Economic Problems of a Nation

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Why the choice of the textbook ECONOMICS, An Introduction by Villegas and Abola? * The book is contextualized to the Philippine economic setting---learning of economic principles is immediately related to the current situation and issues facing the economy. Students will therefore be learning not abstract or foreign concepts but concrete ones they can relate with and use to explain socio-economic phenomena they experience, and most likely motivate them to take constructive action on these phenomena. * The book offers a holistic coverage of the essentials of economics just enough to have a basic understanding of the science and to be able to be covered in one semester. Review Reading 1

THE ECONOMIC PROBLEMS OF A NATION

Introduction
* The Asian financial crisis that started in 1997; Global financial crisis that stated in the US in 2008; the crisis is not yet over, in fact it is spreading (Middle East, Europe). * These more frequently recurring and more widespread crises is baffling economists, and putting them back to their tools. * Our textbook tries to develop the framework and the analytical tools for the study of economics in a bigger scope, that of a nation. The focus is not on the analysis of the smaller units, such as the firm, or industry, or region, but the entire nation. To be able to diagnose and understand the specific it is oftentimes necessary to have a good view of the whole, the system, e.g., poverty, corruption, health condition, environmental problems, etc. * This approach to discussion of economics will help us understand the issues that concern us all as citizens. * The textbook however does not ignore the microeconomic concepts necessary for functional understanding of the science.

Questions that concern us all
* We are affected by external developments: increase in prices of oil/gasoline/lpg; global financial/economic crisis. How do we protect ourselves from these adverse external developments? * Internal developments: increase in transport fare, prices of commodities, tuition and miscellaneous fees, etc. Why are prices rising and how could we prevent it accelerating in the future? Will employment opportunities be better? Can our parents earn more in the coming years? Can the government do anything about these things? * Some of the questions border on the political. How should we deal with foreign investors? Should the government raise taxes? Should the government continue borrowing money from abroad? Should we repudiate or seek a partial cancellation of our foreign debt? * Economics, as a science pioneered by Adam Smith in the 18th century, will help us answer these questions. * This book focusing on the macroeconomic concepts of income, jobs, prices and dollar reserves on the national level, while tackling issues relevant to the smallest firm and household in the economy (microeconomics), will help us answer these questions.

Man’s Needs and Wants

1. Types of Needs
a. Basic needs (survival needs): man’s needs he cannot live without: food, shelter and clothing. b. Needs essential to decent and comfortable living (security & enabling needs): goods and services such as fuel, light, water, household furnishings, equipment, personal care, medical care, education, recreation and leisure. c. Luxury goods

2. Created wants. Some needs can be created thru advertising, demonstration effect 3. Varying needs and wants. Factors are age, rural-urban setting, climate, etc. 4. Public wants. Desired by larger groups or communities in common, no one person would spend for the because of large expense, yet many others will benefit from it: parks, postal systems, roads, bridges, ports, airports, etc. Usually provided by the government and financed by tax revenues. Public goods. 5. Private wants. Those that are clearly specific to individuals: clothings, cars, restaurants, imported goods. Served by the private sector.

How Needs and...
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