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    Intro To Economic Theory

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    Anne Castro
    This document provides an introduction to economic theory, including the branches of macroeconomics and microeconomics. It discusses the circular flow of economic activity between households and business firms, and the shortcomings that can occur including unemployment, economic instability, and income inequality. The document also outlines different economic systems and the tools used in economic analysis, which includes logic, statistics, and mathematics. The purposes of economic analysis are to understand how the economy operates, make predictions, and formulate policy.

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    Intro To Economic Theory

    Uploaded by

    Anne Castro
    358 views12 pages
    This document provides an introduction to economic theory, including the branches of macroeconomics and microeconomics. It discusses the circular flow of economic activity between households and business firms, and the shortcomings that can occur including unemployment, economic instability, and income inequality. The document also outlines different economic systems and the tools used in economic analysis, which includes logic, statistics, and mathematics. The purposes of economic analysis are to understand how the economy operates, make predictions, and formulate policy.

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    Intro to Economic Theory

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    This document provides an introduction to economic theory, including the branches of macroeconomics and microeconomics. It discusses the circular flow of economic activity between households and business firms, and the shortcomings that can occur including unemployment, economic instability, and income inequality. The document also outlines different economic systems and the tools used in economic analysis, which includes logic, statistics, and mathematics. The purposes of economic analysis are to understand how the economy operates, make predictions, and formulate policy.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    358 views12 pages

    Intro To Economic Theory

    Uploaded by

    Anne Castro
    This document provides an introduction to economic theory, including the branches of macroeconomics and microeconomics. It discusses the circular flow of economic activity between households and business firms, and the shortcomings that can occur including unemployment, economic instability, and income inequality. The document also outlines different economic systems and the tools used in economic analysis, which includes logic, statistics, and mathematics. The purposes of economic analysis are to understand how the economy operates, make predictions, and formulate policy.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 12

    Introduction to Economic Theory

    Dr. Marilyn V. Maniago

    Division of Economics:
    1.

    2.

    Macroeconomics branch of economics that studies the economy as a whole. Also known as National Income Analysis Microeconomics branch of economics that deals with parts of the economy such as the household and the business firm. Also known as Price Theory

    Economic Theory it consists of sets of principles or causal relationships among the important facts or variables that surround and permeate economic activity. Economic Activity consists of efforts to satisfy human wants with the use of goods and services.

    THE CIRCULAR FLOW OF ECONOMIC ACTIVITY

    Two Economic Units


    1. Household basic consuming unit 2. Firm basic producing unit

    Economic Activities
    Employment use of economic resources in production Production creation of goods and services out of the available resources for the satisfaction of human wants. Distribution channeling of goods and services products. Consumption use of goods and services Income generation price is paid to the resource owners and for the purchase of goods and services

    Circular Flow of Economic Activity


    Good and Services

    Economic Resources (land, labor, capital, Entrepreneur)

    Household

    Business Firm

    Money Payments (Rent, wages, interest, Profit)

    Consumption Expenditures

    Shortcomings/Problems:
    1. 2. 3. 4.

    5.

    Unemployment of labor and other resources Economic Instability Low levels of economic growth and development Inequality in income distribution Determination of economic system to adopt

    Economic System the means by which a nation finds solutions to basic economic problems.

    Types of Economic System: 1. Traditional 2. Command 3. Market 4. Mixed

    Economic Analysis - is the process of directing economic relationships by examining economic behavior and events and determining the causal relationships among the data and activities observed.

    In making an analysis the following tools of economics are being used:


    1.

    2. 3.

    Logic - to be able to learn to draw conclusions from particular to general; to reason out properly Statistics - to quantitatively describe economic behavior Mathematics - to conceptualize and quantify a hypothesis for validation

    Purposes of Economic Analysis


    1. 2. 3.

    it is an aid in understanding how the economy operates it permits predictions of the results of changes in the economic variables it serves as basis of policy formulation

    Economic Policy - consists of intervention or courses of action taken by the government or other private institutions to manipulate/ control the results of economic activity. The economic policy adopted by the government may be: 1. Monetary-control on the supply of money 2. Fiscal-control unnecessary expenses 3. Trade-deals w/ import and exports Purpose: to achieve economic welfare

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