APPLIED

ECONOMICS
 MEANING OF APPLIED
ECONOMICS
1. IS THE APPLICATION OF ECONOMIC
THEORY AND ECONOMETRICS IN
SPECIFIC SETTINGS.
 ECONOMETRIC

• is the application of statistical methods to economic

data and is described as the branch of economics that
aims to give empirical content to economic
relations.[1] More precisely, it is "the quantitative analysis
of actual economic phenomena based on the
concurrent development of theory and observation,
related by appropriate methods of inference"
 ECONOMIC THEORY
• (economics) a theory of commercial activities (such as the production and consumption of
goods)theory - a well-
substantiated explanation of some aspect of the natural world; an organized system of
accepted knowledge that applies in a variety of circumstances to explain a specific set of phenomena; "the
oriescan incorporate facts and laws and tested hypotheses"; "true in fact and theory"
• consumerism - the theory that an increasing consumption of goods is economically beneficial
• Keynesianism -
the economic theories of John Maynard Keynes who advocated government monetary and
fiscal programs intended to stimulate business activity and increase employment
• liberalism - an economic theory advocating free competition and a self-regulating market
• Malthusian theory, Malthusianism -
Malthus' theory that population increase would outpace increases in the means of subsistence
• monetarism -
an economic theory holding that variations in unemployment and the rate of inflation are usually
caused by changes in the supply of money
• As one of the two sets of fields of economics (the other
set being the core),[1] it is typically characterized by the
application of the core, i.e. economic
theory and econometrics, to address practical issues in a
range of fields including demographic economics, labour
economics, business economics, industrial
organization, agricultural economics, development
economics, education economics, health
economics, monetary economics, public economics,
and economic history.
 MEANING OF APPLIED ECONOMICS

2. The application of economic theories and

principles to real world situations with the desired
aim of predicting potential outcomes. The use of
applied economics is designed to analytically
review potential outcomes without the "noise"
associated with explanations that are not backed by
numbers. Applied economics can involve the use
of econometrics and case studies.
•Because economics relies on the
interpretation of historical events in its
theories, applied economics can lead
to "to do" lists for steps that can be
taken to ensure stability in real world
events
 MEANING OF APPLIED ECONOMICS
3. is the study of economics in relation to real
world situations, as opposed to the theory of
economics. It is the application of economic
principles and theories to real situations, and
trying to predict what the outcomes might be.
- applied economics is the study of observing
how theories work in practice
EXAMPLE: Applied economics may be
practiced at macroeconomic (the
whole, aggregate economy) or
microeconomic (analyzing individual
consumers and companies) levels.
•Economic Theory is all about
thinking things up, while
Applied Economics is about
trying things out.
•Only with applied economics can a
true and complete picture of an
economic situation or theory emerge,
so that decision-makers can choose
what to do in order to move in the
right direction from a current position.
 JOHN NEVILLE KEYNES

• first to use the phrase “applied economics”

• Applied economics is the “art of economics”
• The art of economics relates the lessons learned in
positive economics (the study of what is, and the
way the economy works) to the normative goals
determined in normative economics (the study of
what should be).