BEEB 1013 Introduction to Macroeconomic 宏观经济学的简介

UUM BEEB 1013 Principles of Economics

Chapter 20: Introduction to Macroeconomics

20.1 Macroeconomic Concerns

Output Growth

1) Business cycle (Kitaran Perniagaan / 经济循环) :  The cycle of short-term ups and downs in the economy.

2) Aggregate output (Keluaran agregat / 总合产量) : The total quantity of goods and services produced in an economy in a given period.

Figure 1: A Typical Business Cycle

1.      Expansion or boom (Pengembangan ekonomi / 经济繁荣期): The period in the business cycle from a trough up to a peak during which output and employment grow.

Example: The economy is expanding as it moves through point A from the trough to the peak.

2.      Recession / Contraction / Slump (Kemerosotan ekonomi / 经济衰退期): A period during which aggregate output declines. Conventionally, a period in which aggregate output declines for two consecutive quarters. The period in the business cycle from a peak down to a trough during which output and employment fall.

Example: The economy is in recession when it moves through point B from a peak down to a trough.  

3.      Depression (Kemelesetan ekonomi / 经济萧条期):  A prolonged and deep recession

Example: The economy is in depression when it is at trough point.

4.      Recovery (Pemulihan ekonomi / 经济复苏期): The period in the business cycle from a trough up to a peak during which output and employment grow again

Example: The economy is in recovery when it raises up again from the trough to the peak.

Economy in Reality (US Economy)

Figure 2: U.S. Aggregate Output (Real GDP), 1900–2009

Unemployment

1) Unemployment rate:  The percentage of the labor force that is unemployed.

Kadar pengangguran 失业率: Satu ukuran yang menunjukkan peratusan jumlah tenaga buruh yang tidak melakukan sebarang kegiatan ekonomi berbanding dengan jumlah tenaga buruh di pasaran.

Inflation and Deflation

1) Inflation: An increase in the overall price level of goods and services.

Inflasi 通货膨胀: Satu keadaan yang menunjukkan kenaikan tingkat harga umum barang dan perkhidmatan secara berterusan.

2) Hyperinflation: A period of very rapid increases in the overall price level of goods and services.

Hiperinflasi 恶性通货膨胀: Satu proses kenaikan tingkat harga umum barang dan perkhidmatan secara berterusan dan melampau pada kadar yang sangat tinggi (> 10%).

3) Deflation: A decrease in the overall price level of goods and services.

Deflasi 通货紧缩：Satu proses penurunan tingkat harga umum barang dan perkhidmatan secara berterusan.

20.2 The Components of the Macroeconomy

To see the big picture, it is helpful to divide the participants in the economy into four broad groups:

(1)    Households (Isi Rumah / 家庭成员)

(2)    Firms (Firma / 商家)

(3)    The government (Kerajaan / 政府）

(4)    The rest of the world (Sektor Luar Negara / 外国机构）

Households and firms make up the private sector, the government is the public sector, and the rest of the world is the foreign sector.

The Circular Flow Diagram

1) Circular flow: A diagram showing the income received and payments made by each sector of the economy. 

2) Transfer payments: Cash payments made by the government to people who do not supply goods, services, or labor in exchange for these payments. They include social security benefits, veterans’ benefits, and welfare payments.

Circular flow (English version) :

Figure 3: Circular Flow Diagram 1

·         Households receive income from firms and the government, purchase goods and services from firms, and pay taxes to the government.

·         They also purchase foreign-made goods and services (imports).

·         Firms receive payments from households and the government for goods and services; they pay wages, dividends, interest, and rents to households and taxes to the government.

·         The government receives taxes from firms and households, pays firms and households for goods and services—including wages to government workers—and pays interest and transfers to households.

·         Finally, people in other countries purchase goods and services produced domestically (exports).

Note:  Although not shown in this diagram, firms and governments also purchase imports.

Circular flow (Malay version) :

Figure 4: Circular Flow Diagram 2

1) Isi Rumah (家庭成员)

·         Menerima pendapatan dalam bentuk upah, sewa, kadar bunga atau untung daripada firma dan kerajaan  

·         Membelanjakan pendapatannya untuk membeli barang dan perkhidmatan yang dikeluarkan oleh firma  

·         Menabung baki pendapatan yang tidak dibelanjakan di institusi kewangan 

·         Membayar cukai (seperti cukai pendapatan perseorangan) kepada kerajaan  

·         Mengimport barang dan perkhidmatan dari luar negara

2) Firma (商家)

·         Membayar pendapatan faktor kepada isi rumah atas penggunaan faktor pengeluarannya

·         Memperoleh pendapatan / hasil jualan daripada isi rumah dan kerajaan

·         Membayar cukai (seperti cukai keuntungan syarikat) kepada kerajaan

·         Membuat pinjaman dan pelaburan daripada institusi kewangan

·         Mengimport barang modal, barang perantaraan dan bahan mentah dari luar negara

·         Mengeksport barang dan perkhidmatan ke luar negara 

3) Kerajaan（政府）

·         Memungut cukai pendapatan perseorangan daripada isi rumah dan cukai keuntungan syarikat daripada firma

·         Melakukan perbelanjaan kerajaan (seperti membeli barang dan perkhidmatan yang dikeluarkan oleh firma dan memberikan bayaran pindahan dan subsidi kepada isi rumah)

·         Mengimport barang modal dan kelengkapan pertahanan awam dari luar negara

The Major Economic Goals

1) Price Stability (Kestabilan tingkat harga umum 市场价钱稳定)

We need to understand how to measure prices to control price stability to avoid inflation issue

2) Low Unemployment (Kadar pengangguran yang rendah 低失业率)

We need to know how to measure unemployment

3) High and Sustained Economic Growth (Meningkatkan pertumbuhan ekonomi 提升经济成长率)

We need to know how to measure economic growth – which takes us to a discussion of nominal GDP and Real GDP

U may refer the previous notes in malay version:

https://jlcy2020.blogspot.com/2020/04/bab-1-pengenalan-kepada-makroekonomi.html?m=1

The Three Market Arenas

1) Another way of looking at the way households, firms, the government, and the rest of the world relate to one another is to consider the markets in which they interact.

2) We divide the markets into three broad arenas:

(1)     The goods-and-services market.

(2)     The labor market.

(3)     The money (financial) market.

Goods-and-Services Market

·         Households and the government purchase goods and services from firms in the goods-and-services market.

·         Firms purchase goods and services from each other and also supply to the goods-and-services market.

·         Households, the government, and firms demand from this market.

·         The rest of the world buys from and sells to the goods-and-services market.

Labor Market

·         In the labor market, households supply labor and firms and the government demand labor.

·         Labor is also supplied to and demanded from the rest of the world.

Money Market

·         Households supply funds to the money market—sometimes called the financial market—in the expectation of earning income in the form of dividends on stocks and interest on bonds.

·         Households also demand (borrow) funds from this market to finance various purchases.

·         Firms borrow to build new facilities in the hope of earning more in the future.

·         The government borrows by issuing bonds.

·         The rest of the world borrows from and lends to the money market.

·         Much of this borrowing and lending is coordinated by financial institutions, which take deposits from one group and lend them to others.

Monetary Terms

·         Treasury bonds, notes, and bills: Promissory notes issued by the federal government when it borrows money.

Bil-bil perbendaharaan dan bon kerajaan: Nota janji atau sekuriti hutang yang dikeluarkan oleh kerajaan pusat apabila mereka ingin meminjam wang.

·         Corporate bonds: Promissory notes issued by firms when they borrow money.

Bon korporat: Nota janji atau sekuriti yang dikeluarkan oleh firma semasa mereka meminjam wang.

·         Shares of stock: Financial instruments that give to the holder a share in the firm’s ownership and therefore the right to share in the firm’s profits.

Saham: Sekuriti yang mewakili sebahagian modal pemilik dalam perniagaan dan pemegang saham juga merupakan pemilik perniagaan dan mempunyai hak untuk berkongsi keuntungan atau kerugian sesebuah perniagaan.

·         Dividends: The portion of a firm’s profits that the firm pays out each period to its shareholders. 

Dividen: Bahagian keuntungan syarikat yang dibayar oleh syarikat kepada pemegang sahamnya pada setiap tempoh.

The Role of the Government in the Macroeconomy

1) Fiscal policy (财政政策): Government policies concerning taxes and spending.

Dasar fiskal: Tindakan kerajaan mengubah perbelanjaan kerajaan dan cukai untuk menstabilkan keadaan ekonomi negara.

2) Monetary policy (货币政策): The tools used by the Federal Reserve to control the short-term interest rate.

Dasar kewangan: Tindakan bank pusat mengawal penawaran wang dan kadar bunga dalam ekonomi untuk menstabilkan keadaan ekonomi negara.

20.3 A Brief History of Macroeconomics in US

1) Great Depression: The period of severe economic contraction and high unemployment that began in 1929 and continued throughout the 1930s.

2) fine-tuning: The phrase used by Walter Heller to refer to the government’s role in regulating inflation and unemployment. 

3) stagflation: A situation of both high inflation and high unemployment.