Fundamentals of The Indonesian Economic System

FUNDAMENTALS OF THE INDONESIAN ECONOMIC SYSTEM 1. Write down three definitions of economics according to experts that are most relatable today In essence, economics questions human efforts to increase their prosperity, both individually and as a group (family, nation and society). As a science, economics certainly has material objects (what is studied) and formal objects (how to study it). Or it can be interpreted as the study of the behavior of people and society in choosing to use scarce resources and which have several alternative uses in order to produce various commodities and then distribute them, both now and in the future, to various individuals and groups in a society. 1) Paul A. Samuelson: Economics is the methods used by humans and their groups to utilize limited resources to obtain various commodities and distribute them with the aim of being consumed by society. 2) Ruenez: Economics is a science that studies human behavior in dealing with their needs with limited means and has various functions. 3) Abraham Maslow: Economics is a field of study that tries to solve problems of the basic needs of human life through the use of all existing economic resources based on certain principles and theories in an economic system that is considered effective and efficient. These three definitions are very suitable to the conditions that occur, where in reality humans are faced with a conflict between the scarcity of economic resources and unlimited needs, giving rise to various problems that are faced and must be solved by all human communities, both individually, in groups and in countries, both small and large, both advanced and underdeveloped, to achieve prosperity. Apart from that, economics can help individuals and companies in forming priorities for the needs they want to achieve. 2. Explain the eight branches of economics Broadly speaking, Economics is divided into three parts, namely: 1) Descriptive economics: economics that explains and describes existing economic phenomena. 2) Theoretical economics: economics that studies the processes of economic life theoretically, namely the way an economic system lives and works. 3) This theoretical economics is divided into two, namely: Microeconomic Theory and Macroeconomic Theory. Applied economics: economics which studies the application of the general basics of analysis provided by theoretical economics to explain the causes and the importance of events in descriptive economics. The branches of Basic Concepts of Economics consist of 8: • Monetary economics Monetary economics is a part of economics, specifically studying the nature, function and influence of money on economic activities. The main issues studied in monetary economics are related to: 1. the role and function of money in the economy; 2. monetary system and its influence on money supply and credit; 3. structure and function of the central bank; 4. the influence of money supply and credit on economic activities; 5. payments and the international monetary system • Public economics (Public Economics) Public economics is a branch of economics that examines public affairs, general affairs, various kinds of government policies in the country's economy. The very famous 20th Century Public Economist, Richard A. Musgrave (currently Professor Emeritus in the Department of Economics, Harvard University, USA), believes that the government has three roles in the economy, namely stabilization, allocation and distribution. • Industrial economics Industrial economics is a branch of economics that focuses on the interaction of companies in an industry and studies factors related to both small and large industries. This interaction can be in the form of company performance or business competition. Discussions in this branch of industrial economics fall within the scope of microeconomics. • International economics International Economics is a field of study that studies the implications of international trade in goods and services and investment or international finance (economic activity between countries). Broadly speaking, there are two sub-fields of study in international economics, namely: international trade and international finance. Regional economics • Regional economics Regional economics is a branch of economics which in its discussion includes elements of differences in the potential of one region with another. Natural resource economics • Natural resource economics is the application of economics to natural resources, namely all naturally existing animate or inanimate objects that are traditionally associated with their use for humans. The subject matter of natural resource economics includes positive and negative externalities. Human resource economics • Economics of human resources (employment) is a science that studies human behavior, both individual and aggregate, in their efforts to obtain work and income from the results of their efforts in the labor market. Apart from that, discussions in this branch include: unemployment issues, minimum wages, and the education level of prospective workers. 3. Explain several things that underlie consumer choices in consumption There are several things that underlie consumers' choices in consuming, namely: 1) Limited income requires selection, opportunity cost analysis because of limited income which requires someone to choose the best. 2) Consumers make choices by considering alternatives, namely looking for the best alternative choices, both in terms of price, quality and quality of the goods or services to be consumed. 3) An item can be replaced by another item. Substitute goods are an alternative choice when there is a shortage. 4) Consumers have to make decisions without perfect information but knowledge and experience will help, experience will provide the best lessons for consumers to choose the products they will consume. 5) The law of marginal utility occurs, namely the law of utility which includes opportunity cost analysis, cost benefit analysis, identification of factors driving economic activity, and realizing trade offs where situations make people have to make a decision and sacrifice other options. 4. Explain the characteristics of the Indonesian economy according to article 33 of the 1945 Constitution Article 33 of the 1945 Constitution is the foundation of the national economic system. Article 33 of the 1945 Constitution reads: 1) Paragraph 1: The economy is structured as a joint effort based on the principle of kinship Paragraph 1 confirms that "The economy is structured as a joint effort based on the principle of kinship". This verse contains a very deep meaning, namely that the economic system that is developed should not be based on competition or individualism but on the principle of family. 2) Paragraph 2: Branches of production which are important for the State and which affect the lives of many people are controlled by the State 3) Paragraph 3: The earth, water and natural resources contained therein are controlled by the State and used for the greatest prosperity of the people, Article 33 paragraphs 2 and 3 of the 1945 Constitution provides a very clear mandate that the government has a very large role in economic activities. Economic activities are not only carried out by the public, private sector or individuals, especially for production branches that control the livelihoods of many people, as well as the earth, water and natural resources contained therein. All of this must be controlled by the state for the greatest prosperity of the people. 4) Paragraph 4: The national economy is organized based on economic democracy with the principles of togetherness, efficiency, justice, sustainability, environmental insight, independence, and by maintaining a balance of progress and national economic unity. Article 33 paragraph 4 provides a mandate that the economic system is intended and can be controlled by the people. However, in practice, the economy cannot be directly controlled by the community, but is represented by the people's representatives, such as the MPR, DPR, DPD and president. Even so, the implementation of economic democracy in the national economic system still relies on the principles mentioned. 5) Paragraph 5: Further provisions regarding the implementation of this article are regulated in law. In article 33 paragraph 4, it explains that further provisions regarding the implementation of article 33 of the 1945 Constitution are regulated by law. One example of a law that follows Article 33 is Law Number 11 of 1967 concerning Basic Mining Provisions. This law is a continuation of article 33 paragraphs 2 and 3 of the 1945 Constitution. From the explanation above, we can see that the characteristics of the Indonesian economy are in accordance with Article 33 of the 1945 Constitution, namely that the economy is implemented based on the principle of kinship. All factors of production that control the lives of many people are controlled by the state and are used for the prosperity of the people. The economic system is implemented on the basis of economic democracy. 5. Explain which way the Indonesian economic system is more inclined? Article 33 of the 1945 Constitution is the foundation of the national economic system. In paragraph 1 of article 33 of the 1945 Constitution, it is stated that "as a joint effort based on the principle of kinship". This verse contains a very deep meaning, namely that the economic system that is developed should not be based on competition or individualism but on the principle of family. Likewise, article 33 paragraph 2 and paragraph 3 of the 1945 Constitution provides a very clear mandate that the government has a very large role in economic activities. Economic activities are not only carried out by the public, private sector or individuals, especially for production branches that control the livelihoods of many people, as well as the earth, water and natural resources contained therein. All of this must be controlled by the state for the greatest prosperity of the people. Article 33 paragraph 4 provides a mandate that the economic system is aimed at and can be controlled by the people. However, in practice, the economy cannot be directly controlled by the community, but is represented by the people's representatives, such as the MPR, DPR, DPD and president. Even so, the implementation of economic democracy in the national economic system still relies on the principles that have been mentioned. The important sentences in the question that can help us answer the question above are 1) Production activities that are important and affect the livelihoods of many people are controlled by the state 2) The community is still given a limited role in economic activities These two sentences contain the meaning of article 33 of the 1945 Constitution. In the first sentence, namely that production activities which are important and control the lives of many people are controlled by the state, it contains the meaning of article 33 of the 1945 Constitution, paragraphs 2 and 3. Meanwhile, in the second sentence, the community is still given a limited role in economic activity contains the meaning of article 33 of the 1945 Constitution, paragraph 4. In article 33 of the 1945 Constitution, it is written that the Indonesian economic system tends towards a democratic economic system.