Applied Economics in

Relation to Philippine
Economic Problems
Learner’s Module in Applied Economics
Quarter 1 ● Module 2 ● Week 2

Rowena P. Rojas
Developer

Department of Education • Cordillera Administrative Region

NAME: GRADE AND SECTION

TEACHER: SCORE
 Republic of the Philippines
DEPARTMENT OF EDUCATION
Cordillera Administrative Region
SCHOOLS DIVISION OF BAGUIO CITY
No. 82 Military Cut-off, Baguio City

Published by:
Learning Resource Management and Development System

COPYRIGHT NOTICE
2020

Section 9 of Presidential Decree No. 49 provides:

“No copyright shall subsist in any work of the Government of the Philippines.
However, prior approval of the government agency of office wherein the work is
created shall be necessary for exploitation of such work for profit.”

This material has been developed for the implementation of K-12 Curriculum through
the Curriculum Implementation Division (CID)—Learning Resource Management and
Development System (LRMDS). It can be reproduced for educational purposes and
the source must be acknowledged. Derivatives of the work including creating an
edited version, an enhancement or a supplementary work are permitted provided all
original work is acknowledged and the copyright is attributed. No work may be
derived from this material for commercial purposes and profit.

ii
 PREFACE

This module is a project of the Curriculum Implementation Division particularly

the Learning Resource Management and Development Unit, Department of
Education, Schools Division of Baguio City which is in response to the
implementation of the K to 12 Curriculum.

This Learning Material is a property of the Department of Education- CID,

Schools Division of Baguio City. It aims to improve students’ performance specifically
in Applied Economics.

Date of Development : July 2020

Resource Location : DepEd Schools Division of Baguio City
Learning Area : Applied Economics
Grade Level : 12
Learning Resource Type : Module
Language : English
Quarter/Week : Q1/W2
Learning Competency/Code : The learners examine the utility and application of
applied economics to solve economic issues and
problems / ABM_AE12-Ib-2.

iii
 ACKNOWLEDGEMENT

The developer wishes to express her gratitude to those who helped in the
development of this learning material. The fulfillment of this learning material would
not be possible without these people who gave their support, helping hand and
cooperation:

To her very supportive family and colleagues; and to Dr. Marina D.

Tabangcura, Education Program Supervisor for Social Studies, for the confidence
and the opportunity to provide assistance to other teachers and most especially to
the learners.

Above all, to Father God, for the gift of life and wisdom.

Development Team
Developer/s: Rowena P. Rojas
Layout Artist: Marilyn Degay-Bugatti (Label Icons)
Illustrator:

Quality Assurance Team

Marina D. Tabangcura EPS – Araling Panlipunan
Niño M. Tibangay PSDS- District 3

School Learning Resource Management Committee

Brenda M. Cariño School Principal
Janet B. Pascua OIC- Assistant School Head/ Subject Specialist
Sherwin L. Fernando School LR Coordinator
Jopie B. Ferrer School LR Coordinator- SHS

Learning Resource Management Section Staff

Loida C. Mangangey EPS – LRMDS
Victor A. Fernandez Education Program Specialist II – LRMDS
Christopher David G. Oliva Project Development Officer II – LRMDS
Priscilla A. Dis-iw Librarian II
Lily B. Mabalot Librarian I
Ariel Botacion Admin. Assistant

CONSULTANTS

JULIET C. SANNAD, EdD

Chief Education Supervisor – CID

SORAYA T. FACULO, PhD

Asst. Schools Division Superintendent

MARIE CAROLYN B. VERANO, CESO V

Schools Division Superintendent

iv
 TABLE OF CONTENTS

Page
COPYRIGHT NOTICE …………………………………………………..……...… ii
PREFACE …………………………………………………………………...……... iii
ACKNOWLEDGEMENT ………………………………………………………….. iv
TABLE OF CONTENTS ………………………………………………………….. v
TITLE PAGE ………………………………………………………………………. vi
What I Need to Know ……………………………………………………………... 1
What I Know………………………………………………………………….…..... 2
What’s In……………………………………………………………………………. 3
What’s New………………………………………………………………………… 3
What In It ….……………………………………………………………………….. 5
What I Can Do..……………………………………………...…………………..... 9
Activity: Priorities…priorities! ……………………………………………….. 9
Assessment …………………...…………………………………………………… 10
REFERENCES …...…………………………………………………...…….……. 12

v
 Applied Economics in
Relation to Philippine
Economic Problems
Learner’s Module in Applied Economics
Quarter 1 ● Module 2 ● Week 2

Rowena P. Rojas
Developer

vi
 What I Need to Know
Hello learner! This module was designed and written with you in mind.
Primarily, its scope is to help you analyze and propose solution/s to the economic
problems using the principles of applied economics.

While going through this module, you are expected to:

1. identify the basic problems of the Philippine economy; and
2. analyze basic economic problems and propose solutions to the problem using the
principles of applied economics.

Now, here is an outline of the different parts of your learning module. The
descriptions will guide you on what to expect on each part of the module.

Icon Label Description

What I need to know This states the learning objectives that you need
to achieve as you study this module.

What I know This is to check what you already know about the
lesson on this module. If you answered all the
questions here correctly, then you may skip
studying this module.
What’s In This connects the current lesson with a topic or
concept necessary to your understanding.

What’s In it This contains a brief discussion of the learning

module lesson. Think of it as the lecture section
of the lesson.

What I Can Do This is a real life application of what you have

learned.

Post-Assessment This is an evaluation of what you have learned

from this learning material.

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 What’s In
In module #1, you were able to differentiate economics as a social science
and as an applied science. It clearly shows how these two fields are connected to
be able to understand and improve the economic situation of any country. The
economy involves human behavior and the interaction among people or groups
which makes the study of economics a social science. At the same time, the
behavior, choices and decisions of people (microeconomics) are very much
affected by external factors (macroeconomics). Economists aim to understand
economic situations and challenges through applying economic theories and
econometrics, which makes the study of economics an applied science.
The ability to manage scarce or insufficient resources has other
considerations such as the type of economic system a country practices. This
would be the basis in the formulation of policies and solutions (normative
economics) that will address the real economic condition or problems of a
country (positive economics).
A solid understanding of economic principles and how they are applied in
real- life situations can serve as significant tools to help address the country’s
economic problems. You should be able to improve human welfare among Filipinos
in your own simple ways. And with the help of applied economics, be able to
investigate and analyze economic problems in the real world.

What’s In It
PHILIPPINE ECONOMIC PROBLEMS
Economic growth or the increase in a nation’s wealth is the goal of many
countries because this means better lives for their citizens. The Philippines has
always been described as one of the fastest growing economies in the East Asia
Pacific region. With expanding urbanization, where cities have been growing
motivating more people to live in cities because of more opportunities of
employment and education. Baguio City, for instance, continues to attract tourists,
students and entrepreneurs from different parts of the country. Also, trade and
industry continues to propel the city’s economy because of the increasing number of
business establishments registered. Because business activities are energized,
more workers are being employed. Our country also has an increasing young
population to join the labor force in our country and abroad. Overseas workers
continue to send hard earned money or remittances to their families back home.
These remittances uplift the lives of many Filipinos, and have been helping our
economy. Infrastructure projects are also at its peak with the construction of roads,
bridges, and other physical structures that facilitate economic activities.

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 Despite this remarkable growth, people, especially the poor, have been
complaining of non-inclusive growth. Millions of Filipinos say that they experience
hunger in spite of the claims that our country is experiencing economic progress.
They have not felt the comfort that progress should bring.
Unemployment is still a big problem in the Philippines. The National
Statistical Coordination Board Resolution No. 15 dated October 20, 2004 defines
the unemployed as persons who are 15 years old and over and are reported as: (1)
without work and currently available for work and seeking work; OR (2) without work
and currently available for work but not seeking work for the certain reasons.
Unemployment rate in the Cordillera Administrative Region increased from 3.6
percent in January 2018 to 4.9 percent in January 2019. An increase from 32,000 to
39,000 unemployed persons.
Another serious problem in the country is poverty. There are many Filipinos
who have limited or even no means to provide themselves and their families with the
basic needs to survive. In the Cordillera Administrative Region the poverty incidence
among families may have decreased from 17.0 percent in 2015 to 8.7 percent in
2018. But still, the presence of poverty in the region still affects the nation.
According to the Philippine Statistics Authority, the proportion of poor families in the
Philippines in 2018 was estimated at 12.1 percent, which is equivalent to around
three million families.
The increasing population growth in the Philippines is another problem
connected to the issue of scarcity. Resources are not enough to provide for the
needs and wants of a growing population or number of people. According to
theUnited Nations data, the Philippines population is equivalent to 1.41% of the
total world population. Our county ranks number 13 in the list of countries by
population. In the region alone, the PSA-CAR stated that among the
Cordillera provinces, Benguet had the biggest population with 466,224 followed
by Baguio City with 345,366.
Adding more burden to Filipinos is inflation. This is the increase of the overall
level of prices in the economy. This can be caused by challenges in agricultural
supply or increase of international oil prices.
A significant amount of public debt is another problem that affects the growth
of the economy. Public debts are financial obligations or loans made by the
government. In 2018, the national debt of the Philippines amounted to around 133.07
billion U.S. dollars. A big public debt affects the government’s ability to deliver
essential services to its citizens. This means that the provision of public goods or
the needs provided by the government to its people can be restricted, because
money to produce these goods maybe sacrificed to pay for our growing public debt.
Business establishments are encouraged to open to provide jobs and
contribute to the increase of tax revenues. Tax revenue is the income gained by the
government from the taxes paid by the people. It is used to spend for public goods
and other developmental projects. However, the road to progress is not without
consequences. Many business establishments with factories emit pollution that is
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harmful to the health of people and the environment. This harmful consequences of
economic activities are called negative externalities.
The government and the people should work hand in hand to solve these
problems to ensure economic welfare where the resources of the country is properly
distributed for the overall well-being of the people.
APPLIED ECONOMICS IN RELATION TO PHILIPPINE ECONOMIC PROBLEMS

Now that you are aware of the most pressing economic problems in our
country, as discussed in the previous section, you will begin to understand the
causes and possible solutions to these challenges through studying applied
economics.
For example, understanding the existence of scarcity can help you analyze
how to properly use available resources in order to succeed in dealing with
scarcity. Knowledge of economic theories such as the Law of Supply and
Demandcan help in analyzing why prices are increasing and what solutions or
policies the government can implement to help bring down prices. Below is a
table showing you examples on how some of these problems can be understood
using economic theories to help in strategizing solutions:

Socio- Economic
Economic Theory/ Explanation Solutions
Problem Concept
Unemployment Law of There is an oversupply of Provide retraining
Supply and workers and a good courses so
Demand amount of graduates graduates may gain
every year who fall into new skills that are
unemployment. Inability necessary to garner
to provide enough jobs to them a place in the
an increasing number of workforce.
graduates who possess
skills that are not high in
demand in
the job market anymore.

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Population Law of An increase in population Responsible
Growth Supply and would mean more Parenthood and
Demand mouths to feed so Family Planning
demand for products and Program which
services will increase promotes natural
which will affect the family planning, birth
supply of products and spacing (three years
services that may lead to birth spacing) and
an increase in prices. breastfeeding which
are good for the
health of the mother,
child, family,
and community.
Inflation Law of Increasing oil prices Explore other
Supply and worldwide will increase reliable energy
Demand the prices of goods and sources to achieve
services because the energy self-
cost of producing goods sufficiency.
and service will also
increase.
Pollution Negative An increase in demand Increase and
Externalities for products, such as improve mass
cars, leads to profit for public
manufacturers. transportation.
However, this means an
increase of the number
of cars emitting carbon
dioxide and nitrogen
oxide that are harmful to
people and the
environment.

Aside from strategizing solutions to these socio-economic problems, economic

theories also help you understand how an economy works and why it is important for
you to be concerned about it. You will learn more about the economic theories
mentioned above and other theories and concepts in the succeeding module.

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 What I Can Do
PERFORMANCE TASK #2

Activity: Priorities...priorities!
The infographic below, from dbm.gov.ph, shows the distribution of the
Philippines’ national budget in 2019 to the different government agencies. Take note
of the amount allotted for each agency according to the priorities of the national
government.

https://www.dbm.gov.ph/images/pdffiles/2019-People's-Budget-Quick-Glance_English-Version.pdf

Considering the social and economic problems faced by the country, do you
think that the order of priority of the recipients to which the budget was given is
correct? If you disagree, which department/ departments should be ranked
differently? Why do you think it should be changed? If you think the order is correct,
why do you think it should not be changed?

Explain your answer in 5 to 7 comprehensive sentences only. Make sure to base

your explanation on the lessons learned in this modue. Try your best not to write
beyond the lines provided below.

Grading factor: Completeness and clarity- Does your response directly satisfy the
required answer? (rating x 3)
Excellent= 5 Very Good=3-4 Good= 2 Needs Improvement=1
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 Assessment
WRITTEN WORK #2
Read the statements below then decide whether they are TRUE or FALSE.
Check the appropriate circles on the right.
TRUE FALSE
1. Applied economics will help in understanding social and
economic challenges, and in the formulation of policies and ¢ ¢
activities to resolve them.

2. Trade and industry continues to propel the city’s

economy because of the increasing number of business ¢ ¢
establishments registered.

3. Public goods are goods available to private businesses ¢ ¢

usually provided by the government.

4. Inflation is an increase in the overall level of prices in the ¢ ¢

economy.

5. Unemployment occurs when people are without work. ¢ ¢

6. Remittance is income gained by the government through ¢ ¢

taxes or taxation.

7. Urbanization is the process through which cities grow,

and an increasing number of people comes to live in the ¢ ¢
cities because of more opportunities.

8. Pollution is an example of a negative externality. ¢ ¢

9. Infrastructure projects are signs of economic growth. ¢ ¢

10. Economic growth is the allocation of resources and ¢ ¢

goods that affects the overall well-being of the people.

11. People who are unable to get or provide for their basic ¢ ¢
needs are in poverty.
12. Tax revenues are used by the government to provide for ¢ ¢
public goods and service for the people.
13. Public debts are financial obligations by the government to ¢ ¢
banks within the country only.
14. The Philippines has always been described as one of the ¢ ¢
fastest growing economies in the East Asia Pacific region.
15. In the Cordillera Administrative Region, Baguio had the
biggest population with 466,224 followed by Benguet with ¢ ¢
345,366.

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 REFERENCES
Dinio, Rosemary, and George Villasis. 2019. Applied Economics. 1st ed. Sampaloc,
Manila: Rex Book Store, Inc. (RBSI).

Internet Sources:

Department of Budget and Management. “2019 National Budget: Building a Bright

Future for the Philippines and It’s People.” Accessed July 28, 2020.
https://www.dbm.gov.ph/images/pdffiles/2019-People's-Budget-Quick-
Glance_English-Version.pdf.

Econslip2014.weebly.com. “Unemployment in the Philippines.” Accessed July 27,

2020. http://econsilp2014.weebly.com/solutions.html.

Iowa State Daily. 2016. “Why poverty is everyone’s problem.” Accessed July 26,
2020. https://www.iowastatedaily.com/opinion/editorials/editorial-why-poverty-
is- everyones- problem/article_c5ef08ea-c47d-11e6-bf24-
bfa9cd4740e9.html.

National Economic and Development Authority. February 17, 2011. “Major CCAR
development issues and concerns and corresponding plan of action.”
Accessed July 26, 2020. http://car.neda.gov.ph/major-car-development-
issues-and-concerns-and- corresponding-plan-of-action/.

Philippine Statistics Authority. Sept. 30, 2019. “Labor Force Participation Rate in
CAR: January 2019.” Accessed July 26, 2020.
http://rssocar.psa.gov.ph/lfs/Labor%20Force%20Participation%20Rate%20in
%20CAR:%20January%202019.

Philippine Statistics Authority. Dec. 6, 2019. “Proportion of Poor Filipinos was

estimated at 16.6% in 2018.” Accessed July 24, 2020.
https://psa.gov.ph/poverty-press- releases/nid/144752.

Tobut, Andrew. 2020. “3 ways we can solve the air pollution crisis.” Accessed July
25, 2020. https://www.greenpeace.org/philippines/story/4046/3-ways-we-can-
solve-the-air- pollution-crisis/.

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For inquiries or feedback, please write of call:
Department of Education-Schools Division of
Baguio City (Military Cut-off, Baguio City)
Telefax:
Email Address: