Take Home Final Test Task

Investment ManagementLecturer: Prof. Dr. Drs. Suhadak, M.Ec.

Name: Zhara Marchelina Laurentia

NIM: 125030207121002

Business Administrative Science

Administrative Science Faculty

Brawijaya University

2015

Questions

1. How government can implement the macro policy in connection with demand

shocks and supply shocks to develop economic growth? Explain and give example!

2. Is it different between private industry and public company life cycle? Explain and

give example!

1. Example for supply shock : destroying agricultural pests. A decrease in food supply

push food prices rise. This event is an adverse supply shock (adverse supply shock),

which means increasing costs and prices. If AD is held constant, SRAS curve shifts

upward: the price level rises and the amount of output falls below its natural level. This

event is known as stagflation, as it combines stagnation (falling output) and inflation

(price increases).

Example for demand shock: These cause less quantity of goods to be consumed, and

those consumers still in the market pay a lower price for the good. An example of this

would be if a medical journal reported that a widely used prescription drug appreciably

increases your chances of cancer. Then there would be a sharp shift in demand with

less goods being consumed at a lower price.

STABILIZATION POLICY

1. The slow implementation and impact of policies

Economists distinguish between two lags in the implementing the stabilization policy:

a. The outside lag (outside lags) is the time between development policy action and its

influence on the economy. This lag arises because policies are made not immediately

influence spending, income, and place of work

b. Lags in (inside lags) is the time between the shocks to the economy and the policy

action to deal with it. This lag arises because policy makers need time to realize that a

shock has occurred and then issue appropriate policies.

2. The difficulty of determining indicators of economic forecasts

One of which is used by forecasters (forecaster) to look forward to is the main

indicator (leading indicator). The main indicator is the usual series of data fluctuate in

advance of an economy. A major decline in a major indicator of impending recession

mark in the next few months. Another way used by the forecasters is with

macroeconometric models, which have been developed by government agencies and

private companies for forecasting and policy analysis.

Such as weather forecasts, economic forecasts is an important input for public and

private decision-makers. Business executives rely on economic forecasts when

deciding the amount of production and the amount of investment in plant and

equipment.

2. In my opinion, the cycle occurs due to the rapid changes in supply and demand in

an industry. The rapid changes in demand may be caused by factors that are difficult

to predict such as natural disasters, climate change, etc. The rapid changes in supply

is more interesting to analyze. The main motivation is to encourage industry players

to quickly change the supply is a competition in order to achieve the desire to

become a leader in the industry (market leader). Industry players are not stupid

(often make mistakes in the projected demand) in determining supply. Why the

competition to become leader made a quick change into a product supply? Because

if a company believes that the new product was superior (whether because of new

technology, new features, new design, etc.), then he would remove as many goods

to turn his business opponents. When many of them do it, not imaginary ultimately

only a handful of companies that will be successful while supply abundant and

prices fall. That's when the industry as a whole (except the win) sluggish.

Companies that lose the cap, foreclosed, or reduce production costs with layoffs and

so on. That was a period of consolidation. Then the new players with new ideas or

new technologies and vying to become the new leader. Thus iterative process and

pass the industry cycle. Various industrial cycles sometimes occur together and are

associated and establish the economic cycle as a whole. In general, the level of

investor confidence in the BUMN greater than BUMS. This is due to the name of

the government in the ranks of shareholders gave the assurance that the capital

investment will still occur. But not a few who think BUMN has weaknesses such as

the lack of control and monopoly in various sectors and coupled with subsidies from

the government, according to many observers of the economy, as the main cause of

low performance of BUMNs.