 Introduction to Macroeconomic. 1.1.2 Macroeconomic versus Microeconomic 1.1.3 Macroeconomic Goal. Courses Goals 1/3 6 8 10 14

1.2 Evaluating the government policies and tools 15 1.2.1 Definition of government policies.. 1.2.2 Fiscal Policy.16 1.2.3 Monetary Policy.. 17 1.2.4 Government Expenditure. 18 Courses Goals 2/3 19 1.3 Aggregate Demand and Aggregate Supply 1.3.1 Aggregate Demand 1.3.2 Aggregate Supply. 1.3.3 The Curve.. Courses Goals 3/3.
Menu Page [ PB202 Macroeconomic ]

20 21 22 23

Introduction to Macroeconomic

Source:

http://www.youtube.com/watch?v=MvVcdxtKif4&feature=related

Menu Page

Contents Page [ PB202 Macroeconomic ]

Introduction to Macroeconomic

The field of economics that studies the behavior of the aggregate economy. Macroeconomics examines economy-wide phenomena such as changes in unemployment, national income, rate of growth, gross domestic product, inflation and price levels.
Source: http://www.investopedia.com/terms/m/macroeconomics.asp#ixzz1XDurvlno

The study of the behavior an economy at the aggregate level, as opposed to the level of a specific subgroups or individuals (which is called microeconomics). For example, a macroeconomist might consider the industrial sector, the services sector or the farm sector, but he/she will not consider specific parts of any of these sectors. Factors studies include inflation, unemployment, and industrial production, often with the aim of studying the effect of government policy on these factors.
Source:http://www.investorwords.com/2914/macroeconomics.html#ixzz1ZlVJu9xr

Menu Page

Contents Page [ PB202 Macroeconomic ]

[ Microeconomic versus Macroeconomic ]

http://www.youtube.com/watch?v=MvVcdxtKif4

Source:
Menu Page

http://www.youtube.com/watch?v=DJG-liA19eY&feature=related

Contents Page [ PB202 Macroeconomic ]

[ Microeconomic versus Macroeconomic ]

Microeconomics Studies individual income Analyzes demand for and supply of labour Deals with households and firms decision Studies individual prices Analyzes demand and supply of goods

Macroeconomics Studies national income Analyzes total employment in the economy Deals with aggregate decision Studies overall price level Analyzes aggregate demand and aggregate supply

Menu Page

Contents Page [ PB202 Macroeconomic ]

Macroeconomic Goals

Full Employment
Achieving full employment of all available factors of production i.e of labour, land, capital and entepreneurs. An aeconomy should use all its available resources more efficiently to attain maximum output. Therefore if more resources are employed, the higher the output of goods and services.
Source: Principles of Economic (2nd Ed), Oxford

Menu Page

Contents Page [ PB202 Macroeconomic ]

Macroeconomic Goals

Price Stability
Maintaining price stability or controlling inflation is another macroeconomic goal. The objective of the nation is to keep its inflation rate as low as possible. Inflation can also have several consequences. It can lead to income not rising as fast as price, thereby penalizing certain group of people, namely pensioners and fixed income earners.
Source: Principles of Economic (2nd Ed), Oxford

Menu Page

Contents Page [ PB202 Macroeconomic ]

Macroeconomic Goals

Economic Growth
To achieve economic growth, the economy must be operating at maximum capacity. In other words, economic growth refers to an increase in the full production output level of a nation over time. Economic growth can only be realized over the years. However, the economic growth of a nation does not move constantly but will experience short-term ups and downs. Economic growth also measured by evaluating the full production output per capita.
Source: Principles of Economic (2nd Ed), Oxford

Menu Page

Contents Page [ PB202 Macroeconomic ]

Macroeconomic Goals

Equitable Distribution of Income

Most of the nations try to narrow the gap between higher income and the lower income groups. This is to ensure that all people are equal in terms of the standard of living. Taxation is one method of achieving and equitable distribution of income. An expenditure policy narrows the gaps between the two income groups.
Source: Principles of Economic (2nd Ed), Oxford

Menu Page

Contents Page [ PB202 Macroeconomic ]

Courses Goals 1/3

CLO 1: apply accuracy the knowledge of basic macroeconomic theory in the world of economy issue Cognitive Domain C1 : Knowledge Cognitive Domain C2 : Comprehensive Learning Domain LD1: Knowledge Learning Domain LD2: Technical Skills Affective Domain A4: Organizing Values

Menu Page

Contents Page [ PB202 Macroeconomic ]

Government Policies

Definition:
Public policy as government action is generally the principled guide to action taken by the administrative or executive branches of the state with regard to a class of issues in a manner consistent with law and institutional customs. In general, the foundation is the pertinent national and sub national constitutional law and implementing legislation such as the US Federal code. Further substrates include both judicial interpretations and regulations which are generally authorized by legislation. Other scholars define it as a system of courses of action, regulatory measures, laws, and funding priorities concerning a given topic promulgated by a governmental entity or its representatives. Public policy is commonly embodied in constitutions, legislative acts, and judicial decisions.
Source: http://en.wikipedia.org/wiki/Public_policy

Menu Page

Contents Page [ PB202 Macroeconomic ]

Government Policies

In economics, fiscal policy is the use of government expenditure and revenue collection (taxation) to influence the economy. The two main instruments of fiscal policy are government expenditure and taxation. Changes in the level and composition of taxation and government spending can impact on the following variables in the economy: a. Aggregate demand and the level of economic activity; b. The pattern of resource allocation; c. The distribution of income. Fiscal policy refers to the use of the government budget to influence the first of these: economic activity.
Source: http://en.wikipedia.org/wiki/Fiscal_policy

Fiscal Policy

Menu Page

Contents Page [ PB202 Macroeconomic ]

Government Policies

Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment. Monetary theory provides insight into how to craft optimal monetary policy. It is referred to as either being expansionary or contractionary. Expansionary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in hopes of avoiding the resulting distortions and deterioration of asset values. Monetary policy differs from fiscal policy, which refers to taxation, government spending, and associated borrowing.
Source: http://en.wikipedia.org/wiki/Monetary_policy

Monetary Policy

Menu Page

Contents Page [ PB202 Macroeconomic ]

Government Expenditure

Government acquisition of goods and services for current use to directly satisfy individual or collective needs of the members of the community is classed as government final consumption expenditure. Government acquisition of goods and services intended to create future benefits, such as infrastructure investment or research spending, is classed as government investment (gross fixed capital formation), which usually is the largest part of the government gross capital formation. Acquisition of goods and services is made through own production by the government (using the government's labour force, fixed assets and purchased goods and services for intermediate consumption) or through purchases of goods and services from market producers.
Read more on http://en.wikipedia.org/wiki/Government_spending

Menu Page

Contents Page [ PB202 Macroeconomic ]

Courses Goals 2/3

CLO 1: apply accuracy the knowledge of basic macroeconomic theory in the world of economy issue Cognitive Domain C1 : Knowledge Cognitive Domain C2 : Comprehensive Cognitive Domain C3 : Application Learning Domain LD1: Knowledge Learning Domain LD2: Technical Skills

Menu Page

Contents Page [ PB202 Macroeconomic ]

Aggregate Demand

The total amount of goods and services demanded in the economy at a given overall price level and in a given time period. It is represented by the aggregate-demand curve, which describes the relationship between price levels and the quantity of output that firms are willing to provide. Normally there is a negative relationship between aggregate demand and the price level. Also known as "total spending".
Source: http://www.investopedia.com/terms/a/aggregatedemand.asp#ixzz1Zra4ekMA

In macroeconomics, aggregate demand (AD) is the total demand for final goods and services in the economy (Y) at a given time and price level. It is the amount of goods and services in the economy that will be purchased at all possible price levels. This is the demand for the gross domestic product of a country when inventory levels are static. It is often called effective demand, though at other times this term is distinguished.
Source: http://en.wikipedia.org/wiki/Aggregate_demand

Menu Page

Contents Page [ PB202 Macroeconomic ]

Aggregate Supply

The total supply of goods and services produced within an economy at a given overall price level in a given time period. It is represented by the aggregate-supply curve, which describes the relationship between price levels and the quantity of output that firms are willing to provide. Normally, there is a positive relationship between aggregate supply and the price level. Rising prices are usually signals for businesses to expand production to meet a higher level of aggregate demand.
Source: http://www.investopedia.com/terms/a/aggregatesupply.asp#ixzz1ZrwFoPLE

In economics, aggregate supply is the total supply of goods and services that firms in a national economy plan on selling during a specific time period. It is the total amount of goods and services that firms are willing to sell at a given price level in an economy.
Source: http://en.wikipedia.org/wiki/Aggregate_demand

Menu Page

Contents Page [ PB202 Macroeconomic ]

The Curve

] Aggregate Supply AS Intersection between Aggregate Supply and Aggregate Demand

Price

P*
Equilibrium Price

Aggregate Demand
AD

Y*
Equilibrium Output

Aggregate Output

Menu Page

Contents Page [ PB202 Macroeconomic ]

Courses Goals 3/3

CLO 1: apply accuracy the knowledge of basic macroeconomic theory in the world of economy issue Cognitive Domain C1 : Knowledge Cognitive Domain C2 : Comprehensive Cognitive Domain C3 : Application Psychomotor Domain P4: Articulation

Learning Domain LD1: Knowledge Learning Domain LD2: Technical Skills

Menu Page

Contents Page [ PB202 Macroeconomic ]

[ Group 1

Group Discussion

Explain the circular flow model in a two sector economy in detail and relate it with three approaches in calculating national income Differentiate between microeconomics and macroeconomic Group 2

Group 3

Explain briefly the macroeconomic goals Differentiate fiscal and monetary policy Group 4

Group 5

Government cut the tax rate and increase the expenditure. Explain this statement with regard to government policies.
Group 6

Explain when the government practices contractionary fiscal policy.

Menu Page

Contents Page [ PB202 Macroeconomic ]