Applied Economics Notes PDF

LESSON 2 APPLIED ECONOMICS BY: DARLENE T. ALAG APPLIED ECONOMICS is the application of economic theory to determine the likely outcomes associated with various possible courses of action in the real world. By better understanding the likely consequences of choices made by individ...

LESSON 2 APPLIED ECONOMICS BY: DARLENE T. ALAG APPLIED ECONOMICS is the application of economic theory to determine the likely outcomes associated with various possible courses of action in the real world. By better understanding the likely consequences of choices made by individuals, businesses, and policy makers, we can help them make better choices.  JOHN NEVILLE KEYNES -is attributed to be the first to use the phrase “applied economics” to designate the application of economic theory to the interpretation and explanation of particular economic phenomena. GROSS DOMESTIC PRODUCT (GDP) is the monetary value of all finished goods and services made within a country during a specific period. GROSS NATIONAL PRODUCT (GNP) is defined as the total value of goods and services produced by a country's citizens in a year, regardless of the location of production.  3 TYPES OF APPROACH IN COMPUTING GNP & GDP EXPENDITURE INCOME VALUE ADDED APPROACH APPROACH APPROACH uses four critical types of all economic calculating an industry or spending: consumption, investment, net exports of expenditures should sector's output and goods and services, and equal the total income subtracting its intermediate government purchases of goods consumption (the goods generated by the and services to calculate gross and services used to domestic product (GDP). It does production of all produce the output) to so by adding them all up and economic goods and receiving a final value. derive its value added. services.  FORMULA (EXPENDITURE APPROACH) GDP = consumption + investment + (government spending) + (exports − imports) GDP = C + I + G + (X - M) EXAMPLE EXAMPLE  FORMULA (VALUE ADDED APPROACH) VA= PO (Price of Output) - CI (Cost of Input)  FORMULA FOR GROSS NATIONAL PRODUCT (GNP) GNP = GDP + Net Income Inflow from Overseas – Net Income Outflow to Foreign Countries GNP = GDP + (NI - NO) or GNP = GDP + Z  EXAMPLE Problem: For the fiscal year 2023, the Philippines reports the following economic data: Gross Domestic Product (GDP): PHP 18 trillion Remittances from Overseas Filipino Workers (OFWs): PHP 1.2 trillion (net factor income from abroad) Depreciation: PHP 2 trillion (the decrease in the value of capital goods over the year) Calculate the Gross National Product (GNP) for the Philippines.  HOW DO APPLIED ECONOMICS HELP SOLVE ECONOMIC PROBLEMS IN THE PHILIPPINES? Applied Economics seeks to solve the problems on scarcity. This happens when human wants for goods and services exceed the available supply. In a modern economy, it is evident that a division of labor happens when people earn income by specializing in what they produce. They will use that income to purchase the products they need or want every day.  TOP 3 PHILIPPINES’ BASIC ECONOMIC PROBLEMS Poverty and Income Inequality Unemployment and Underemployment Infrastructure Deficit  POVERTY AND INCOME INEQUALITY A significant portion of the population in the Philippines still lives in poverty, and there is a considerable gap between the rich and the poor. Despite overall economic growth, the benefits of that growth have not always been evenly distributed. UNEMPLOYMENT AND UNDEREMPLOYMENT High levels of unemployment and underemployment persist, with many individuals either lacking jobs or being engaged in jobs that do not fully utilize their skills and education. This creates challenges in providing decent livelihoods for a growing population.  INFRASTRUCTURE DEFICIT The Philippines faces infrastructure challenges, including inadequate transportation, energy, and communication systems. This deficit can hinder economic development and competitiveness by limiting the efficient movement of goods and people.  LEE KUAN YEW (born September 16, 1923, Singapore— died March 23, 2015, Singapore) -politician and lawyer who was prime minister of Singapore from 1959 to 1990. During his long rule, Singapore became the most-prosperous country in Southeast Asia.  HOW DID LEE KUAN YEW MADE THE SINGAPORE THE MOST PROSPEROUS COUNTRY IN SOUTHEAST ASIA DURING WHEN HE WAS THE PRIME MINISTER? Economic Strict Rule of Educational Infrastructure Pragmatism Law Focus Development Embraced a Established a strong Prioritized education, Implemented market-oriented legal framework and investing heavily in comprehensive approach, effective developing a skilled infrastructure attracting foreign governance to workforce to meet projects, enhancing investments and ensure stability and the demands of a connectivity, and promoting export- attract business growing economy. facilitating economic led growth. investments. activities.  HOW DID LEE KUAN YEW MADE THE SINGAPORE THE MOST PROSPEROUS COUNTRY IN SOUTHEAST ASIA DURING WHEN HE WAS THE PRIME MINISTER? Anti-Corruption Social Diversification Strategic Geopolitical Measures Discipline Strategies Positioning Enforced strict Promoted social Diversified the Leveraged anti-corruption discipline and a economy into high- Singapore's strategic measures to ensure strong work ethic to tech industries and location as a global transparency and services, reducing trading hub, foster a productive maintain a clean reliance on benefiting from and efficient society. international trade business traditional sectors. environment. and commerce.