Applied Economics (Module 1)

Applied Economics

is the application of economic theory and econometrics in specific settings with the goal of analyzing potential outcomes.

Gross National Product

is the market value of all goods and services produced by the citizens of the country whether production was made inside or outside the country in a given period.

Gross Domestic Product

is the market value of all goods and services produced within the country without distinction between foreign or domestic ownership made during specific period of time.

Normative economics

it embodies the ideal such as the ideal rate of population growth or the most effective tax system.

Microeconomics

it is concerned with the behavior of individual entities such as consumer, producer, and the resource owner.

Macroeconomics

it is concerned with the overall performance of the entire economy.

Capital

man-made resources used in the production of goods and services, which includes machineries and equipment.

Positive economics

refers to things that are actually happening such as the current inflation rate, the number of employed labor, and the Gross National Product.

Land

soil and natural resources that are found in nature and are not man-made.

Absolute Scarcity

A type of scarcity. supply is limited.

Scarcity

a condition where there are insufficient resources to satisfy all the needs and wants of a population.

Relative Scarcity

a good is scarce compared to its demand.

Economics

a social science that involves the use of scarce resources to satisfy unlimited wants.

Traditional economy

decisions are based on traditions and practices upheld over the years and passed on from generations.

Command economy

decisions are imposed on the people who do not have a say in what goods are to be produced.

Market economy

decisions are made on what goods to produce based on people's preferences.

Labor

the physical and human effort exerted in production.

Social Science

the study of society and how people behave and influence the world around them.

Opportunity Cost

the value of the best foregone alternative.