UNIVERSITY OF MAKATI
J. P. Rizal Ext., West Rembo, Makati City
HIGHER SCHOOL NG UMAK
ABM AND LANGUAGE DEPARTMENT
COURSE TITLE CHAPTER 1
MODULE NO. 1
APPLIED ECONOMICS INTRODUCTION TO APPLIED ECONOMICS
LEARNING define basic terms in applied economics
OBJECTIVES
At the end of the identify the basic economic problems of the country
lesson, the students
explain how applied economics can be used to solve economic problems
should be able to:
INTRODUCTION
When you think about scientists, you probably think about geologists, biologists, physicists, chemists, and the like.
But have you ever considered economics as a science? Although each of these fields has its own language (for
example, geologists talk about rocks, sediments, and tectonic plates, while biologists talk about cells, the nervous
system, and anatomy), they do have some things in common. If you would like to know what these commonalities
are, and why economics is considered a social science as opposed to a natural science, read on!
CONTENT
Economics as Social Science Definition
All scientific fields have a few things in common.
The first is objectivity, that is, the quest to find the truth. For example, a geologist may want to find out the truth
about how a certain mountain range came into being, while a physicist may want to find the truth about what
causes light rays to bend while going through water.
The second is discovery, that is, discovering new things, new ways of doing things, or new ways of thinking about
things. For example, a chemist may be interested in creating a new chemical to improve the strength of an
adhesive, while a pharmacist may desire to create a new drug to cure cancer. Similarly, an oceanographer may
be interested in discovering new aquatic species.
The third is data collection and analysis. For example, a neurologist may want to collect and analyze data on
brain wave action, while an astronomer may want to collect and analyze data to track the next comet.
Finally, there is the formulation and testing of theories. For example, a psychologist may formulate and test a
theory about the impacts of stress on a person's behavior, while an astrophysicist may formulate and test a
theory about the impact of the distance from the earth on the operability of a space probe.
So let's look at economics in light of these commonalities among the sciences. First, economists most certainly are
objective, always wanting to know the truth about why certain things are happening among individuals, firms,
and the economy at large. Second, economists are constantly in discovery mode, trying to find trends to explain
what is happening and why, and always sharing new thoughts and ideas among themselves, and with
policymakers, firms, and the media. Third, economists spend much of their time collecting and analyzing data to
use in charts, tables, models, and reports. Finally, economists are always coming up with new theories and testing
them for validity and usefulness.
Therefore, compared to the other sciences, the field of economics fits right in!
Like many scientific fields, the field of economics has two main subfields: microeconomics and macroeconomics.
Microeconomics is the study of how households and firms make decisions and interact in markets. For example,
what happens with the supply of labor if wages rise, or what happens with wages if firms' costs of materials
increase?
Macroeconomics is the study of economy-wide actions and impacts. For example, what happens to home prices
if the Federal Reserve raises interest rates, or what happens to the unemployment rate if production costs
decline?
Although these two sub-fields are different, they are connected. What happens at the micro level eventually
manifests at the macro level. Therefore, in order to better understand macroeconomic events and impacts, it is
vital to understand microeconomics as well. Sound decisions by households, firms, governments, and investors all
hinge on a solid understanding of microeconomics.
Now, what have you noticed about what we've said so far about economics? Everything that economics as a
science deals with involves people. At the micro level, economists study the behavior of households, firms, and
governments. These are all different groups of people. At the macro level, economists study trends and the
impact of policies on the overall economy, which consists of households, firms, and governments. Again, these are
all groups of people. So whether at the micro level or the macro level, economists essentially study human
behavior in response to the behavior of other humans. This is why economics is considered a social science,
because it involves the study of humans, as opposed to rocks, stars, plants, or animals, as in the natural, or
applied sciences.
Difference Between Economics as a Social Science and
Economics as Applied Science
What is the difference between economics as a social science and economics as an applied science? Most people
think of economics as a social science. What does that mean? At its core, economics is the study of human
behavior, both the causes and effects. Since economics is the study of human behavior, the main problem is that
economists cannot truly know what is going on inside a person's head that determines how they will act based on
certain information, wants, or needs.
The Most Popular Economic Issues of 2023
In the website https://philippines.isidewith.com/polls/economic, they conducted a poll of the most popular
economic issues of 2023. As seen below in the photos, there are quite a number of economic issues that are
present.
Before looking at the issues, let’s define the following terminologies:
1. minimum wage - A minimum wage is the lowest remuneration that employers can legally pay their
employees—the price floor below which employees may not sell their labor. Most countries had
introduced minimum wage legislation by the end of the 20th century.
2. tariffs - A tariff is a tax imposed by the government of a country or by a supranational union on imports
or exports of goods. Besides being a source of revenue for the government, import duties can also be a
form of regulation of foreign trade and policy that taxes foreign products to encourage or safeguard
domestic industry.
3. tech monopolies - Tech monopoly refers to big tech companies who monopolize and dominate flow of
information across the world.
4. economic stimulus - In economics, stimulus refers to attempts to use monetary policy or fiscal policy to
stimulate the economy. Stimulus can also refer to monetary policies such as lowering interest rates and
quantitative easing. A stimulus is sometimes colloquially referred to as "priming the pump" or "pump
priming".
5. universal basic income program - a proposal to have a universally accepted remuneration system.
6. free trade - Free trade is a trade policy that does not restrict imports or exports. It can also be
understood as the free market idea applied to international trade. In government, free trade is
predominantly advocated by political parties that hold economically liberal positions, while economic
nationalist and left-wing political parties generally support protectionism, the opposite of free trade.
7. taxes - A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer by a
governmental organization in order to fund government spending and various public expenditures, and
tax compliance refers to policy actions and individual behaviour aimed at ensuring that taxpayers are
paying the right amount of tax at the right time and securing the correct tax allowances and tax reliefs.
8. corporate taxes - A corporate tax, also called corporation tax or company tax, is a direct tax imposed
on the income or capital of corporations or analogous legal entities. Many countries impose such taxes at
the national level, and a similar tax may be imposed at state or local levels.
9. Bureau of Internal Revenue - The Bureau of Internal Revenue is a revenue service for the Philippine
government, which is responsible for collecting more than half of the total revenues of the government. It
is an agency of the Department of Finance and it is led by a Commissioner.
10. government spendings - Government spending or expenditure includes all government consumption,
investment, and transfer payments. In national income accounting, the acquisition by governments of goods
and services for current use, to directly satisfy the individual or collective needs of the community, is
classed as government final consumption expenditure
11. government pensions - A pension is a fund into which a sum of money is added during an employee's
employment years and from which payments are drawn to support the person's retirement from work in
the form of periodic payments.
12. welfare benefits - Benefits that may help you pay for food, housing, health, and other living expenses
usually provided by the government. (ex. ayuda, 4Ps, free health care, etc.)
13. offshore banking - An offshore bank is a bank regulated under international banking license, which
usually prohibits the bank from establishing any business activities in the jurisdiction of establishment. Due
to less regulation and transparency, accounts with offshore banks were often used to hide undeclared
income.
14. welfare and welfare drug testing - This refers to drug testing before welfare or benefit is given to the
citizens.
15. domestic jobs - This refers to jobs that are kept within a particular geographical location or area.
16. state ownership - This refers to the ownership of the government over public service agencies and other
agencies that provide commodities (water, electricity, food, etc.)
ASSESSMENT
Define the following terms:
1. social science
2. applied science
3. economics
4. macroeconomics
5. microeconomics
6. tariff
7. economic stimulus
8. free trade
9. pension
10. taxes
11. tech monopolies
ASSIGNMENT
1. Refer to the photos above of the common economic issues of 2023.
2. Choose at least two issues that you like to discuss.
3. Explain how applied economics can be used to solve these economic issues.
REFERENCES
https://www.studysmarter.us/explanations/microeconomics/economic-principles/economics-as-science/
https://philippines.isidewith.com/polls/economic
Wikipedia (for terminologies)
DepEd Curriculum Guide | DepEd Modules
Prepared by:
CALICDAN, MARK JAYCEE
HEBREW, JUNE CANICOSA
