Podcast
Questions and Answers
What does applied economics primarily focus on?
What does applied economics primarily focus on?
Which of the following best defines Gross Domestic Product (GDP)?
Which of the following best defines Gross Domestic Product (GDP)?
Which approach is NOT one of the three methods for computing GNP and GDP?
Which approach is NOT one of the three methods for computing GNP and GDP?
What is the purpose of the Expenditure Approach in computing GDP?
What is the purpose of the Expenditure Approach in computing GDP?
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What does Gross National Product (GNP) measure?
What does Gross National Product (GNP) measure?
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What approach did Lee Kuan Yew embrace to attract foreign investments in Singapore?
What approach did Lee Kuan Yew embrace to attract foreign investments in Singapore?
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Which of the following was a key focus in education during Lee Kuan Yew's leadership?
Which of the following was a key focus in education during Lee Kuan Yew's leadership?
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What strategy did Lee Kuan Yew use to ensure a stable business environment in Singapore?
What strategy did Lee Kuan Yew use to ensure a stable business environment in Singapore?
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What was a significant anti-corruption measure implemented by Lee Kuan Yew?
What was a significant anti-corruption measure implemented by Lee Kuan Yew?
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How did Lee Kuan Yew diversify Singapore's economy?
How did Lee Kuan Yew diversify Singapore's economy?
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What is the formula for calculating Gross National Product (GNP)?
What is the formula for calculating Gross National Product (GNP)?
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In the formula for Gross Domestic Product (GDP), what do the letters C, I, G, and X - M stand for?
In the formula for Gross Domestic Product (GDP), what do the letters C, I, G, and X - M stand for?
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Which of the following is NOT one of the top three economic problems faced by the Philippines?
Which of the following is NOT one of the top three economic problems faced by the Philippines?
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How does applied economics aim to address scarcity in the Philippines?
How does applied economics aim to address scarcity in the Philippines?
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What does the term 'infrastructure deficit' refer to in the context of the Philippine economy?
What does the term 'infrastructure deficit' refer to in the context of the Philippine economy?
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What factor does NOT contribute to income inequality in the Philippines, according to the presented information?
What factor does NOT contribute to income inequality in the Philippines, according to the presented information?
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What is the relationship between Gross Domestic Product (GDP) and depreciation in the context provided?
What is the relationship between Gross Domestic Product (GDP) and depreciation in the context provided?
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Which of the following did Lee Kuan Yew NOT serve as during his career?
Which of the following did Lee Kuan Yew NOT serve as during his career?
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Study Notes
Applied Economics
- Applied economics is the application of economic theory to predict outcomes from various courses of action in the real world.
- It helps individuals, businesses, and policymakers make better choices by understanding the likely consequences of their decisions.
John Neville Keynes
- John Neville Keynes is credited with coining the term "applied economics."
- He used the term to describe the application of economic theory to interpret and explain various economic phenomena.
Gross Domestic Product (GDP)
- GDP is the monetary value of all finished goods and services produced within a country during a specific period.
Gross National Product (GNP)
- GNP is the total value of goods and services produced by a country's citizens in a year, regardless of location.
GNP vs. GDP
- GNP considers the production of a country's citizens anywhere in the world, while GDP considers production within the country's borders.
- GNP is a better indicator of the financial well-being of a country's citizens, especially those in multinational corporations.
- GDP is a better indicator of the overall U.S. economy.
Approaches to Calculating GNP & GDP
- Expenditure approach: GDP is calculated by summing four types of spending: consumption, investment, government purchases, and net exports (exports – imports).
- Income approach: Economic expenditures equal the total income generated through the production of all economic goods and services.
- Value-added approach: calculating an industry's output, reducing intermediate consumption, to determine its value added.
Formulas
- Expenditure Approach: GDP = Consumption + Investment + (Government Spending) + (Exports – Imports) or GDP = C + I + G + (X – M)
- Value Added Approach: VA = PO (Price of Output) – CI (Cost of Input)
Example Calculation (Expenditure Approach)
- Data from a table shows individual expenditure components such as transfer payments, interest income, depreciation, wages, gross private investments and government spending for GDP calculation.
Example Calculation (Income Approach)
- Another table provides data on GDP components including transfer payments, interest income, depreciation, wages, gross private investment, and government spending.
- The formula used in this approach for calculating GDP is NI = W + R + i + PR
GNP Formula
- GNP = GDP + Net Income Inflow from Overseas - Net Income Outflow to Foreign Countries or GNP = GDP + (NI – NO)
- Optionally: GNP = GDP + Z
Example Calculation (Philippines GNP fiscal year 2023)
- Data provided for the Philippines includes: GDP (PHP 18 trillion), Remittances (PHP 1.2 trillion), and Depreciation (PHP 2 trillion).
- The example calculation is used to determine the Philippines GNP using the formula.
Economic Problems in the Philippines
- Poverty and income inequality
- Unemployment and underemployment
- Infrastructure deficit
Poverty and Income Inequality
- A significant portion of the Philippine population remains in poverty.
- A large gap exists between the rich and poor.
- Economic growth has not always resulted in equitable distribution of benefits.
Unemployment and Underemployment
- High levels of unemployment and underemployment persist in the Philippines.
- Many individuals lack jobs or are engaged in jobs not utilizing their full skills and education, leading to livelihood challenges.
Infrastructure Deficit
- The Philippines faces challenges with infrastructure development in areas including transportation, energy, and communication systems, hindering economic development.
Lee Kuan Yew (Singapore)
- Background: Singaporean politician and lawyer, Prime Minister from 1959 to 1990.
- Achievements: Singapore achieved significant economic prosperity under his leadership.
Strategies for Singapore's Economic Success
- Economic pragmatism: Adopting a market-oriented approach and attracting foreign investment.
- Strong rule of law: Establishing a robust legal framework for economic stability and attracting investment.
- Prioritized education: Developing a skilled workforce through education and addressing labor demands in their economy.
- Infrastructure development: Implementing comprehensive infrastructure projects to enhance connectivity and facilitate economic activities.
- Anti-corruption measures: Fostering transparency and maintaining a clean business environment.
- Social discipline and work ethic: Promoting social discipline and a strong work ethic to foster a productive and efficient society.
- Diversification of the economy: Expanding their economic activity into High-Tech industries and services by reducing reliance on traditional sectors.
- Strategic geopolitical positioning: Singapore strategically positioned as a global hub for trade and commerce.
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Description
This quiz covers the fundamentals of applied economics, including key concepts such as Gross Domestic Product (GDP) and Gross National Product (GNP). You'll learn about the contributions of John Neville Keynes and how these economic measures impact decision-making. Test your understanding of these important economic terms and their applications.
