Applied Economics Lesson 1.2 - 2025.pptx

1. Economics as an
Applied Science
Lesson 1.2
Economics
as an
Applied
Science

2. Specific Objectives
At the end of the lesson, the learner will be able to:
1. Discuss why economics is an applied science;
2. Explain the basic economic problems; and
3. Understand how applied economics work.

4. In your own opinion,
are the country’s
resources being
utilized? Why?

5. John Neville Keynes
- is attributed as the first to use
the phrase “applied economics” to
designate the application of
economic theory to the
interpretation and explanation of
particular economic phenomena.

6. ECONOMICS
APPLIED SCIENCE
• Field of study that is
used to improve
people’s lives, the
application of
economic theories and
models in real life
( Econometrics)

7. ECONOMICS
APPLIED SCIENCE
• Helps students to learn
about the relationship of a
business and basic
economic theories.
• Focuses on urban
problems, health care
crisis, agricultural
problems , poverty ,
economic growth and the
environment.

8. WHAT IS ECONOMETRICS?
THE APPLICATION OF STATISTICAL AND MATHEMATICAL THEORIES TO
ECONOMICS FOR THE PURPOSE OF :
•TESTING HYPOTHESES
•FORECASTING FUTURE TRENDS
THE RESULTS OF ECONOMETRIC ARE COMPARED AND CONTRASTED
AGAINST REAL LIFE EXAMPLES.

9. BASIC
ECONOMIC
PROBLEMS
What to
produce?
If there is scarcity of
goods in a society, the
firms have to make
wise decision on what
goods/ service should
be produced and
determine the quantity
to produced.

10. BASIC
ECONOMIC
PROBLEMS
What to
produce?
The production of
goods or services
needs effective
methods and
processes.
How to
produce?

11. BASIC
ECONOMIC
PROBLEMS
What to
produce?
The society would always consider the
immediate beneficiary of the goods.
How to
produce?
For whom to
produce?

12. DIVISION OF
ECONOMICS
Production
Distribution
Exchange
Consumption
Public Finance

13. Production
• This refers to the process of producing or creating goods
needed by the households to satisfy their needs. The
factors of production are called inputs and the goods and
services that have been created are called outputs of
production.

14. Distribution
• This refers to the marketing of good and services to
different economic outlets for allocation to individual
consumers. In monetary terms, this is the allocation of
income among persons or household.

15. Exchange
• This is a process of transferring good and services to a
person or persons in return for something. At present, the
medium of exchange used in the market in money. This
means, we can exchange our money with goods and
services.

16. Consumption
• This refers to the proper utilization of economic goods.
However, goods and services could not be utilized unless
you pay for it. Hence, we can also say that consumption is
spending money for goods and services in order to yield
direct satisfaction.

17. Public Finance
• This pertains to the activities of the government regarding
taxation, borrowings, and expenditures. It deals with the
efficient use and fair distribution of public resources in
order to achieve maximum social benefits. This means,
government programs and projects which are funded by
taxes and loans are properly implemented and managed
to generate maximum and optimum benefits for all
members of society.

18. Knowledge of economic
theories such as Law of Supply
and Demand can help in
analyzing why prices are high
and what the government can
do to help bring down prices.

19. APPLIED ECONOMICS IN RELATION TO
PHILIPPINE ECONOMIC PROBLEMS.
A solid understanding of economic principles and
how they are applied in real-life situations can serve
as significant tools to help address the country’s
economic problem.
For example, understanding the existence of scarcity
can help Economics students analyze how to
maximize the use available resources in order to
overcome scarcity

20. BASIC
ECONOMIC
PROBLEMS OF
THE COUNTRY
Unemployment
Poverty
Quality of
Infrastructures
Income inequality
Inflation

21. Unemployment
• When someone could work and wants to work but is
unable to find suitable job.
Unemployment Rate in November 2023 was Estimated at 3.6
Percent

22. Unemployment
• The number of people entering the job
market has been greeter than the job created.
• The rural-urban migration increase due to
employment opportunities.
• May of the unemployed individuals are
college.

23. RURAL TO URBAN MIGRATION
• Few services
• Lack of job opportunities
• Unhappy life
• Poor transport links
• Natural disaster
• Shortage of foods
• Access to services
• Better job opportunities
• More entertainment facilities
• Better transport links
• Improve living condition
• Hope for better way of life

24. Unemployment
• Improve the education system of the country,
specially in rural areas.
• More investment opportunities to encourage local and
international opportunities.
• Decrease the retirement age.

25. WHAT CAN BE DONE TO SOLVE UNEMPLOYMENT?
1. Appropriate economic policies for labor-intensive industries.
2. Improve the educational system of the country especially in the
rural areas.
3. Minimize rural-urban migration by improving the economic
environment in rural areas.
4. Proper coordination between government and the private sector
to solve the problem of job mismatch.
5. Provision of more investment opportunities to encourage local
and international investment.

26. Poverty
• A state or condition in which a person or community
lacks the financial resources and essentials for
minimum standard of living.
The Philippines' poverty rate dropped to 22.4%, or 25.24
million people, in the first half of 2023

27. Poverty
• A state or condition in which a person or community
lacks the financial resources and essentials for
minimum standard of living.
The Philippines' poverty rate dropped to 22.4%, or 25.24
million people, in the first half of 2023

28. Poverty
• Reduce unemployment.
• Appropriate policies on
labor income.
• Provide unemployment
benefits.
• Increase social services
( Education, health care
and food subsidies)

29. WHAT CAN BE DONE TO SOLVE POVERTY?
Reduce unemployment.
• Appropriate policy on labor income.
• Provision of unemployment benefits for
those who will be unemployed due to
natural or man made calamities.
Ex. Typhoon, Bombing of Terrorist,
Earthquake.

30. • A system contributing to
governmental policy objectives
in areas including industrial
development, trade
competitiveness in global
markets, efficient us of natural
and human resources , food
safety , health, the environment
and climate change.
Quality of
Infrastructures

31. • The said allocation will be sourced from the
proposed P822. 2 billion national budget for the
Department of Public Works and Highways (DPWH) in the
2024 National Expenditure Program (NEP)
Quality of
Infrastructures

32. • Focus on private – public partnerships.
• Reforms on key sectors: power, roads and water.
- Improve cost recovery
- Competition
- Institutional credibility
- Reduce corruption.
Quality of
Infrastructures

33. • How unevenly income is distributed throughout a
population.
Income inequality
• “The problem of income inequality has grown during
pandemic because informal sector workers have
been faced with a double whammy of significant job
losses..”
• 2 out of 10 Filipino families earn of total family
income.

34. 1. Political culture.
“palakasan” “utang na loob”
Ex. Voting for the wrong person during
election.
Major Causes of Income inequality
2. Indirect taxes- poor people shoulder
this taxes like the Value Added Tax – 12%.

35. • Investing in Human capital is the best way to increase
individual wealth and improve the labor force.
• Better Education, health care and social safety.
• Better policies of wages.
Income inequality

36. • How unevenly income is distributed throughout a
population.
Income inequality
• “The problem of income inequality has grown during
pandemic because informal sector workers have
been faced with a double whammy of significant job
losses..”
• 2 out of 10 Filipino families earn of total family
income.

37. WHAT CAN BE DONE TO SOLVE THE PROBLEM OF
INCOME INEQUALITY?
1. Policies to enforce progressive
rates of direct taxation on high wage
earners and wealthy individuals.
2. Direct money transfer and
subsidize food programs for the
urban and rural poor.
3. Direct government policies to keep
the price of basic commodities low.
4. Raise minimum wage.
5. Encourage profit sharing.

38. • Decline of purchasing power of a given currency over
time.
Inflation
• The Philippine Statistics Authority reported today that
inflation for December 2023 further slowed down to 3.9
percent from 4.1 percent in November 2023, bringing the
full-year average inflation rate to 6.0 percent.
• Disturbances in agricultural sectors, movements in
international oil prices.

39. • Government can use wage and price controls.
• Boosts import products.
Inflation

40. BE READY FOR YOUR QUIZ NO. 2
END OF
DISCUSSION