1. Give some scenario about positive and normative economies.

POSITIVE SCENARIO

Prices of e-cigarettes, beers, and other alcoholic drinks are bound to rise each year with a new law
providing higher "sin" taxes.

President Rodrigo Duterte signed Republic Act 11467, which hikes the excise taxes on alcohol and
imposes new duties on heated tobacco and vapor products effective January 1, 2020.

Duterte previously tagged the bill as urgent, with the revenues to be raised meant to fund increased
medical services as provided by the Universal Health Care Law.

Under the signed measure, distilled spirits like brandy, gin, vodka, tequila, and whiskey would be
charged a specific tax of ₱42 per proof liter, on top of a 22 percent tax representing excise and value-
added taxes. The duty will rise to ₱47 per liter next year, ₱52 per liter in 2022, ₱59 per liter by 2023,
and ₱66 pesos by 2024.

For beer and other fermented liquor, the specific tax will rise to ₱35 per liter this 2020, and will add ₱2
per liter each succeeding year until 2024, according to a copy of the law obtained from the office of
Senator Pia Cayetano.

Starting January 1, 2025, the specific tax for these drinks will increase by 6 percent per year.
Meanwhile, the tax on wines will rise to ₱50 per liter effective this year and would add 6 percent for
annually starting 2021.

POSITIVE ECONOMIC STATEMENTS

 Price hike in alcoholic drinks has decreased and control alcohol consumptions.

NORMATIVE SCENARIO

Senate Minority Leader Franklin Drilon said that a P17.5 billion revenue is expected from Philippine
Offshore Gaming Operators (Pogos) under the newly-enacted Bayanihan to Recover As One Act or
Bayanihan 2.

In a statement, the Senate leader said that Bayanihan 2 “redefined the taxation of Pogo and tightened
the regulations in a bid to raise funds to augment the government’s dwindling resources.”

“The Bayanihan 2 will more than double the tax collection from POGO – from P7 billion estimated
collection in 2019 to approximately P17.5 billion this year because of the reforms we have introduced
in the measure,” he added, citing estimates from the Department of Finance.

“All revenues from POGO will be used to fund the various types of assistance laid out in the
Bayanihan 2 for all sectors affected by the pandemic.”

Under the law’s provision, which was first proposed as an amendment by Drilon, it mandates that a
five percent franchise tax shall be on the gross bets or turnovers, or the pre-determined minimum
monthly revenues from gaming operations, whichever is higher.
 NORMATIVE STATEMENT

 The government should raise taxes on businesses to increase tax revenue.

2. Explain “Economics is not value free, there are judgements made concerning what is
important”

It is an explanation that all economic decisions require a balance between what is important and
what is not. For example, the opening of classes during this pandemic period caused by CoVid-19.
It has considered and studied things such as the safety of students, teachers and school
administrations. That is why the government has decided that no face-to-face learning will take
place this year as long as the health of the whole country is threatened by the said pandemic. In
this matter, it is studied what is really important, education or the safety and health of the Filipino
people.

3. Draw and explain the economic flow of economy.

TERMINOLOGIES:

 FIRMS-
 HOUSEHOLDS

(2-sector economy: firms + households (closed economy))

Firms provide households with goods and services.

Firms get factors of production from households. It can be labor, land, capital or some of us in households
are going to be entrepreneurs. So, entrepreneurship.

Are these for free? NO. We don’t get freebies from firms and we don’t provide labor for free either.
So there’s money flowing in the opposite direction. Households pay firms for the goods and services they
get. Firms also pay households in the form of wages, rents, interests or profits.

But we don’t spend everything we earn in real life. So let’s add savings.
Savings is money we don’t spend. So there’s money flowing out.

Basically, we save money through banks. But savings don’t just sit in banks. The banks invest in firms by
lending to them. Because firms need money to buy capital equipment or cover other costs of production.

Let’s add government. (3 sector economy: firms + households + government)

Government buys stuff as well. So there’s money flowing in. Government gets money from taxes.
Taxes. So there’s money flowing out. Because for the money we’re paying as taxes, we cannot spend it.

Lastly, countries interact with one another.

Let’s add trade. (4 sector economy: firms + households + government + foreign sector)
Philippines imports stuff. For example, Philippines can import shoes from America. Shoes flow from
America into Philippines.

And money spent on imports flows out of Philippines into America.

Philippines exports too. Philippines can produce rice and export it to foreigners,
Money then flows from foreign countries into Philippines. This is Philippine’s export earnings.
Investments, Government Spending and Export earnings are money flowing in.
Savings, taxes and import spending are called the money flowing out of the system. And these money
Flowing in and out of the system are sort of related. Investments come from savings. Government
spending comes from taxes. Philippines makes money from foreigners by exporting. But foreigners also
make money from Philippines when we import. It tells us how an economy function.