Introduction to Economics

Review

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 History of Economics
ECONOMICS
<< Ancient Greek
Oikonomia : Management of a household or estate
Oikos : Household
Nomos : Law

ARISTOTLE, XENOPHAN, CHANAKYA, QIN SHI HUANG, THOMAS

AQUINAS, IBN KHALDUN (14th 17th centuries) Adam Smith

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

PENGANTAR EKONOMI John Maynard Keynes

www.aeunike.lecture.ub.ac.id (right)
 Silsilah Ilmu Ekonomi
Kaum Fisiokrat Kaum Merkantilis
Quesnay, 17th and 18th
1758 century
Adam Smith,
1776
MADZHAB KLASIK
David Ricardo, T. R. Malthus,
1817 1798
ILMU EKONOMI NEOKLASIK
J. S. Mill,
ALIRAN SOSIALIS Walras,
K. Marx, 1867 1848
Marshall, Fisher,
V. Lenin, 1917 1880 - 1910
J. M. Keynes,
U.S.S.R and 1936
East Europe
China ALIRAN ILMU EKONOMI
UTAMA MODERN
Masa Transisi
?
? Ilmu Ekonomi Source:
?
Rosyidi, S. (1996)
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 Definition of Economics

ECONOMICS
>>> SCARCE RESOURCES

>>> CHOICES

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 Why Study Economics?
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

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 Approach to Economics
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

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 Positive Economics
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

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 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)

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 Economics Policy
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

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 The Economic Problem:
Scarcity and Choice
human wants are unlimited but resources are not

Basic questions:
What?
How?
Who?
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 Scope of Economics

Microeconomics
Trees
Macroeconomics
Forest

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 Microeconomics
PERFECTLY COMPETITIVE MARKET

Household Equilibrium in
Behavior Competitive
Demand Output
Supply Markets
MARKET
IMPERFECTIONS AND
The Competitive THE ROLE OF
Market System GOVERNMENT
General equilibrium
Imperfect Market
and efficiency
Structure
Public goods, social
choice
Firm Behavior Competitive Income dist. &
Demand Input Markets poverty
Supply Public Finance
Choice of Tech.

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 Macroeconomics
The Goods-
and-Services
Market
Connection
between
The Goods-and- Aggregate Supply
Services Market
and
The Money Market

The Money Aggregate

Market Demand

The Labor Market

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 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,
466476.

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