APPLIED ECONOMICS
The Philippine Peso and Foreign Currencies
The Story of Philippine Money
The chief means of trading was barter. Records
show that Chinese merchants came to the
Philippines to trade porcelain, silk, and metal
ware in exchange for gold, pearls, beeswax and
medicinal plants, which the Philippines is
naturally rich in.
Excavations also unearthed gold ingots, known
as piloncitos, the first recognized form of
coinage in the country. Barter rings in different
sizes, gold ornaments and beads were the other
objects used as medium of exchange during the
pre-colonial period.
From the beadlike form of pre-colonial
Philippine money, to the early coins and notes
of the Spanish period and the Philippine
revolutionary government, the face of our
country’s currency has evolved significantly
through the years.
Definition of Money
Money – anything that is generally accepted in
payment for goods and services.
Philippine currency exists as both coins and
bank note (or bills). The peso or piso is equal to
100 centavos or sentimo. Letter P is the symbol
for peso with two horizontal strikethrough lines.
It is sometimes shown as a P with just one
strikethrough line or just a P with no
strikethrough lines at all since there are
problems with font support. The ISO 4217 code
for the Philippine peso is PHP.
Qualities of Good Money Material
1. Acceptability
2. Stability
3. Portability
4. Durability
5. Uniformity
6. Divisibility
7. Recognizability
Functions of Money
1. Medium of Exchange
2. Unit of Account
3. Store of Value
4. Standard of Deferred Payments
Types of Money
1. Currency in Circulation
2. Demand deposits
3. Traveler’s checks
4. Other checkable deposits
Purchasing Power – is the value of a currency
expressed in terms of the amount of goods or
services that one unit of money can buy.
Inflation – is a phenomenon of rising general
level of prices of goods and services over period
of time.
Deflation – a decrease in the general level of
prices of goods and services.
Types of Inflation
1. Demand-pull inflation - this is the type
of inflation which results from a more
rapid increase in income than the
increase in production.
2. Cost-push inflation - when cost of
production increases – inputs required
to produce goods and services (wages,
raw materials, and utilities), the said
increase is passed along to consumers
in the form of higher prices.
3. Structural Inflation – inflation that
occurs because a government pursues
an excessively loose monetary policy.
Losers of Inflation
1. Fixed incomes
2. Savers
3. Creditors
Gainers of Inflation
1. Debtors
2. Business Owners
3. Government
Exchange Rate
– states the price, in terms of one currency, at
which another currency can be bought.
Factors that determine the demand for foreign
currency
1. Imports of goods and services
2. Foreign trip
3. Demand for country’s financial assets
leads to a demand for its currency
4. Direct investment leads to a demand for
a country’s currency
5. Speculation
Factors that determine the supply for foreign
currency
1. Exports of Goods and Services
2. Foreign Investment
3. Remittances
4. Speculation
Floating Exchange Rates – are rates determined
in free markets by the law of supply and
demand.
Fixed Exchange Rate – is a system in which the
value of country’s currency is matched against
another currency’s value through government
intervention. Opposite of floating exchange
rate.
 Contemporary Economic Issues Facing the more emphasis on advertising and sales
Filipino Entrepreneur promotion.
Entrepreneurship
– refers to the talent that some people have for
organizing the resources of land, labor, and

capital to produce goods, seek new business

opportunities, and develop new ways of doing
things.
- Is a way of giving individuals access to
better lives not only for themselves but for
their family as a whole.

Entrepreneur
– is an individual who attempts to organize his
own business rather than working as an
employee.

Economic Issues Facing the Filipinos

Entrepreneur
1. Investment and interest rate
2. Rentals
3. Minimum wage
4. Taxes

Entrepreneurs are obliged to pay the following

taxes:
a. Percentage Tax – is imposed for sold or
leased goods, properties or services.
b. Value Added Tax (VAT) – is a form of
sales tax. It is a tax on consumption
levied on the sale, barter, exchange or
lease of goods or properties and
services within the Philippines.
c. Income Tax – is a government levy (tax)
imposed on individuals or entities
(taxpayers) that varies with the income
or profits (taxable income) of the tax
payers.

Market Structures

Market Structures – refers to the different

characteristics of a market that influence buyers
and sellers.

Four Market Structures

1. Pure or Perfect Competition – very large
number of firms. Identical products are
offered for sale like rice, corn,
vegetables, meat, among others.
2. Pure Monopoly – there is only one firm
who provides services and dominates
the market like water and electricity.
Unique products are offered for sale
and no close substitutes.
3. Monopolistic Competition –
characterized by many firms selling
similar, but not identical products like
clothing, shoes, laundry, soap, books,
among others.
4. Oligopoly – markets dominated by a
few (more than two) large firms. Firms
offered identical or differentiated
products. A firm under oligopoly give