Basic Macroeconomics – Both human nature and mother nature
is the source of our economic problems
Economics is an interplay of supply and
demand
 The purpose of studying
economics is not to acquire a set
of readymade answers to
economic questions, but to learn
how to avoid being deceived by
economists. – Joan Robinson
The study that deals with the proper
allocation of scarce resources to satisfy
unlimited human wants and needs.
 Rational Thinker – minding the
benefits ug costs (can be non-
monetary term)
 Marginality – gaps and/or
considerations
 TAAS demand, KULANG supply
 Global Affairs – international
connections (war sa Ukraine and
Russia)
 There is NO READY-MADE
SOLUTIONS in Economics
Needs vs Wants
- The main concern of economics is the
fulfillment of human wants among the
competing uses of resources.
(Needs = essentials, Wants = dili kaayo
important)
Resources
- Natural, human, and man-made wealth
that can provide satisfaction through the
production of goods and services.
Scarcity
- An important quality of resources.
Scarcity means more than limited, for
everything in the material world is limited,
but not everything is scarce. It arises
because of certain qualities of resources
and human wants. (kakulangan/limited)
Is human nature or mother nature the
source of our economic problems?
because human wants are unlimited but
the resources are limited.
 Human Nature – our insatiable
desires and needs
 Mother Nature – Scarcity of
nature’s resources
Microeconomics - the branch of
economics that examines the functioning
of individual industries and the behavior of
individual decision-making units—that is,
business firms and households. (individual
= trees)
Macroeconomics - the branch of
economics that examines the economic
behavior of aggregates—income,
employment, output, and so on—on a
national scale. (groups = forest)
Relationship of Economics with other
Sciences
 Psychology – because it studies
our behavior
 Political Science – economics is
always associated w/ science
 Sociology – social interaction in
our economy
 Anthropology – past society, we
use this foundation in our economy
 Geography – determines the “main
source”
 Philosophy – a quest for
enlightenment
 History - to learn from the past
Methods of Economics
 Positive Economics - An approach to
economics that seeks to understand
behavior and the operation of systems
without making judgments. It
describes what exists and how it
works. (Answers the question “what
is”, about facts, objective, descriptive)
 Normative Economics - An
approach to economics that
analyzes outcomes of economic
behavior, evaluates them as good
or bad and may prescribe
 courses of action. Also called ECONOMICS (choose) - The choices that
policy economics. (value and people make, when added up, translate
judgements, subjective) into societal choices.
 Descriptive Economics - the
compilation of data that describe Two Actors in Economy:
phenomena and facts.
 HOUSEHOLDS – provides lands,
 Economic Theory – statements
labor, capital, and
about cause and effect to action
entrepreneurship. (factor
and reaction.
market/input market)
 Model – “abstraction” from “reality”,
 BUSINESS FIRMS – produces
explains the essential relationships
goods and services
between the variables, simplified
representation of a real situation, FOREX = Foreign Exchange Market
sometimes expressed through a
set of mathematical equations.
 Variable – indicators that show us
the current trends in the economy.
> Abstraction – OCCAM’S RAZOR
(irrelevant details should be cut away).
We always make assumptions so it’d
be better to simplify things.
> Ceteris Paribus (all else equal)
outcome na atong gina consider
The most common method of
expressing the quantitative
relationship between two variables is
graphing that relationship on a two-
dimensional plane. Ceteris Paribus
helps us simplify reality to focus on the
relationships that interest us.
Cautions and Pitfalls
Post hoc, ergo propter hoc. -
Literally, “after this (in time), therefore
because of this.” A common error
made in thinking about causation: If
Event A happens before Event B, it is
not necessarily true that A caused B.
Fallacy of composition. The
erroneous belief that what is true for a
part is necessarily true for the whole.
Testing Theories and Models
Empirical Economics - the collection
and use of data to test economic
theories