Applied Economics as a Science

Lesson 1

Philippine Economic Growth

The study of economic development and improvements in the Philippine economy.

John Nevile Keynes

First to use the phrase 'applied economics'.

'Applied Economics'

Designates the application of economic theory and economic phenomena.

Applied Science

Study used to improve people's lives, focusing on urban problems: health care, crisis, agricultural issues.

Econometrics

Application of economic theory and models in real life.

Statistical and Mathematical theories of Econometrics

Testing hypotheses and forecasting future trends, comparing results to real-life outcomes.

Basic Economic Problems

Questions: 'What to produce?', 'How to produce?', 'From whom to produce?'

'What to produce?'

Concerns scarcity of goods, necessitating wise decisions by firms.

'How to produce?'

Focuses on effective production methods and processes.

'From whom to produce?'

Considers the immediate beneficiary of the production.

Division of Economics

Includes Production, Distribution, Exchange, Consumption, and Public Finance.

What is Production?

Producing or creating goods to satisfy needs.

Inputs

Factors of production.

Outputs

Services that have been revealed.

What is Distribution?

Marketing of goods and services to different economic outlets for allocation.

What is Exchange?

Transfer of goods and services from one person to another.

What is Consumption?

Proper utilization of economic goods; payment required to receive.

What is Public Finance?

Government activities related to taxation and borrowings.

Theories

Includes the Law of supply and demand.

Basic economic problems of the community

Includes Unemployment, Poverty, Quality of Infrastructure, Income Inequality.

What is Unemployment?

Individuals who could work but are unable to find suitable jobs, leading to rural-urban migration.

What is Unemployment Rate?

The number of unemployed people compared to the number of available jobs.

What causes Unemployment?

Factors include rapid population growth, disabilities, and lack of education and training.

How can we solve unemployment?

1. Create appropriate economic policies, 2. Improve the educational system, 3. Enhance the economy to minimize urban migration, 4. Coordinate between government and private sector, 5. Provide more investment opportunities.

What is Poverty?

A lack of financial resources.

What causes Poverty?

Unequal access to quality education, unemployment, and low economic growth.

How do we solve poverty?

1. Reduce unemployment, 2. Provide support during calamities, 3. Implement policies on labor.

What is Quality of Infrastructure?

Focus on public-private partnerships.

Examples of Quality Infrastructure

Includes roads, highways, and bridges.

What is Income Inequality?

Disparity caused by political culture, worsened by the pandemic.

What causes Income Inequality?

Technological advancements, educational disparities, and systematic discrimination.

What is Inflation?

An increase in the prices of goods and services.

What causes Inflation?

Rising production costs, psychological expectations of price increases, and global crises.