Economics-a social science which studies individuals and organizations engaged in the production, distribution, and consumption of goods and services.
Microeconomics focuses on the individual parts of the economy.
Macroeconomics looks at the economy as a whole.
Positive Economics- strives to describe what exists and how it works (describing) - analyzes how economies work, what we know, what can be tested by looking at macroeconomic data
Example: The high demand for health care profession abroad resulted to an increase in nursing applicants and graduates
Normative Economics- looks at outcomes of economic behavior and asks whether they are good or bad - analyzes how to improve the economy, deals more with economic policy, what we should do.
Example: Farmers should receive subsidies from the government to maximize their income and avoid borrowing from landlords
The circular-flow diagram is a visual model of the economy that shows how dollars/pesos flow through markets among households and firms.
Land – the source of all materials and food whether in liquid, solid, or gaseous form, in and above the earth
Labor – refers also to the available physical and mental talents of the people who have to produce goods and services
Capital – refers to a tangible, physical good that a person or society creates in the expectation that its use will improve or increase future production
Economic System refers to a set of economic institutions that dominate a given economy with the main objective of solving the 3 basic economic problems/questions.
Traditional Economy - is a system whose past experiences which were handed down from generation to generation are used as bases for economic decisions
Command Economy- under this system, the factors of production and distribution are owned and manage by the state.
Free Market Economy- also known as laissez-faire which is a French phrase which literally means “allow...