BUSN 5: Applied Economics
Learning Module 2: Economics as Applied and Social
Science
Prepared by:
Ethyl Vilgrace Oliveros Pacaldo
Faculty, Institute of Arts and Sciences
ECONOMICS AS APPLIED AND SOCIAL
SCIENCE
ECONOMICS
-Oikanomia-
(Household Management)
Is the proper allocation and Is the science of choice. It studies how
efficient use of available people choose to use scarce resources to
resources for the maximum produce various commodities.
satisfaction of human wants
-Nordhaus-
-Fajardo-
Is a branch of knowledge that deals
Is a scientific study which with production, distribution and
deals with how individuals consumption of goods and services.
and society may general
choices.
-Webster-
-Sicat-
ECONOMICS IN PROCESS:
UNLIMITED WANTS
SCARCITY MAKE CHOICES
ECONOMIC ACTIVITIES:
Earning Money
Buying Goods and Services
Depositing and Withdrawing money in bank
ECONOMICS AS SOCIAL SCIENCE:
- Is classified as a social science because it deals with the study of human’s
life and how he lives with other men.
Science
Social
Science
Economics
MACROECONOMICS VS MICROECONOMICS:
ECONOMICS
MACROECONOMICS MICROECONOMICS
MACROECONOMICS
Deals with the economics behavior of the whole economy or its aggregates
(composed of individual units)
Discusses the following:
Gross national product
Level of employment
National income
General level of prices
AGGREGATES
MICROECONOMICS
Deals with economic behavior of individuals units such as:
o Consumers
o Firms
o Landowners
Discusses the following:
o Price of rice
o Number of workers in a certain firm
o Income
o Expenditure
Production
Public Finance Divisions of
Distribution
Economics
Consumption Exchange
BASIC ECONOMICS PROBLEMS:
Unemployment
Poverty
Poor Quality of Infrastructure
Income Inequality
Unemployment
(Common Causes)
The number of people entering the job market has been greater that the
number of jobs created.
The rural-urban migration increases due to employment opportunities
Many of the unemployed individuals are college graduates
Rural to Urban Migration
Push Factors Pull Factors
Few services Access to services
Lack of job opportunities Better job opportunities
Unhappy life More entertainment facilities
Poor transport links Better transport links
Natural disasters Improved living conditions
Wars Hope for a better way of life
Shortage of food Family links
What can be done solve unemployment problem?
Appropriate economics policies for labor-intensive industries
Improve the educational system of the country especially in the rural
areas
Minimize rural-urban migration by improving the economic environment
in rural areas
Proper coordination between government and the private sector to solve
the problem of job mismatch
Slowing population growth. Philippine growth must increase faster than
the population.
Provision of more investment opportunities to encourage local and
international investment
Poverty
(Common Causes)
Increase in population
Increase in the cost of living
Unemployment
Income quality
What can be done to solve the poverty problem?
Reduce unemployment
Appropriate policy on labor income
Provision of unemployment benefits for those who will be unemployed
due to natural or man-made calamities (Typhoon, Bombing of terrorists,
earthquake)
Increase social services like education, health care and food subsidies for
sustainable poverty reduction
Appropriate policy on labor crime
Poor Quality of Infrastructure
(Common Causes)
Increasing rate of corruption
Substandard materials
What can be done to solve poverty problem?
The government shall implement fiscal reform program
Continue reform in key sectors – particularly power, roads and water – to
improve cost recovery, competition, and institutional credibility and to
sharply reduce corruption.
Improving central oversight of the planning and coordination of
investments
Focus on investment through public-private partnerships to achieve faster
delivery of service
Income Inequality
Income is the money that an individual earned from work or business
received from investments
Income Inequality - refers to the gap in income that exists between the rich
and the poor
(Major Causes)
Political Structure (palakasan, utang na loob)
Example: Voting for the wrong person during election
Indirect Taxes – poor people shoulder these taxes like the Value
Added Tax – 12%
Income Taxes
What can be done to solve the problem of income inequality?
Policies to enforce progressive rates of direct taxation on high wage
earners and wealthy individuals
Direct money transfers and subsidize food programs for the urban and
rural poor
Direct government policies to keep the price of basic commodities
Raise minimum wage
Encourage profit sharing
Exercise No. 3
1. Aside from the economic problems enumerated in this learning
material, cite atleast three (3) economic problems that the Philippine
Economy experiencing nowadays in the time of Covid-19 pandemic
and how these problems will be solved.
