APPLIED

ECONOMICS
What ECONOMICS Is About?

Having more of one thing

we want usually means
having less of another.
ECONOMICS
The social science that involves
the use of scarce resources to
satisfy unlimited wants.
Is a social because it studies
human behavior just like
Psychology and Sociology.
SOCIAL SCIENCE
The study of society and how
people behave and influence the
world around them.
ECONOMICS as a SOCIAL
SCIENCE
The study of how individuals, business
firms, governments, and societies as
a whole make choices under
conditions of scarcity.
GOODS – physical objects such as
shoes and computers.

SERVICES – work done for people

such as shoe repair and computer
maintenance.
 Scarcity, Choice, and
Trade-Offs
SCARCITY
A situation in which people CHOICE
cannot have everything
that they want because of Selection of one
limited resources. thing over another.

TRADE - OFFS
Situations in which people have to choose
between two things.
TWO TYPES OF SCARCITY
1. RELATIVE SCARCITY
- is when a good is scarce compared to its demand.
- it occurs not because the good is scarce per se and is
difficult to obtain but because of the circumstances that
surround the availability of the good.
2. ABSOLUTE SCARCITY
- is when supply is limited.
- explains why there are some products that are very
expensive in the Philippines.
OPPORTUNITY COST
refers to the value of the forgone
alternative.
opportunity that will require
sacrifices.
 WHAT WILL
HAPPEN IF THERE IS
NO SCARCITY?
For an individual, a trade – off arises
from scarce time or scarce money.
For society as a whole, a trade – off
arises from the scarcity of resources.
• RESOURCES – most basic elements that
people use to produce the goods and
services that they want.
ECONOMIC RESOURCES:
1. LAND – provided by nature such as
fertile soil, forests, water, and
minerals.
2. LABOR – physical and mental effort
human beings use to produce goods
and services.
ECONOMIC RESOURCES:
3. CAPITAL – anything that we produce –
factory buildings, skill, and knowledge of
workers – and then use in the production of
goods and services.
4. ENTREPRENEURSHIP – the ability that some
people have for organizing the other
resources – land, labor, and capital – to
produce goods and services.
 ECONOMICS As An Applied
Science
APPLIED ECONOMICS
– study of economics in relation to real world
situations. It is the application of economic
principles and theories to real situations, and
trying to predict what the outcomes might be.
- study of observing how theories work in
practice.
BRANCHES OF ECONOMICS

1. Microeconomics
2. Macroeconomics
3. Positive
Economics
4. Normative Economics
 MICROECONOMICS vs.
MACROECONOMICS

1. MICROECONOMICS
 Micro – from the Greek word mikros, meaning
“small”
 Takes a close-up view of the economy and
analyzes individual parts of an economy – a
consumer, a business firm, an industry, a single
market – rather than the whole economy.
Examples:

1. What will happen to the cost of

desktop computers over the next
two years?
2. How many fast-food industry jobs will
open up for high school graduates?
 MICROECONOMICS vs.
MACROECONOMICS

2. MACROECONOMICS
 Micro – from the Greek word makros, meaning
“large”
 Takes an over-all view of the economy.
Examples:

1. What determines national income

and over-all production?
2. What might cause unemployment
rate, inflation rate, and interest rates
to be low in one year and high the
next?
 Positive Economics vs. Normative Economics
CRITERIA POSITIVE ECONOMICS NORMATIVE ECONOMICS
Based on Data and facts Opinions and values
Type Descriptive Narrow
Function Explains cause and effect Pass value conclusions
relationship between variables
Subjective vs Objective Subjective
Objective
Question “What actually is” “What ought to be”
Statements Statement can be tested or Statement cannot be
proved. tested.
Use Describe economics issues Provide solutions based on
value
 All About
the
Economic
Problems
of the
Philippines
Did You Know?
In January 2015, out of the 62.87
million Filipinos in the age group
of 15 years and above, the labor
force comprised 40.11 million.
Out of these, 2.65 million were
unemployed.
Did You Know?
With more than 100 million people currently
living in the Philippines, it is ranked as the
12th most populous country in the world.
Philippines' economy largely depends on
the remittances from the Filipinos residing
overseas and investing in the homeland.
More than 10 million Filipinos are currently
living abroad.
 ACTIVITY #2:
REACTION PAPER
(OFW’s – The Strong Pillars Of The Philippine Economy)

DIRECTIONS: Read the full article

carefully. After reading, make a
reaction paper about it in a whole
sheet of paper.
Did You Know?
Philippines has emerged as one of the
fastest growing economies in Asia, with
an annual GDP growth rate of 6.1% in
2014. According to the Asian
Development Bank, the GDP growth,
Inflation, and Current Account Balance
(share of GDP) in 2015 is estimated to be
6.4%, 2.8%, and 4%, respectively.
Economics Problems of the
Philippines
 Unemployment
 Poverty
 Poor Infrastructure
 Heavy Dependence on Remittances
 Corruption
UNEMPLOYMENT
 UNEMPLOYMENT
 In 2012, 10 million Filipinos were either
unemployed (three million) or underemployed
(seven million).
 In October 2013, unemployment rate was
6.5% in comparison to 6.8% in 2012.
 According to the Labor Force Survey, the
unemployment rate was 6% and 6.6% in
October 2014 and January 2015, respectively.
Range: Jul 1982 - Apr 2019
Last: 5.10% Apr 2019
Previous: 5.20% Jan 2019
Lowest: 4.70% Oct 2016
Highest: 14.40% Apr 1991
CAUSES OF UNEMPLOYMENT:
 The number of people entering the
job market has been greater than the
number of jobs created.
 The rural-urban migration increases
due to employment opportunities.
 Many of the unemployed individuals
are college graduate.
RURAL TO URBAN MIGRATION
WHAT CAN BE DONE TO SOLVE
UNEMPLOYMENT PROBLEM?
1. Appropriate economic policies for
labor-intensive industries.
2. Improve the educational system of the
country especially in the rural areas.
3. Minimize rural-urban migration by
improving the economic environment
in rural areas.
WHAT CAN BE DONE TO SOLVE
UNEMPLOYMENT PROBLEM?
4. Proper coordination between government
and the private sector to solve the problem
of job mismatch.
5. Slowing population growth. Limit the size of
families
6. Provision of more investment opportunities
to encourage local and international
investment.
POVERTY
POVERTY
As per the National Statistical
Coordination Board (NSCB), poverty
incidence of the population improved
from 26.3 percent in 2009 to 25.2
percent in 2012.
CAUSES OF POVERTY:
1. low economic growth
2. weak agricultural sector
3. increased population rates
4. high volume of inequality
EFFECTS OF POVERTY:
1. Inability
to Afford Housing
2. Malnutrition in the Philippines
3. Child Labor
4. Crime and Thievery
WHAT CAN BE DONE TO SOLVE THE
POVERTY PROBLEM?
1. Reduce unemployment
2. Appropriate policy on labor income
3. Provision of unemployment benefits for those who
will be unemployed due to natural or man made
calamities.
Examples: Typhoon, Bombing of terrorists, Earthquake
ASSIGNMENT: Notebook
1. What SSS Unemployment Benefit?
2. How much is the financial assistance?
3. Who can claim the SSS Unemployment Benefit?
4. What are the requirements for SSS
Unemployment Insurance?
5. How many times can you apply for the
unemployment benefits?
6. Is SSS unemployment benefit a type of loan?
POOR INFRASTRUCTURE
POOR INFRASTRUCTURE
 In
the Global Competitiveness Report
2014-2015 of the World Economic Forum,
Philippines didn't fare well in terms of the
quality of the overall infrastructure. It
ranked at number 91 among 144
countries.
 As per the World Bank's Ease of Doing Business 2015
report, Philippines ranked 95 out of 189 economies.
 It needs to improve its ranking in following categories:
CATEGORY RANKED (OUT OF 189)
starting a business 161
dealing with construction permits 124
registering property 108
getting credit 104
protecting minority investors 154
enforcing contracts 124
paying taxes 127
WHAT CAN BE DONE TO IMPROVE
THE QUALITY OF INFRASTRUCTURE?
1. The government shall implement fiscal
reform program.
2. Continue reform in key sectors –
particularly power, roads, and water –
to improve cost recovery, competition,
and institutional credibility and to
sharply reduce corruption.
HEAVY DEPENDENCE ON
REMITTANCES
 HEAVY DEPENDENCE ON
REMITTANCES
 Philippines was the third-highest
recipient of migrant remittances in 2013,
after India and China.
 According to the Philippine Central
Bank, remittances from overseas Filipino
workers (OFWs) reached USD 25.1 billion
in 2013.
 Itwas 7.6% higher than the remittances from
the last year, and accounted for 8.4 % of
Philippine gross domestic product (GDP) in
2013.
 The source countries for the remittances
included the United States, Saudi Arabia, the
United Kingdom, the United Arab Emirates,
Singapore, Canada, and Japan.
 ThePhilippine government, since the
time labor export was institutionalized in
the Marcos years to the present,
cannot do without the remittances of
migrant Filipinos and the revenues it
derives from the fees that it gets from
them before they leave the country.
CORRUPTION
 dishonestor fraudulent conduct by
those in power, typically involving
bribery.

Adherence to good governance

creates an environment where
corruption struggles to flourish.
 Key principles of good governance:
 Honesty - employees and managers should operate
in good faith, with integrity and no conflicts of interest.
 Transparency - decisions made, action taken and
how it is reported to stakeholders must be
communicated clearly and made easily available for
those affected by the organization.
 Responsiveness - listening to stakeholders, taking
action or reporting transparently should be done
within a reasonable time of a request, complaint or
concern.
 Key principles of good governance:
 Management independent of governing bodies -
there must be a separation of powers and chain of
accountability.
 Ruleof law - institutions must comply with the laws,
codes, guidelines and regulations of the nations in
which they operate.
 Effectivenessand efficiency - delivering to mandates,
meeting the needs of stakeholders, curtailing
expenditure, streamlining decision-making and
action, and making the best use of available
resources.
 Key principles of good governance:
 Fairness - treating stakeholders equally
 Just - justice and governance concerns the moral
responsibility and integrity of individuals within an
organization and the behavior of the organization
itself.
 Accountability - ensuring that public and private
institutions, corporations and individuals entrusted
with public resources and civil society are held to
account, means they are answerable to their
stakeholders.
Philippine Development Plan
2017-2022
• On October 11, 2016, President Rodrigo R.
Duterte signed Executive Order No. 5,
s.2016 approving and adopting the 25-year
long-term vision entitled AmBisyon Natin
2040 as a guide for development planning
A.ENHANCING THE SOCIAL FABRIC
(“MALASAKIT”)
1. Ensuring People-Centered, Clean,
and Efficient Governance
2. Pursuing Swift and Fair Administration
of Justice
3. Promoting Philippine Culture and
Values
B. INEQUALITY-REDUCING
TRANSFORMATION(“PAGBABAGO”)
1. Expanding Economic Opportunities in
Agriculture, Forestry, and Fisheries
2. Expanding Economic Opportunities in Industry
and Services through Trabaho at Negosyo
3. Accelerating Human Capital Development
4. Reducing Vulnerability of Individuals and
Families
5. Building Safe and Secure Communities
C. INCREASING GROWTH POTENTIAL
(“PATULOY NA PAGUNLAD”)
1. Reaching for the Demographic Dividend
2. Vigorously Advancing Science,
Technology, and Innovation
D. ENABLING AND SUPPORTIVE ECONOMIC
ENVIRONMENT
1. Ensuring Sound Macroeconomic Policy
2. Leveling the Playing Field through a
National Competition Policy
E. FOUNDATIONS FOR SUSTAINABLE
DEVELOPMENT
1. Attaining Just and Lasting Peace
2. Ensuring Security, Public Order, and Safety
3. Accelerating Infrastructure Development
4. Ensuring Ecological Integrity, Clean and
Healthy Environment