Irish S.

De La Cruz 11-SKYLON

A pure science furnishes tools and applied science works with these tools. Economics as pure
science, formulates various laws and applied economics applies them in practice in solving various
problems. Before economics has been treated as a pure positive science. But recently, applied
economics assumed greater importance. As pure science and applied science go together, so
Economics is also pure as applied science.
is the study of observing how economics theories work in real world-
situations. It is the application of economic principles and theories to real situations and trying to
predict what the outcomes might be. Applying economics to the status of the economy of a country,
household or company helps eliminate all attempts to dress up a situation so that it will seem better
or worse than it really is. Applied Economics deals on the application of economic theories and
principles to real-world situations with the desired aim to analytically review potential outcomes.

Applied Economics issues influence our daily lives. This includes issues such as tax and inflation,
interest rates and wealth, inequality and emerging markets, and energy and the environment. A
broad subject, economics provides answers to a range of health, social and political issues that
impact households and wider communities.

The field of economics is traditionally divided into two (2) broad subfields:
Macroeconomics and Microeconomics
is the study of economy-wide phenomena dealing with economics behavior of
the whole economy or its aggregates such as the government and businesses. It is concerned with
the discussion of topics like gross domestic product (GDP) inflation, unemployment, and economic
growth. Economist – and society at large – agree on three important macroeconomic goals:
economic growth, high employment, and stable prices.
is the study of how households and firms make decisions and how they interact
in markets. It deals with the economic behavior of individual units such as consumers, firms, and
the owners of the factors of production. It looks at the choices they make and how they interact
with each other when they come together to trade specific goods and services.

Normative economics may be useful in establishing and generating new ideas from different
perspectives, but it cannot be the only basis for making decisions on important economic issues, as
it does not take an objective angle that focuses on facts and causes and effects.
Economic statements coming from the positive economics angle can be broken down into
determinable and observable facts that can be examined and tested. Because of this characteristic,
economists and analysts often practice their professions under the positive economic angle. Positive
economics, being the measurable perspective, helps policymakers and other government and
business authorities decide on important matters that affect particular policies under the guidance
of fact-based findings.

• NO government involvement in economic decisions. Private firms account for all production.
• Consumers decide WHAT should be produced. They do this through the purchases they
make.
• Businesses determine HOW the products will be produced. They must be competitive.
• WHO buys the products? The people with the most money is able to buy more goods and
services.

• All resources are government-owned.

• One person (dictator) or a group of officials decide WHAT products are needed.
• The government runs all businesses, controls all employment, and decides HOW goods and
services will be produced.
• The government decides WHO receives the products that are produced.

• Economy is shaped largely by custom or religion.

• Customs and religion determine the WHO, WHAT, and HOW.
• Example: India has a caste system which restricts occupational choice. (A social class
separated from others by distinctions of hereditary rank, profession, or wealth.)

• Most economies in the world today are mixed.

• Classification is based on how much government intervention there is.
• In the U.S. the government accounts for about 1/3 of all U.S. economic activity.