Jas PDF

PAMANTASAN NG CABUYAO
Senior High School Department

Katapatan Subdivision, Brgy. Banay-Banay, City of Cabuyao, Laguna
ABM AE12: APPLIED ECONOMICS
____________________
A COURSE REQUIREMENT PRESENTED TO
Jeremy Paul E. Gecolea, MBA
Course Professor
By
Jasenri Anne O. Gonzales
March 2019
Cases:
1. Gross Domestic Product (GDP) is measured to see the overall
production of an economy. There are three approaches in measuring
it namely: (1) The Expenditure Approach, (2) The Income Approach,
and (3) The Value Added Approach. Describe and explain how each
of these approaches measure GDP. Based on your research, which of
the three approaches is best in measuring GDP? Explain your answer
comprehensively.
2. Inflation is the rate of increase in prices of commodities in an economy.

It is measured through Price Indexes—Consumer (CPI) and Production
(PPI). The Philippines had a 9% inflation rate in the last quarter last 2018.
What are the causes of this increase in inflation? Identify at least three
(3) factors and explain how each of these factors caused this increase.
What is the overall outlook of inflation for the current year, 2019?
3. Investment is the lifeblood of production and businesses in an

economy. The Philippine’s financial markets provide avenues for
investment to take place and grow. What is the current status of the
Philippine Financial Markets? Which businesses (e.g. real estate,
education, food services, BPOs, etc.) are good to invest at this 2019?
Identify at least three (3) businesses and explain why these investments
are feasible for this coming fiscal year, 2019?
4. The Association of Southeast Asian Nations or ASEAN is promoting the

ASEAN Economic Community (AEC) which aims to create a business
and investment region that could rival that of the European Union (EU).
What is the AEC? How does it aim to improve the economic status of
the region? Identify at least five (5) investment opportunities for the
Southeast Asian region? Explain these opportunities. Identify at least
three (3) investment opportunities for the Philippines. Explain these
opportunities.
CASE 1
According to Kimberly Amadeo (2019), Gross domestic product is

the total value of everything produced in the country. It doesn't matter if
it's produced by are citizens or foreigners. If they are located within the
country's boundaries, their production is included in GDP.
To avoid double-counting, GDP includes the final value of the

product, but not the parts that go into it. For example, a U.S. footwear
manufacturer uses laces and other materials made in the United States.
Only the value of the shoe gets counted; the shoelace does not.
In the United States, the Bureau of Economic Analysis measures GDP

quarterly. Each month, it revises the quarterly estimate as it receives
updated data.
Calculating GDP
The components of GDP include personal consumption

expenditures plus business investment plus government spending plus
(exports minus imports). Now that you know what the components are, it's
easy to calculate a country's gross domestic product using this standard
formula: C + I + G + (X - M).
When economists talk about the “size” of an economy, they are referring
to GDP.
There are many different ways to measure a country's GDP. It's important
to know all the different types and how they are used.
The first is Nominal Gross Domestic Product. This is the raw

measurement that includes price increases.
Another way to measure GDP is real GDP. To compare GDP by

year, the BEA removes the effects of inflation. Otherwise, it might seem like
the economy is growing when really it's suffering from double-digit
inflation. The BEA calculates real GDP by using a price deflator. It tells you
how much prices have changed since a base year. The BEA multiplies
the deflator by the nominal GDP.
Growth Rate is one of the ways to measure a country’s

GDP. The GDP growth rate is the percentage increase in GDP from
quarter to quarter. It tells you exactly whether the economy is growing
quicker or slower than the quarter before. Most countries use real GDP to
remove the effect of inflation.
If the economy produces less than the quarter before, it contracts

and the growth rate is negative. This signals a recession. Recession is a
decline in economic activity that goes on for more than a few months. It is
visible in industrial production, employment, real income and wholesale-
retail trade. If it stays negative long enough, the recession turns into
a depression.
GDP per capita is the best way to compare gross domestic

product between countries. This divides the gross domestic product by the
number of residents. It’s a good measure of the country's standard of
living. Some countries have enormous economic outputs only because
they have so many people.
The best way to compare GDP per capita by year or between

countries is with real GDP per capita. This takes out the effects of inflation,
exchange rates, and differences in population. In 2007, the United States
lost its position as the world's largest economy.
GDP impacts personal finance, investments, and job growth.

Investors look at a nations' growth rate to decide if they should adjust
their asset allocation. They also compare country growth rates to find their
best international opportunities. They purchase shares of companies that
are in rapidly growing countries.
If growth slows or becomes negative, then you should update your

resume. Slow economic growth leads to layoffs and unemployment. That
can take several months. It takes time for executives to compile the layoff
list and prepare exit packages.
Use the GDP report from the BEA to determine which sectors of the
economy are growing and which are declining.
Expenditures Approach
According to Accounting Dictionary, the Expenditures Approach is

a method of measuring GDP by calculating all spending throughout the
economy including consumer consumption, investing, government
spending, and net exports. In other words, this method measures what our
country produces by assuming that the finished goods and services of a
country equals the amount spent in the country for that time period. This is
the most common way to measure and calculate nominal GDP. The
expenditure method formula is calculated by adding up the following:
(C) Consumer Spending – this is the amount that all consumers spend on
goods and services for personal use.
(I) Investment – this is the amount that businesses or owners spend to invest
in new equipment or expansions.
(G) Government Spending – this includes spending on new infrastructure

like bridges and roads.
(NX) Net Exports – this includes spending on a country’s exports minus its
spending on imports.
Expenditures Approach Formula: GDP = C + I + G + NX
Income Approach
In Investopedia, The Income Approach to measuring gross

domestic product (GDP) is based on the accounting reality that all
expenditures in an economy should equal the total income generated by
the production of all economic goods and services. It also assumes that
there are four major factors of production in an economy and that all
revenues must go to one of these four sources. Therefore, by adding all of
the sources of income together, a quick estimate can be made of the
total productive value of economic activity over a period. Adjustments
must then be made for taxes, depreciation, and foreign factor payments.
Ways to Calculate GDP
There are generally two ways to calculate GDP: the expenditures

approach and the income approach. Each of these approaches looks to
best approximate the monetary value of all final goods and services
produced in an economy over a set period of time (normally one year).
The major distinction between each approach is its starting point.

The expenditure approach begins with the money spent on goods and
services. Conversely, the income approach starts with the income earned
(wages, rents, interest, profits) from the production of goods and services.
Income Approach Formula:
Total National Income= sales taxes + depreciation + net foreign factor

income
Value-Added Approach
According to Jodi Beggs (2019), The Value-Added Approach is

helpful when considering how to count goods with imported inputs (i.e.
imported intermediate goods) in gross domestic product. Since gross
domestic product only counts production within an economy's borders, it
follows that only value that is added within an economy's borders is
counted in gross domestic product.
The value-added approach is also helpful when dealing with goods

where some inputs to production are not produced in the same time
period as the final output. Since gross domestic product only counts
production within the specified time period, it follows that only value that
is added during the specified time period is counted in gross domestic

product for that period.
When it comes to the three approaches, the best in measuring the

GDP is the Expenditure Approach. According to my research, Expenditure
Approach calculates all spending throughout the economy including
consumer consumption, investing, government spending, and net exports.
This makes the Expenditure approach calculate the country’s GDP.
Though, this approach starts with the money spent on goods and services.
According to Investopedia, Expenditure is a reference to spending.
Another word for spending is demand. The total spending, or demand, in
the economy is known as aggregate demand. This is why the GDP
formula is the same as the formula for calculating aggregate demand.
Because of this, aggregate demand and expenditure GDP must fall or rise
together.
However, this similarity isn't technically always there—especially

when looking at GDP in the long run. Short-run aggregate demand only
measures total output for a single nominal price level, or the average of
current prices across the entire spectrum of goods and services produced
in the economy. Aggregate demand only equals GDP in the long run
after adjusting for price level.
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Case 2
According to Economic Help, The factors that causes of the

increase in inflation are Demand-pull Inflation, Cost push Inflation and
Higher Taxes.
Demand-pull inflation
If the economy is at or close to full employment, then an increase in

AD leads to an increase in the price level. As firms reach full capacity,
they respond by putting up prices leading to inflation. Also, near full
employment with labour shortages, workers can get higher wages which
increase their spending power.
AD can increase due to an increase in any of its components C+I+G+X-M
We tend to get demand-pull inflation if economic growth is above the

long-run trend rate of growth. The long-run trend rate of economic growth
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is the average sustainable rate of growth and is determined by the growth

in productivity.
Cost-push inflation
If there is an increase in the costs of firms, then businesses will pass

this on to consumers. There will be a shift to the left in the AS.
Cost-push inflation can be caused by many factors
1. Rising wages
If trades unions can present a united front then they can bargain for
higher wages. Rising wages are a key cause of cost push inflation
because wages are the most significant cost for many firms. (higher
wages may also contribute to rising demand)
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2. Import prices
One-third of all goods are imported in the UK. If there is a

devaluation, then import prices will become more expensive leading to
an increase in inflation. A devaluation / depreciation means the Pound is
worth less. Therefore we have to pay more to buy the same imported
goods.
Raw material prices
The best example is the price of oil. If the oil price increase by 20%
then this will have a significant impact on most goods in the economy
and this will lead to cost-push inflation. E.g., in 1974 there was a spike in
the price of oil causing a period of high inflation around the world.
Source: World Bank. In 2008, we had a smaller spike in oil prices causing a
rise in inflation – just before the great recession of 2008/09
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According in Investopedia, Demand-pull inflation exists when

aggregate demand for a good or service outstrips aggregate supply. It
starts with an increase in consumer demand. Sellers meet such an
increase with more supply. But when additional supply is unavailable,
sellers raise their prices. That results in demand-pull inflation.
It is the most common cause of inflation. The other reason, cost-

push inflation, is rarer. It starts with a decrease in total supply or an
increase in the cost of that supply. Suppliers raise prices because they
know consumers will pay it. That situation is called inelastic demand.
Five Causes of Demand-Pull Inflation
There are five causes of demand-pull inflation. The first is a growing

economy. When families feel confident, they spend more instead of
saving. They expect to get raises and better jobs. They know their homes
and other investments will increase in value. They feel that the
government is doing the right thing in guiding the economy. They will also
borrow more, either with auto or home loans, or credit cards. If they don't
borrow too much, this is a healthy cause of inflation. It creates gradual
and steady price increases.
The second is the expectation of inflation. Former Federal Reserve

Chairman Ben Bernanke explained it this way. Once people expect
inflation, they will buy things now to avoid higher future
prices. That increases demand, which then creates demand-pull inflation.
Once the expectation of inflation sets in, it's hard to eradicate. For
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example, businesses expected higher interest rates and inflation in the

1970s. That created galloping inflation. At the same time, President Nixon
imposed wage-price controls which slowed economic growth.
The combination created stagflation.
The third cause is over-expansion of the money supply. That's when

there is too much money chasing too few goods. That occurs when the
government prints too much money. It does this to pay off its debt.
Oversupply of money is the primary driver of hyperinflation. It can also
occur if the Fed puts too much credit into the banking system.
The forth cause is discretionary fiscal policy. Government

spending drives up demand according to Keynesian economic theory.
For example, military spending raises prices for military equipment.
When the government lowers taxes, it also drives demand. Consumers
have more discretionary income to spend on goods and services. When
that increases faster than supply, it creates inflation.
Although there were many other reasons for the housing bubble,
they wouldn't have been as attractive without government fiscal policies.
The fifth is a strong brand, itself created by marketing. Marketing

can create high demand for certain products, a form of asset inflation. A
great example is Apple products, including the iPod, iPad, and iPhone.
Prices for these goods are higher than comparable products. That's
because the consumer feels Apple understands their needs, including
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emotional ones. There is a certain cachet to owning an Apple product.

That allows Apple to charge higher prices.
The fifth reason is technological innovation. A company that

creates a new technology owns the market until other companies figure
out how to copy it. People will demand products with technologies that
create real improvement in their daily lives. The new technology also
creates a cachet for those who must own the latest gadget. For example,
Tesla's electric sports car was a technological breakthrough. It used new
advanced motors, powertrains, and battery packs. It is so successful that it
sells these parts to other auto companies.
Inflation rate is a sustained increase in the general price level of

goods and services in an economy over a period of time. When the price
level rises, each unit of currency buys fewer goods and services.
Consequently, inflation reflects a reduction in the purchasing power per
unit of money – a loss of real value in the medium of exchange and unit of
account within the economy. According to David Payne (2019), the
inflation rate for 2019 will be 2.2%, up modestly from 2018’s 1.9%. Last
year’s falling gasoline prices pushed the inflation rate down, but their
recent steady climb is expected to continue.
Overall, prices rose 0.2% in February after three months of

stagnation. Lower energy costs have dragged down the overall average,
but that trend is heading the opposite direction now. The “core” rate — all
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prices except food and energy — increased 2.1% last year and will grow
2.2% this year.
Shelter costs will end 2019 up 3%, down from 3.1%. Food prices will
pick up to 1.9% — and could rise higher if trade tensions with China are
resolved and exports surge. All other commodities will see their prices go
up a bit; and medical care services’ costs will jump 2.7%, about the same
as las year. Physicians’ services and prescription drug prices have been
lower than expected for a while but should start gaining. Hospital visits will
keep getting more expensive faster than other goods and services. Other
services will be 2.2% more expensive in 2019, down from 2018’s 2.4%
increase.
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CASE 3
Financial Market
According to Kimberly Amadeo (2019), Financial markets create an

open and regulated system for companies to acquire large amounts of
capital. This is done through the stock and bond markets. Markets also
allow these businesses to offset risk. They do this with commodities, foreign
exchange futures contracts, and other derivatives.
Since the markets are public, they provide an open and

transparent way to set prices on everything traded. They reflect all
available knowledge about everything traded. This reduces the cost of
obtaining information because it's already incorporated into the price.
The sheer size of the financial markets provides liquidity. In other

words, sellers can unload assets whenever they need to raise cash. The
size also reduces the cost of doing business. Companies don't have to go
far to find a buyer or someone willing to sell.
Then, The Philippine Financial Market stay on top of current data on

the financial markets in Philippines, including Major and Sector Indices
and their components as well as daily gainers and losers. As you can see
below this is an image of it.
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According to Jonathan Weber (2019) are at least three (3)

businesses that are feasible to this year 2019. These businesses are Food
Service.
1.Kellogg
Kellogg is a breakfast producer that has, over the years, expanded into
other packaged food segments. The company, which is valued at $18
billion, has battled declining sales throughout the last couple of years, but
Kellogg has made some progress in 2018 and forecasts that 2019 will be
an even better year:
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Source: Kellogg earnings presentation
According to management’s guidance, Kellogg should be able to

achieve 1%-2% organic top line growth this year, which would make 2019
the best year in quite a while. Thanks to the impact of acquisitions
Kellogg’s reported revenues could grow even faster.
A strong performance of Kellogg’s snack brands (that offset weaknesses in

the cereal business) helps bolster the growth outlook over the foreseeable
future.
Kellogg hasn’t been a high-growth business for a long time, but recently
growth rates improved thanks to the company’s focus on the better-
performing snack foods business (e.g. Pringles) and on acquisitions, such
as RXBAR.
Continuing efforts to improve margins (e.g. cutting overhead costs) and

share repurchases will be positives for Kellogg’s earnings-per-share growth
as well, which is why we forecast annual growth of ~5%.
Kellogg’s share price has been under pressure over the last couple of
months, along with that of many of its peers, which is why Kellogg’s
dividend yield has risen to a quite high level of 4.2% — more than twice
the broad market’s yield.
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At the same time Kellogg’s valuation has declined to just 13 times this
year’s earnings, which represents a significant discount relative to how
Kellogg’s shares were valued in the past (median earnings multiple of 16).
We believe that multiple expansion will add considerably to Kellogg’s

total returns going forward, to the extent of a 4% annual tailwind.
Through a combination of mid-single digit earnings-per-share growth (~5%

a year), valuation expansion tailwinds (~4% a year) and its dividend,
which yields 4.2% right now, Kellogg should be able to deliver total returns
of more than 13% a year going forward.
With expected total returns of 13% per year, Kellogg is rated the
packaged food stock with the best total return outlook in our database.
Kellogg has a Dividend Risk Score of C and a Retirement Suitability Score
of B.
2. Conagra Brands (CAG)
Conagra Brands is a food company that operates through the Grocery &
Snacks, the Refrigerated & Frozen, the International, and the Foodservice
segments.
Conagra Brands sells both shelf stable products as well as temperature

controlled foods in the US as well as internationally. Conagra’s
Foodservice segment offers food products such as meals, entrees, and
sauces to restaurants and other establishments.
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Conagra Brands made a major acquisition when it bought Pinnacle Foods

in 2018 for $8.1 billion. This is relatively close to Conagra’s current market
capitalization of $11.2 billion, which shows that the market is a bit skeptical
about the positive impact of the acquisition.
The combined market value of the two companies is not much higher
than the price Conagra paid for Pinnacle Foods alone.
Source: Conagra Brands earnings presentation
Conagra Brands’ performance has not been bad though, as the

company achieved sales growth during each of the last five quarters, with
stacked sales (2 years) rising steadily throughout that time frame.
We believe that Conagra should be able to grow its profits during the
coming years, due to a solid underlying sales growth rate and benefits
once Pinnacle Foods is fully integrated. Our forecast sees Conagra
growing its earnings-per-share by 3.6% annually.
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The company offers an above-average dividend yield of 3.7% on top of

that, which means that total returns would be 7%+ at constant multiples.
Since Conagra Brands’ shares trade below the historic median valuation
right now, shareholders should benefit from some multiple normalization
tailwinds going forward, which we believe will fall into the 2%-3% range.
All in all, Conagra Brands has thus potential to generate total returns of
~10% annually over the coming five years, despite the fact that the
company is not growing at an overly high pace. We give Conagra Brands
a Dividend Risk Score of C and a Retirement Suitability Score of B.
3.The J. M. Smucker Co (SJM)
JM Smucker is a packaged foods and beverages company whose history

dates back more than 120 years. JM Smucker has, over the years, turned
into a powerhouse in several foods categories. The company is well
positioned in the spreads business as well as in coffee segment, and JM
Smucker also holds a large share in the dog snacks market.
The coffee and the pet food market are growing at above-average rates
compared to other segments of the food industry, which is one reason
why JM Smucker has a solid sales growth outlook.
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Source: JM Smucker CAGNY presentation
JM Smucker targets earnings-per-share growth through a multitude of

measures, including cost savings, tuck-in acquisitions, organic sales growth
through rising market shares, and share repurchases.
JM Smucker also makes investments into e-commerce, improves

acquisition synergies, and tries to drive growth in key brands such as
Dunkin’.
Margin pressures have been a headwind in the recent past, but due to
the positives we still forecast earnings-per-share growth at a mid-single
digits pace over the coming five years.
JM Smucker will also, in all likelihood, continue to raise its dividend, which
currently yields 3.3%. Despite a relatively low payout ratio of ~50% JM
Smucker thus offers a lot of income generation potential, at the same time
the dividend looks very safe.
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Shares of JM Smucker trade at roughly 16 times this year’s forecasted

earnings, which is slightly below the valuation shares have traded at in the
past. We forecast a multiple expansion tailwind of roughly half a
percentage point annually going forward.
Combined with ~5% earnings-per-share growth and a 3.3% dividend yield

JM Smucker therefore has a solid total return outlook, as the company
could produce total annual returns of slightly below 9% a year from the
current level. We give JM Smucker a Dividend Risk Score of C and a
Retirement Suitability Score of B.
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Case 4
Association of Southeast Asian Nations (ASEAN)
According to Wolfgang Lehmacher (2016), ASEAN is one of the

success stories of modern economics. In 2014, the region was the seventh-
largest economic power in the world. It was also the third-largest
economy in Asia, with a combined GDP of US$2.6 trillion – higher than in
India.
Between 2007 and 2014, ASEAN trade increased by a value of

nearly $1 trillion. Most of that (24%) was trade within the region, followed
by trade with China (14%), Europe (10%), Japan (9%) and the United
States (8%). During the same period, foreign direct investment (FDI) rose
from $85 billion to $136 billion, and in share to the world from 5% to 11%.
With 622 million people ASEAN is the world’s third largest market, which
behind China and India has the third largest labour force.
ASEAN Economic Community (AEC)

According to Wolfgang Lehmacher (2016), the AEC established in
late 2015 by the Association of Southeast Asian Nations (itself founded in
1967), the AEC has been seen as a way to promote economic, political,
social and cultural cooperation across the region. The idea was to move
South-East Asia towards a globally competitive single market and
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production base, with a free flow of goods, services, labour, investments

and capital across the 10 member states.
According to Wolfgang Lehmacher (2016), Established in late 2015

by the Association of Southeast Asian Nations (itself founded in 1967), the
AEC has been seen as a way to promote economic, political, social and
cultural cooperation across the region. The idea was to move South-East
Asia towards a globally competitive single market and production base,
with a free flow of goods, services, labour, investments and capital across
the 10 member states.
The AEC’s vision for the next nine years, laid out in the AEC Blueprint 2025,
includes the following:
1. A highly integrated and cohesive economy
2. A competitive, innovative, and dynamic ASEAN
3. Enhanced connectivity and sectoral cooperation
4. A resilient, inclusive, people-oriented and people-centred region
5. A global ASEAN.
Although working within the confines of the AEC integration

timetable has been a struggle for member states, their efforts have paid
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off: many companies have already approached ASEAN as one region.

This has been helped by the ASEAN Single Window (ASW), a regional
initiative to allow free movement of goods across borders. But progress is
slow: the region can only proceed at the behest of national governments,
and with every ASEAN country so different, a common vision can be hard
to arrive at.
Investment Opportunities In Southeast Asia’s Stock Markets (2017)
Vietnam’s stock exchange is getting ready for its largest initial public
offering (IPO). Shares in Vincom, a mall operator, will be sold at an
amount that could range from US$620 million to US$680 million. The
company currently operates 41 malls, and plans to raise this number to
200 by 2021.
Indonesia is Southeast Asia’s largest economy, and its GDP has

been expanding steadily at about 5% per year since 2014. According to
World Bank estimates, this will rise marginally to 5.1% in 2017 and 5.3% by
2018.
The country’s economy could receive a boost by the fact that in
May this year, S&P Global Ratings raised Indonesia’s sovereign rating to
investment grade. It was the last of the three major rating agencies to
upgrade the country.
Commodity exports play an important role in Indonesia’s economy.
The country produces about half the world’s supply of palm oil. It also
exports vast quantities of other agricultural produce, oil and natural gas,
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and rubber. However, many of the major companies that have

operations in the country prefer to list on the Singapore Exchange.
President Joko Widodo wants to reverse this trend. He has appealed
to firms with local operations to list themselves on the Indonesia Stock
Exchange. If this happens, the IDX Composite could get a further boost.
Malaysia’s stock index is a laggard among its Southeast Asian peers.
It is the only one that has registered a single-digit increase this year, and
the indices of all the other major markets have risen by a much greater
margin.
The country’s budget for 2018, which was announced recently,
holds some hope for the stock market. The reduction in personal income
tax and special payments to civil servants is expected to increase
consumer spending.
According to Gily Tenorio(2013), that there are investment

opportunities for the Philippines such as Mutual Funds, Unit Investment Trust
Funds, Treasury Bills and Philippine Stocks.
Mutual Funds
Probably, mutual fund is the most simple and easiest investment

opportunity in the Philippines today. The concept of this investment can
be understood easily by anyone even regular employees like you.
As a background, mutual fund is a pool of fund from different

investors. The fund is managed by a mutual fund company duly registered
in SEC.
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The company hires a fund manager that is responsible for taking

care of the fund and investing it in different vehicles such as investing in
Philippine stock market, government bonds, special deposit accounts and
other commodities.
Depending on your type as an investor, there are various types of

mutual fund that you can choose from. Here’s a post about different kinds
of mutual fund.
Unit Investment Trust Fund
Unit Investment Trust Fund or UITF for short is much similar as mutual
fund in concept and the way it is invested. It is also a pool or collection of
fund from many people.
UITF can be opened in any bank that offers this kind of investment.
Most of the major banks in the Philippines these days have UITF in their
portfolio. The fund here is also managed by a fund manager who
employed by the bank and very knowledgeable about investments.
If you have Internet banking with your bank, opening a UITF

account can be easy and doable online. For example, in BPI, you can
open a UITF or even mutual fund account via BPI express online.
However, you still need to send the printed form and other
requirements to their office for validations and security purposes. So I
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would suggest that you enroll your bank account to online banking in
order for you to open a UITF in the future.
Below you can see some of the articles I made to give you more
understanding about this investment opportunity in the Philippines. You
can also check this link from PNB that good explanation about UITF.
 Benefits of Investing in UITF

 Four Types of UITF
 How to Invest in UITF
 What are the Differences and Similarities between Mutual Funds
and UITF
 What is UITF
Treasury Bills
Treasury bills (T-bills) is not a popular investment among the ordinary

people because it requires big capital an it is not easily accessible.
Treasury bills are being offered also by the bank with a normal minimum
investment of P200,000.
T-bills are peso-dominated short-term fixed income securities issued

by the government of the Philippines through Bureau of Treasury. There
are several advantages of T-bills such as you can receive the interest in
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advance though the whole amount of the money you invested will be
given to you on the maturity date.
Another advantage is that this investment opportunity is generally

risk-free investment since the government will not fail to pay its own debt.
It also yields higher interest than regular savings account and time
deposits.
Philippine Stocks
Investing in Philippine stock market is becoming popular these days

among OFW and regular employees alike. However, compared with other
neighboring countries, there is still a very low percentage of Philippine
population who invests in stock market.
Last year, Philippine stock market beat almost all stock market in the
world in terms of return it gives to investors. There is a promising opportunity
in stocks though not all people can venture in it.
So how can you invest in stock? First of all, before you invest, you
must understand how it works and the consequences of your investment.
Be reminded that stock is a high-risk investment and the profit is not
guaranteed by anyone.
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Second, you should open a stock broker account. There are many
stock brokers in the Philippine that you can choose from that also offers
online service. Check here the list.
Lastly, you should fund your account to start buying stocks which
you can do online. If you are a BPI or Metrobank customer, you can add
money to your stock account through Internet banking.
With Citiseconline, it is easy to add and withdraw money from your

stock account. I recommend this stock broker along with BPI Trade since
they are established ones and have user-friendly interface.
33
References:
An Introduction to the Financial Markets. Retrieved from
https://www.thebalance.com/an-introduction-to-the-financial-markets-
3306233
Calculating Gross Domestic Product Using Value-Added Approach.

Retrieved from https://www.thoughtco.com/calculate-gross-domestic-
product-using-value-added-1147520
Demand-Pull Inflation and Its Causes with Examples. Retrieved from
https://www.thebalance.com/what-is-demand-pull-inflation-3306100
Economic Forecasts. Expect Tame Inflation Through 2019. Retrieved from

https://www.kiplinger.com/article/business/T019-C000-S010-inflation-rate-
forecast.html
http://learnfinancialeducation.com/what-are-the-investment-
opportunities-in-the-philippines/
https://wealthinasia.com/wisdom/investment-opportunities-southeast-
asias-stock-markets/
https://www.economicshelp.org/macroeconomics/inflation/causes-
inflation/
https://www.investing.com/markets/philippines
https://www.investopedia.com/ask/answers/070715/how-do-you-
calculate-gdp-income-approach.asp
https://www.suredividend.com/food-stocks/
34
https://www.thebalance.com/what-is-gdp-definition-of-gross-domestic-
product-3306038
https://www.weforum.org/agenda/2016/05/asean-economic-
community-what-you-need-to-know/
www.myaccountingcourse.com/accounting-dictionary/expenditure-
approach

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PAMANTASAN NG CABUYAO

Senior High School Department

ABM AE12: APPLIED ECONOMICS

A COURSE REQUIREMENT PRESENTED TO

Jeremy Paul E. Gecolea, MBA

Jasenri Anne O. Gonzales

2. Inflation is the rate of increase in prices of commodities in an economy.

3. Investment is the lifeblood of production and businesses in an

4. The Association of Southeast Asian Nations or ASEAN is promoting the

According to Kimberly Amadeo (2019), Gross domestic product is

To avoid double-counting, GDP includes the final value of the

In the United States, the Bureau of Economic Analysis measures GDP

The components of GDP include personal consumption

The first is Nominal Gross Domestic Product. This is the raw

Another way to measure GDP is real GDP. To compare GDP by

Growth Rate is one of the ways to measure a country’s

If the economy produces less than the quarter before, it contracts

GDP per capita is the best way to compare gross domestic

The best way to compare GDP per capita by year or between

GDP impacts personal finance, investments, and job growth.

If growth slows or becomes negative, then you should update your

According to Accounting Dictionary, the Expenditures Approach is

(G) Government Spending – this includes spending on new infrastructure

Expenditures Approach Formula: GDP = C + I + G + NX

In Investopedia, The Income Approach to measuring gross

Ways to Calculate GDP

There are generally two ways to calculate GDP: the expenditures

The major distinction between each approach is its starting point.

Income Approach Formula:

Total National Income= sales taxes + depreciation + net foreign factor

According to Jodi Beggs (2019), The Value-Added Approach is

The value-added approach is also helpful when dealing with goods

is added during the specified time period is counted in gross domestic

When it comes to the three approaches, the best in measuring the

However, this similarity isn't technically always there—especially

According to Economic Help, The factors that causes of the

If the economy is at or close to full employment, then an increase in

AD can increase due to an increase in any of its components C+I+G+X-M

We tend to get demand-pull inflation if economic growth is above the

is the average sustainable rate of growth and is determined by the growth

If there is an increase in the costs of firms, then businesses will pass

Cost-push inflation can be caused by many factors

One-third of all goods are imported in the UK. If there is a

Raw material prices

According in Investopedia, Demand-pull inflation exists when

It is the most common cause of inflation. The other reason, cost-

Five Causes of Demand-Pull Inflation

There are five causes of demand-pull inflation. The first is a growing

The second is the expectation of inflation. Former Federal Reserve

example, businesses expected higher interest rates and inflation in the

The combination created stagflation.

The third cause is over-expansion of the money supply. That's when

The forth cause is discretionary fiscal policy. Government

The fifth is a strong brand, itself created by marketing. Marketing

emotional ones. There is a certain cachet to owning an Apple product.

The fifth reason is technological innovation. A company that

Inflation rate is a sustained increase in the general price level of

Overall, prices rose 0.2% in February after three months of

According to Kimberly Amadeo (2019), Financial markets create an

Since the markets are public, they provide an open and

The sheer size of the financial markets provides liquidity. In other

Then, The Philippine Financial Market stay on top of current data on

According to Jonathan Weber (2019) are at least three (3)