INTRODUCTION
Indonesia as a developing country has population of more than 237 million people spread across the country which covering area of approximately 1.9 million square miles. Indonesia has a huge potential of natural resources, due its position in tropical area between two continents and two oceans, consisting 17.508 islands and large ocean territory that stores biological wealth. Largest potential of natural resources that support state's economy are obtain from crude oil, natural gas, tin, copper and gold (Indonesia, 2010). In addition, agriculture, livestock, forestry and fisheries also make significant contribution.
Even though Indonesia has big potential natural resources,
LITERATURE REVIEW
Some literatures explain concept of unemployment in term of economic aspect. Unemployment is one of the parameters of a country's economic conditions, in addition to economic growth through Gross Domestic Product (GDP) and Inflation rate. Unemployment, economic growth and inflation rate is seen to have an interdependent relationship. Previously, the following will clarify this economic parameter, both definitions and related economic theories.
Gross Domestic Product (GDP)
In his book "Principles of Economics", Mankiw (2008) simply defines Gross Domestic Product (GDP) as total income of nation. Furthermore, GDP reflect the market value of all both product and service which accepted by customer during the interval in certain period. To describe society's economic well-being, GDP measure not only total revenue of every part in economic system, but also all expenditure of goods and services. Economic theory state real GDP also reflects from aggregate supply curve.
Aggregate supply curve show total quantity of goods and services that are producers convey to customers (Mankiw, 2008). There are two different conditions of aggregate supply curve extent. Firstly, in the short run, aggregate supply curve slopes upward reflect positive relationship, means increasing of price level tends to increase quantity of goods or services. On the other hand, in the long run, aggregate supply curve turn to vertical, when price level does not affect quantity output. However, labor, capital and natural resources as input and technology used in advance gives effect to quantity output. In long run, aggregate supply meets its natural rate of output that is reflects GDP.
Kitov (2005,b) found that GDP formulated as total of personal income in a country who already have ability to produce goods or services. Thus, GDP is relating to sum of all income that received from working age population. Thereof, Personal Income Distribution (PID) from labor force is representing GDP of nation. Meanwhile, Levine (2010) analyze GDP have relationship with productivity and labor supply which show growth rate when the economic system are fully employed. In addition, GDP depend on how many labor available and how productive the labor to produce goods or services.
Inflation Rate
There are many descriptions about inflation. Inflation simply defines as situation where price level is rising (Mankiw, 2008). Thus, high value of inflation leads to various cost to society as effect, hence, policy maker goal are to keep inflation value at low rate. On the other research, Amir (2009) emphasize that increasing of price level occur continuously, otherwise inflation do not exist. Furthermore, inflation classified based on cause factor i.e. demand-pull inflation, cost-push inflation and imported inflation. Demand-pull inflation occurs when aggregate demand raise significantly whereas aggregate supply stay constant. Therefore, demand is larger than supply that pushes price level higher. Cost-push inflation is situation when production cost increase sharply and encourage producer to reduce supply, which is lead to price increasing. Whereas imported inflation take place if increasing in price level as impact of price of goods are also increase at place origin (Amir, 2009).
On the other research, inflation found as indicator of relative income changes due to growth in both economic and population viewed from structure and age (Kitov, 2006).
Inflation measured by two methods i.e. Customer Price Index (CPI) and GDP deflator. Mankiw (2008) distinguish inflation measurement methods by the purpose of final value. CPI calculates by consumer point of view, from particular customer type and certain time based. CPI values are relatively stable because it compute from fix customer consumption of goods and services and based on one decided year. The other methods called GDP deflator looking from producer point of view, which is measure ratio of real and nominal value of GDP. Other differences between CPI and GDP deflator is DP deflator value based on current price. Consequently, GDP deflator values more volatile than CPI. At the same period, CPI and GDP deflator might show different value, however, both of these would illustrate similar pattern of inflation.
Unemployment
Unemployment is regular issue of every country at short run of economics system (Amir, 2009). Both developed and developing countries are experiences the same problem, the differences be placed in level of natural rate of unemployment.
Coherence of GDP, Inflation and Unemployment
Macroeconomics put GDP, inflation and unemployment as prior to gives clues about economics well-being, and tools for policy maker to control economics activity to keep balance.
From recent review about GDP, Long Run Aggregate Supply (LRAS) might shift due to particular conditions that are changes in labor, capital, natural resources and technology as its factor. Shifting of LRAS might cause inflation ………..
CONCEPTUAL FRAMEWORK
DATA
Describing relationship between economic growth, inflation rate and unemployment rate in Indonesia might be different with developed countries such as America and European countries. Each economic parameter has different characteristic that effect ……………..
Economic Growth
Inflation Rate
Unemployment Rate
CONCLUSION
REFERENCES
Mankiw, N., Gregory (2008) Principles of Economics, 5th Ed., South-Western, Cengage Learning, Mason, Ohio
Kitov, I. O., (2005) "A model for microeconomic and macroeconomic development," Working Papers 05, ECINEQ, Society for the Study of Economic Inequality.
Kitov, Ivan, (2006a) GDP growth rate and population, Research Announcements, Economics Bulletin, Vol. 28 no. 9 p. 1.
Kitov, Ivan, (2006b) Inflation, unemployment, labor force change in the USA
http://www.indonesia.bg/indonesian/indonesia/index.htm
http://www.bps.go.id/index.php
http://www.bi.go.id/web/en/Moneter2/Inflasi/
http://www.indexmundi.com/indonesia/#Economy
