Take Home Final Test Task

Investment Management
Lecturer: 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.