Principles of

Macroeconomics
By : Neni Murniati
+6287825119454/ nenimurniati.feunpas@gmail.com
 Introducing myself
• Name : Neni Murniati
• Graduate : Padjadjaran University
• Major Study : Development Economics
• Lecturer of the subjects :
1) Macroeconomics
2) Microeconomics
3) Microeconomic Policy
4) Mathematical Economic
 References

1. Colander, David, 2020, Economics, 11e, McGraw Hill Education.

2. Paul A. Samuelson & William D. Nordhaus, 2010, “Economics”, 19-th
edition, Mc Graw Hills.
3. Sadono Sukirno, 2016, Makroekonomi Teori Pengantar, edisi ketiga, PT
Raja Grafindo Perkasa, Jakarta.
4. Neni Murniati, 2021, Pengantar Ekonomi Makro, FEB Unpas, Bandung.
Macroeconomic Basic
Preliminaries
 Definitions about Economics
Colander :”Economics is the study
of how human beings coordinates
their wants and desires, given the
decision-making mechanism, and
political realities of the society”
Samuelson :“Economics is the study of
how people and society choose, with or
without the use of money, to employ
scarce productive resources which could
have alternative uses, to produce various
commodities over time and distribute
them for consumption now and in the
future among various persons and
groups of society.”
 Economic Resources
Economic resources are also called production factors, because every
economic resource is used for production activities.
The main economic resources used in production activities :
1)Human resources (labor) : skilled labor & unskilled labor
2)Natural resources (land and its carrying capacity)
3)Capital
4)Technology
5)Etc.
Which economic resource is the most important?
Ec resources must used effectively & efficiently
 Which economic resource is the most important?

Human resources are the most important economic

resources in all economic activities. Human
resources who manage other resources so that
production activities are carried out efficiently and
effectively.
 What will happen if resources are not used
effectively and efficiently?

If the resources are not used effectively and

efficiently it will cause economic problems.
Therefore it requires knowledge of how to utilize
economic resources effectively and efficiently 
need Economics
 The study of Definite focus and
economy in the theory :
individually (the 1. Consumer
study about partial 2. Producer
Microeconomics 3. The owner of
equilibrium supply
& demand) resources

Economics General focus :

1. Unemployment
(after 1930s)
2. Business cycles (fluctuation in
output)
3. Economic growth
The study of 4. Inflation, etc.
Macroeconomics the economy in
the aggregate
Policy problems

Figure 1 : The Two branches of Economics

 Causes of The Great Depression
Industrial Excess Great Depression : output fell by 30%;
Revolution (1760 – supply of
1840) : innovation,
unemployment rose to 25%
goods
invention

High market system

Before 18th century, failure.
Economics = Decreasing in unemploymen
microeconomics; price of goods, t
Classical school & business
profit decline in
believe laissez faire. the
business
sector
Causes of The Great Depression
Social-Economic Problems caused by Great
Depression
This photo is a snapshot of the Great
Depression in the US, when many
people were looking for work. Many
of them are starving because they
don't have money to buy food.
The photo was taken between 1930
and 1940. There is no Social Security,
welfare, or unemployment
compensation.
Unemployed men are shown
sitting outside waiting dinner at
Robinson's soup kitchen located
at 9th and Plum streets in
Cincinnati, Ohio, in 1931. That
year, the economy contracted
6.2%, and prices dropped 9.3%.
Unemployment was 15.9%.
The photo shows the floor of the
New York Stock Exchange right
after the stock market crash of
1929. It was a scene of total panic
as stockbrokers lost all.

The Great Depression caused

every economy in the world to
contract.
JM Keynes Macroeconomics Thought
Great JM Keynes thought
Depression how to solve 1936 : “The General Theory
macroeconomic of Employment, Interest, and
problems Money)”, economic
activities need government
intervention, believe that the
market mechanism system
does not automatically create
the full employment
 Macroeconomic Policy Debates
Classical Economists: oppose government intervention in the
economy, favor a laissez faire policy (free market system)

Macroeconomic
Debates

Keynessian Economists : more likely to favor government

intervention in the economy. Laissez faire policy can sometimes lead
to disaster

Classical Economists versus Keynessian Economists

 Macroeconomic Policy Debates
The depression changed the way economics was taught and the way in which economic
problems were conceived.
Macroeconomic debates have centered on a struggle between two groups : Keynesian
economist and Classical economist.
Classical economists generally oppose government intervention in the economy, the
favor a laissez faire.
Keynesians are more likely to favor government intervention in the economy. They feel
laissez faire policy can sometimes led to disaster.

Note:
Conceived= difahami