Economics Mind-map
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How inflation affects the economy
Low inflation
High inflation
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How employment affects the economy
Low unemployment
High Unemployment
Indonesia example
Increase in GDP
GDP increase
Increase in demand
Increase in spending
Increase in output
Economy is growing
People also start to spend a lot
People start to work a lot during this time
When products are made, it doesn't stop but always been made deliberately
People have incomes
Increased in tax revenue
Increased in GDP
Increase in Government spending
Subsidy
Government grants
Wellfare (Unemployment benefits)
Reduces output
Less in income
Less in growth
High unemployment makes it bad for the economy because most people would have no jobs because of Covid-19.
I believe Covid-19 is the reason for making the economy slow down exponentially.
4 types of inflation
Cost-push inflation
Imported inflation
Demand-pull inflation
Total demand rising faster than total output of goods and services
What causes inflation?
Rising production costs/rising import prices
Value of money
Excess demand for goods and services
High unemployment
How to measure inflation?
In Indonesia, 58% inflation in 1958
Calculating the average percentage change in the prices of all goods and services from one point in time to another
For example: A consumer price index (CPI) - is a measure of price inflation affecting consumers
Uses of price indices
As a price deflator – deflate the value of wages & incomes
Indexation: to index-link income payments – purchasing power increases at the same rate as inflation
As a macro-economic indicator – change in cost of living
An increase in the cost of producing goods and services
Rising prices goods and services imported from overseas
Impacts of high inlflation in indonesia
Overtime; money would be worth less overtime
Indonesia recorded inflation of 2.72 percent in 2019, the lowest level in around two decades, thanks to lower inflationary pressure from government-regulated prices, Statistics Indonesia (BPS) announced on Monday. Administered prices recorded 0.51 percent inflation, drastically lower than 3.36 percent in 2018.
Cases in indonesia
Economy rate of indonesia grow a rate in 5%
Low inflation= good for the economy.
Indonesian's inflation is a stable 2-3%
Hyperinflation
Extremely high rates of inflation that result in money failing to be good store of value & becoming virtually worthless
Overtime, businesses in indonesia will fail
The economy and the people becomes poorer
Increased government spending
Because of the increase in inflation, this can cause high interest rates as well. Making a lot of people to borrow money from the bank or their friends too.
From the aritcle is says that during the course of Suharto's New Order, economic development added many new jobs to the Indonesian economy, thus pushing down the nation's unemployment rate. Especially the industry and services sectors experienced major increases in their employment shares towards national employment, at the expense of the agriculture sector: whereas in the 1980s around 55 percent of Indonesia's working population was concentrated in the agricultural sector, recently this figure has declined to below 40 percent.
The unemployment rate dropped to 5.01 percent in February from 5.13 percent in the same month last year, according to new Central Statistics Agency (BPS) data released on Monday.
Unemployment Rate in Indonesia averaged 6.05 percent from 1982 until 2018, reaching an all time high of 11.24 percent in the third quarter of 2005 and a record low of 2 percent in the fourth quarter of 1983.
Causes of unemployment in indonesia
Based on articles in Indonesia. The high unemployment rate in Indonesia is caused by a lack of access to education, lack of opportunities to develop, inability to compete and lack of skills. In Indonesia, the International Labor Organization (ILO) states that 50% of the unemployed are new graduates.
Causes of inflation in Indonesia
Main factors that causes inflation rate in Indonesia are fluctuation of fuel prices, growth of money supply (M2) and growth of gross domestic product.
Inflation Rate in Indonesia averaged 9.50 percent from 1997 until 2020, reaching an all time high of 82.40 percent in September of 1998 and a record low of -1.17 percent in March of 2000.
When theres high inflation, theres more likely for poverty to increase
Indonesia's annual inflation rate dropped to 1.54 percent in July 2020, the lowest since May 2000 and below market expectations of 1.66 percent, as restriction measures imposed by the government to halt the rapid spread of COVID-19 led consumers to stay at home.
A payment made by a government/ labour union to an unemployed person
A sum of money given by the government
is a financial award given by the federal, state, or local government authority for a beneficial project.