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Introduction to Economics
Review
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id
History of Economics
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id
ECONOMICS << Ancient GreekOikonomia : Management of a household or estateOikos : HouseholdNomos : Law
ARISTOTLE, XENOPHAN, CHANAKYA, QIN SHI HUANG, THOMAS AQUINAS, IBN KHALDUN (14th – 17th centuries)
ADAM SMITH (1776) >> "an inquiry into the nature and causes of the wealth of nations“
KEYNES (1936)>> The General Theory of Employment, Interest and Money
Adam Smith
John Maynard Keynes(right)
Silsilah Ilmu Ekonomi
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id
Quesnay, 1758
Adam Smith, 1776
17th and 18th
century
David Ricardo, 1817
T. R. Malthus, 1798
K. Marx, 1867V. Lenin, 1917
China
U.S.S.R and East Europe
J. M. Keynes, 1936
J. S. Mill, 1848
Walras, Marshall, Fisher,
1880 - 1910
ALIRAN ILMU EKONOMI UTAMA MODERN
Masa TransisiIlmu Ekonomi
?? ?
MADZHAB KLASIK
Kaum Fisiokrat Kaum Merkantilis
ALIRAN SOSIALIS
ILMU EKONOMI NEOKLASIK
Source:Rosyidi, S. (1996)
Definition of Economics
ECONOMICS
>>> SCARCE RESOURCES
>>> CHOICES
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id
Why Study Economics?
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id
• To learn a way of thinking– Opportunity cost
– Marginalism
– Efficient markets – no free lunch
• To understand society
• To understand global affairs
• To be an informed citizen
Approach to Economics
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id
• Positive Economics to understand, no judgement
to describe what exist & how it works
• Normative Economics / Policy Economics to analyzes outcomes, evaluates, prescribes
courses of action
Positive Economics
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id
• Descriptive Economics Compilation of data that describe phenomena & facts
• Economics Theory Compilation of data that describe phenomena & facts
Statement / set of related statements about cause & effect, action & reaction
Economics Theory
• Model– Types: Words, Graphs, Equation– Consists of: Variables– Variable <<< Ceteris Paribus– Caution!!!
• Post hoc fallacy correlation does not imply causation
• Fallacy of composition what is true for a part actually not always true for whole
• Empirical economics To test Economics Theory Example: Research in Trust & Gender Behavior Read and Summary (homework1)
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id
Economics Policy
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id
• Set objective
• 4 criteria in judging economic outcomes: Efficiency, produce what people want at the least cost
Equity (fairness), distribution of income & wealth
Growth, increase of total output of an economy
describe relationship of: output growth & population growth
Stability, growing steady + low inflation + full employment resources
The Economic Problem:Scarcity and Choice
“human wants are unlimited but resources are not”
Basic questions:• What?• How?• Who?
PENGANTAR EKONOMI
Scope of Economics
• Microeconomics Trees
• Macroeconomics Forest
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id
Microeconomics
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id
PERFECTLY COMPETITIVE MARKET
Equilibrium in Competitive Output Markets
Household Behavior•Demand•Supply
Firm Behavior•Demand•Supply•Choice of Tech.
Competitive Input Markets
The Competitive Market System•General equilibrium and efficiency
MARKET IMPERFECTIONS AND
THE ROLE OF GOVERNMENT
•Imperfect Market Structure
•Public goods, social choice
•Income dist. & poverty
•Public Finance
Macroeconomics
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id
The Goods-and-Services Market
The Money Market
Connection between The Goods-and-Services Market and The Money Market
Aggregate Demand
Aggregate Supply
The Labor Market
References
• Case, K., Fair, R., & Oster, S. M. (2010). Principles of Economics, 10th Editions. Prentice Hall Business Publishing.
• Salvatore, D., & Diulio, E. (2003). Principles of Economics. McGraw Hill.
• Rosyidi, S. (1996). Pengantar Teori Ekonomi. Jakarta: Rajawali Press.
• Wikipedia. (2012). Article: Economics. http://en.wikipedia.org/wiki/Economics.
• Buchana, N.R., et al. (2008). Trust and gender: An examination of behavior and beliefs in the Investment Game. Journal of Economic Behavior & Organization 68,466–476.
PENGANTAR EKONOMIwww.aeunike.lecture.ub.ac.id