Problem:
Applied Economics focuses on economic theories and econometrics (mathematical and statistical methods used in economics) and how they can be used to address and improve economic issues. Applied economics looks at real-world problems in the public and private sectors through an economic perspective, in order to determine the weaknesses and how to improve a company, country, or household. Generally speaking, applied economics is the empirical study of economics.
Applied economics is relevant to our own lives because it gives us a clear, concise image of an economic situation, without the influence of bias. This helps us determine a way to improve how our economy functions. Economic theories are formed by looking at how historical events have impacted the economy and how the economy rebalances itself. Applied economics tests these theories against empirical evidence to see if they actually hold true. The main goal is to distinguish between correlation and causality; economics is interested in causal relationships but these are easily confused with correlations.
This area of economics covers a wide array of topics and the categories that fall under applied economics relate to how our lives are affected by changes in the economy. The topics that fall under applied economics are as follows: labour economics, monetary economics, nature resource economics, and public economics.