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27 views17 pages

Module 1

Module 1 PPT

Uploaded by

ML Creations
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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AE 104

Economic Development
Is there a difference between economic growth
and economic development?
Economic Growth
Economic growth in an economy is demonstrated by an
outward shift in its Production Possibility Curve. Another way
to define growth is the increase in a country’s total output or
Gross Domestic Product. It is the increase in a country’s
production.
The PPF assumes that:
1. The economy is working at maximum efficiency.
2. There are only two (2) goods being produced in the
economy.
3. The same resource(s) are being used in the production
of these two goods, and may be shifted to produce
more of one good, or more of another.
4. Resources and technology are fixed.
Economic Development

A country’s economic development is usually indicated by an


increase in citizens’ quality of life. ‘Quality of life’ is often
measured using the Human Development Index, which is an
economic model that considers intrinsic personal factors not
considered in economic growth, such as literacy rates, life
expectancy and poverty rates.
• The Human Development Index (HDI) is a summary measure of
average achievement in key dimensions of human development:
a long and healthy life, being knowledgeable and have a decent
standard of living. The HDI is the geometric mean of normalized
indices for each of the three dimensions.
• On September 25th 2015, countries adopted a set of goals to end
poverty, protect the planet, and ensure prosperity for all as part of a
new sustainable development agenda. Each goal has specific targets
to be achieved over the next 15 years.

• For the goals to be reached, everyone needs to do their part:


governments, the private sector, civil society and people like you.
Branches of &
Approaches to
Economics
Macroeconomics vs. Microeconomics

Microeconomics
- branch of economics that analyzes the market
behavior of individual consumers and firms in an
attempt to understand the decision-making
process of firms and households

Macroeconomics
- branch of economics that studies how the
aggregate economy behaves
Branches of Economics
Macroeconomics Microeconomics
• studies national income • studies individual income
• analyzes total employment • analyzes demand and
in the economy supply of labor
• deals with aggregate • deals with households and
decisions firms decisions
• studies overall price level • studies individual prices
• analyzes aggregate demand • analyzes individual demand
and aggregate supply and individual supply
Approaches to Economics

Positive Economics Normative Economics


- Studies the way the world - Studies the way the world
is: “what is” of economics should be: “what ought to be”
- Factual, objective and is - Subjective and judgmental
used to describe the
occurrence of a
phenomenon
- Usually quantified - Far more difficult to quantify
- More descriptive than - More predictive than
predictive in its usage descriptive in it usage
Why study macroeconomics?

1. The macroeconomy affects society’s well-being.


2. The macroeconomy affects your well-being.
3. The macroeconomy affects politics and current
events.

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