APPLIED ECONOMICS
QUARTER 1 – WEEK 2 – MODULE 2 | SEM 1 2022 | Padayon!
− Increase access to education
ECONOMIC PROBLEM
• SOCIAL INEQUALITY refers to disparities
and discrepancies in areas such as
• Economic problems exists because of income, wealth, education, health
imbalances of resources and satisfaction nutrition, space, politics, and social
of human needs and wants. identity.
• Resources are limited to suffice the
unlimited desires of the society. SOLUTIONS:
− Create jobs (e.g. government
THE UTILITY AND APPLICATION OF − projects, encourage investment)
APPLIED ECONOMICS IN SOLVING
− Raise the minimum wage
ECONOMIC ISSUES AND PROBLEMS
− Promote pay equity
• MONOPOLY is a market structure
★ MICROECONOMICS ISSUES
characterized by a sole seller in a
○ Poverty particular market wherein the business
entity may control the supply
○ Social Inequality compromise the quality of goods and
services, and manipulate the price.
○ Monopoly
SOLUTIONS:
○ Environmental Issues
Since a monopoly does not face
★ MACROECONOMICS ISSUES competition, only the government may
○ Recession help solve the problem. The government
○ Unemployment may;
○ Inflation − Implement price capping (limiting
price increases)
○ Trade-deficit − Regulate the quality of service
− Investigate and address the abuses
MICROECONOMIC ISSUES
• ENVIRONMENTAL ISSUES are harmful
effects of human activities (usually
• POVERTY is pronounced deprivation in economic activities) on the environment.
well-being. Poverty is the lack of
monetary resources to meet one’s needs SOLUTIONS:
or the lack of specific goods like foods, − Use reusable items
shelter, health and the like.
− Conserve water and energy
SOLUTIONS: − Proper waste disposal
− Create jobs (e.g. government − Recycle waste
projects, encourage investment) − Find clean renewable energy
− Raise the minimum wage sources
− Promote pay equity
− Properly allocate time and MACROECONOMIC ISSUES
resources (e.g. social programs)
− Provide access to healthcare • RECESSION is a period of temporary
economic decline during which
− Create micro-financing programs
industrial and trade activities are
− Provide an adequate social safety reduced, marked by a fall in GDP in tw
net consecutive quarters (6 to 18 months).
1 | NOT - 11 ABM - 1
APPLIED ECONOMICS
QUARTER 1 – WEEK 2 – MODULE 2 | SEM 1 2022 | Padayon!
SOLUTIONS: imports more expensive and
exports cheaper and trigger the
− Tax cuts or reduced tax will trade balance.
increase people’s disposal income − Raise the quotas and tariffs on
which later results in increased imports. This will make imports
consumption, increase production,
more expensive so it will discourage
employment, and so on.
people and local businesses from
− Increase government spending, buying foreign products.
done by investing or marking
projects like construction of
infrastructures like roads, railways, All societies are faced with basic question
and ports. Therefore, this will both in the economy that have to be answered in
stimulate production (producers order to cope with constraints and
receive payment) and consumption limitations. These are:
(workers spend salary).
• UNEMPLOYMENT happens when a lot of 1. What to Produce?
people are jobless/cannot find work or
are losing jobs. 2. How to Produce?
SOLUTIONS: 3. For Whom to Produce?
− Create jobs by creating public 1. WHAT TO PRODUCE?
projects/jobs − Society must decide what goods and
− Provide employment subsidies to services should be produced in the
businesses to lower the costs of economy.
production − Having decided on the nature of
− Invite foreign investments goods that will be produced, the
− Reduce occupational mobility to quantity of these should also be
easily find new different jobs. decided on.
• INFLATION is the consistent increase in 2. HOW TO PRODUCE?
the average price level of goods and
services. The purchasing power of − Is a question on the production
money declines and it lowers living method that will be used to produce
standards. the goods and services.
SOLUTIONS: − This refers to the sources mic and
technology that will be applied in
− Increase taxes (such as Income tax production.
and VAT) and cut spending 3. FOR WHOM TO PRODUCE?
• TRADE DEFICIT occurs when a country
imports exceed its exports during a given − Is about the market for the goods.
time period. It is known as a negative − For whom will the goods and services
balance of trade (BOT). be produced? The young or old, the
SOLUTIONS: male or female market, the low-
income or the high-income groups?
− Discourage consumption and
increase savings. If households and
the government reduce their
consumption, then the need for
imports decline and less foreign
borrowing to pay.
− Depreciate the exchange rate.
Because we use the dollar for
foreign trade, a weaker peso makes
2 | NOT - 11 ABM - 1
