Applied Economics

UNIVERSITY OF NUEVA CACERES
J. Hernandez Ave., Naga City

Senior High School Department
JOMAR CEZAR ABORQUEZ VINCENT ESTEVE GRAZA

Mathematics Learning Facilitator Social Science Learning Facilitator
Accountancy, Business, and Management Strand 12 General Academic Strand 12
Applied Economics
By: Jomar C. Aborquez and Vincent E. Graza
Copyright © 2020 by Jomar C. Aborquez, Vincent E. Graza and the University of Nueva
Caceres
No part of this course module/study guide may be reproduced or transmitted in any

form or by any means, electronic or mechanical, including photocopying, recording, or
any information storage and retrieval system, without permission in writing from the
author/s and the University of Nueva Caceres
Published in the Philippines by the University of Nueva Caceres

Office of the Vice President for Academic Affairs
JH10, JH Bldg., University of Nueva Caceres,
J. Hernandez Ave. Naga City,
Camarines Sur, Philippines
Printed in the Philippines

First printing, 2020
TABLE OF CONTENTS
Title Page i
Copyright Page ii
Table of Contents iii
List of Figures iv
Course Description v
Course Outline v
Course Objectives v
Course Requirements vi
Assessment System vi
SECTION 1 INTRODUCTION TO ECONOMICS 1

1.1 Economics and How it Affects Us All 2
SECTION 2 ECONOMIC SYSTEMS OF THE WORLD 8

2.1 Different Economic Systems 9
2.2 World Economic Measures Milestone 15
2.3 Basic Research Wiki 18
SECTION 3 THE WORLD AND ECONOMICS 23

3.1 How the Economies of the World Work Milestone 24
SECTION 4 YOUR OWN ECONOMIC SYSTEM 26

4.1 Final Output: Preferred Economic System 27
ATTACHMENTS
Resource Pool of Article: Different Economic System 29
Resource Pool of Article: World Economic Measures 35
Sample Final Output 52
LIST OF FIGURES
Figure 1 The Circular Flow Model 12

Figure 2 The Demand Curve 45
Figure 3 The Supply Curve 45
COURSE DESCRIPTION
In this course, you will learn about different components of an economic system and create
your own case study of the proposed economic systems. You will perform research in order to learn
about the different economic systems and economic measures. You will also go through the
experience of being in charge of a city's economy. You will then use this experience along with what
they learned in order to analyze proposed economic systems. You will need to have a level of
understanding of economics so that you will understand how one action in the economy can affect
others. This will be important as you deal with real life issues such as unemployment, inflation rate,
and tax rate. It can also give you a better perspective on how businesses and governments make
decisions because you can recognize the concept of scarcity of resources.
COURSE OUTLINE
SECTION 1 INTRODUCTION TO ECONOMICS

1.1 Economics and How it Affects Us All Week 1
SECTION 2 ECONOMIC SYSTEMS OF THE WORLD

2.1 Different Economic Systems Week 2
2.2 World Economic Measures Milestone Week 3-4
2.3 Basic Research Wiki Week 5-6
SECTION 3 THE WORLD AND ECONOMICS

3.1 How the Economies of the World Work Milestone Week 7-8
SECTION 4 YOUR OWN ECONOMIC SYSTEM

4.1 Final Output: Preferred Economic System Week 9-10
THIRD QUARTERLY ASSESSMENT Week 11
COURSE OBJECTIVES
KNOWLEDGE OBJECTIVES
At the end of the course, you will be able to:
(I) INTRODUCTORY (E) ENABLING (D) DEMONSTRATIVE
Identify the basic economics Differentiate the types of Create your own case study of
concepts and their application economic systems and the proposed economic
in real life. economic measures that are systems.
used around the world.
SKILL OBJECTIVE:
At the end of the course, you should acquire the following skill:
PROBLEM SOLVING
can identify and define a problem,
determine root causes, and resolve
them by applying relevant and
appropriate problem-solving
techniques.
LEVEL 4
COURSE REQUIREMENTS
★ Final Output At the end of the course, you will create your own case study of the proposed
economic systems. You have to choose which economic system you think is best.
★ Milestones Before you can accomplish your final output, you have to do two milestones.
These will help you in your final output:
1. World Economic Measures
2. How the Economies of the World Work
*Additional: Notebook, Pen, Folder(long), Brown Envelope(long), Bond Papers
ASSESSMENT SYSTEM
To pass this course, you need to comply with the following requirements:
1. In this course, you will be graded based on the following criteria:
Criterion Weight
Written Work:
40%
Activity and Milestones
Performance Task:
60%
Final Output
2. Milestones and Final Output will be graded using the provided rubrics for this course. Make sure
that you read and understand these rubrics before creating your milestones and final output.
3. The notebook will be submitted every end of the quarter where you will write all your answers to all
the activities and exercises.
OVERVIEW OF THE SECTION
Welcome to Applied Economics Course, now let's begin your journey in discovering the
world of Economics.
In this section, you will learn the importance of knowing basic Economics concepts
and their application in real life. Also, you will learn the skills that this course will
develop and the output it will produce.
LEARNING OUTCOME(S)
At the end of the section, you should be able to:
Read through a document about the concepts of Economics and how it exists
all around the world.
SECTION OUTLINE
Economics and How it Affects Us All Week 1
APPLIED ECONOMICS Module | 1

Title Economics and How it Affects Us All
Timeline Week 1
Read through a document about the concepts of Economics and how it
Objectives
exists all around the world.
Tools Notebook, Pen, and Dictionary
1. Read the text below titled “Introduction to Economics”. This contains the concepts in
Economics and how it is applied in everyday life.
2. List down the words that are not familiar to you. Look at their definitions in a
dictionary of synonyms in a thesaurus. Write it in your notebook.
3. After reading the document you need to answer the following questions.
a. What is your understanding of Economics?
b. What is an opportunity cost?
c. What do you feel is the opportunity cost of taking this class?
d. What is scarcity?
e. Why is it important to understand scarcity in an economy?
f. What is the difference between Macroeconomics and Microeconomics?
g. Is it important to learn both? Why?
h. How will you use the information that you will learn in this course?
4. Write your answers in two (2) to three (3) sentences per question in your Economics
notebook.
Mr. Clifford: I'm Mr. Clifford, and I'm a high school economics
teacher and YouTuber, and I'm going to focus on teaching you the
theories and graphs of economics. You know, the textbook stuff.
Adriene: And I'm Adriene Hill; I'm a senior reporter for the public radio
show Marketplace, and I'm gonna focus on showing you the
real-world applications of economics. You know, the good stuff. The
really fun stuff.

Mr. Clifford: So let's start with the basics. What is economics? Well, it might be easier to
term what economics isn't. Economics is not the study of money or getting rich, although
understanding economics can help with that. Economics is not the study of the stock
market. It's just not. And economics is not primarily about men in bow-ties forecasting
what will happen in a given market or the overall economy. Actually, a few economists do
that, but that's not the main focus of economics. Economics is the study of people and
choices. The famous economist Alfred Marshall defined economics as
Adriene: So let's talk a minute about what else economics is. Economics is an 18 year old
deciding whether to work or go to college and how that affects her future income.
Economics is a company deciding whether to produce smartphones or tablets and how
that's influenced by what we consumers want to buy. Economics is the government
deciding whether to increase its spending when it's a recession and if it's worth going into
debt. So despite what you might think, economics is not boring and dull. OK, some of it is,
but it's not all like that I promise! It's awesome. Understanding economics can forever
change the way you think and problem-solve. Our job over the next few weeks is to teach
you concepts that will help you understand the world, and hopefully, make it a better
place. No matter who you are, you will be using economics. In fact, you are using
economics right now, you chose to read this text, which means you must feel that the
benefit outweighs the cost. You could be
reading novels or history books. The cost
of reading this text is the text you're not
reading, the value of the next best
alternative. Economists call this your

opportunity cost. If you're still reading this text, it means that you believe it's the best use
of your time, or you wouldn't be reading it. "But what if I'm reading this at school?" you
ask, "What if I'm forced to read this?" Well, you weren't forced to go to school, you could
ditch, you could drop out, you could move to a country that doesn't have compulsory
education. But the cost would outweigh the benefit. Even if you are at school, you're not
forced to read books, you could close your eyes or put your head down. No one's gonna
pry your eyes open, that'd be creepy! So Mr. Clifford and I are jumping in to teach you
economics.
Mr. Clifford: And believe it or not, we just

covered the two most important assumptions
in all of economics. First, the idea of scarcity.
People have unlimited wants but limited
resources, and second, everything, and I mean
everything has a cost. And if these
assumptions are true, then we need a way to
analyze our choices and get the most from our limited resources. And that's economics.
Adriene: Wait, but let's go back to the idea of benefits and costs. About 30,000 people a
year die in car accidents in the US. Is there a way to ensure there will never be another
traffic fatality? Yes! We can crush all the cars, close all the roads, and force everyone to
walk. That would solve the car crash problem. Do you want to decrease the number of
people convicted of murder? You could decriminalize murder. You want to end the
unethical treatment of elephants? You could kill off all the elephants, in an ethical way of
course. But before you decide to tenderly euthanize herds of beautiful elephants, think
about it for a second. Each of these solutions is absurd because the cost clearly
outweighs the benefit. Traffic fatalities are tragic, but we don't prevent them at all costs.
You know that driving has risks, that you might get in a car accident, but you still drive.
Why? Well first, who's gonna walk to the gym? And
walking home with groceries in the rain is way
worse than the teeny-tiny chance of dying in a car
crash. The point is, individuals, businesses, and
countries can't have everything, so they're forced
to weigh the benefits and costs of their decisions
and make choices. Let's look at another example.
Military spending in the United States is over 600
billion dollars per year, that's close to what the
next top ten countries spend combined. There are a total of about 20 active aircraft
carriers in the world, and the US has half of them, and it's building more. The opportunity
cost of those aircraft carriers could be hospitals, schools, and roads. So, is the US

spending too much on the military? Should the US focus on making guns or butter? That
is, weapons or consumer goods?
Mr. Clifford: And notice the keyword here is "or," we can't produce an infinite amount of
weapons AND consumer goods because we don't have an infinite amount of workers
and farms and factories and raw materials. Scarcity means we must make a choice. The
American President Dwight D. Eisenhower explained
this best in 1953 in a speech about the Cold War
military buildup. "Every gun that is made, every
warship launched, every rocket fired signifies, in the
final sense, a theft from those who hunger and are
not fed, those who are cold and are not clothed. This
world in arms is not spending money alone. It is
spending the sweat of its laborers, the genius of its
scientists, the hopes of its children." And this is a good
time to mention the role of politics in economics;
we're not pushing some liberal anti-military policy
here. We're just pointing out that military spending
has an opportunity cost: The resources not being used for social services like feeding the
hungry. We're gonna try not to push a political agenda on you. We're gonna show you
both sides and let you decide which one's best. So please don't say "Mr. Clifford loves
capitalism, so he's just a pro-business conservative," or "Adriene's talking about
environmental regulations, so she's an anti-business liberal." Yeah, we are pro-business
and you are too. I mean, where do you think your computer came from? That computer
was brought to you by capitalism and the private sector. But that being said, the security
and laws, roads, and that traffic ticket you got the other day came from the government.
Conservatives and liberals fight over the details, but the free market alone can't solve all
of our problems. And the government can't solve all of them either. Government officials
use economic theory to guide public policy; their effects are widespread and affect
millions of people. Sometimes a theory is flawed, but many times a policy is flawed.
Economists adjust theories supported by data and understanding of incentives. Having
the right incentive is key.
Adriene: But the right incentives can be hard to figure out. Take for example public
colleges and universities. Many of them used to get state money for each student they
enrolled. That meant universities had financial incentives to focus on recruiting as many
students as possible, but not helping them succeed once they were in class. So states
have started changing the incentives. Now, more and more states reward schools for the
number of students that complete courses or earn degrees. And in some places this has
worked; it's helped schools increase their graduation rates by shifting money from

marketing budgets to programs to help students do better, but those incentives can also
backfire if they're poorly designed. A university that gets money for graduates could push
students through the program without giving them a good education. It might want to
only admit students who come in with super high test scores, instead of considering
other factors that might make them good candidates. It might push students into
less-rigorous majors. But incentives can help solve problems without adding more
resources. You just have to get the incentives right. Many non-economists assume that
the way to improve things like health care is to spend more money. Economists would
point out that the US already spends almost twice as much per person as other rich
countries, and in many cases, they get worse health outcomes. Economists would also
say that rather than spending more money, we need to make sure that insurers, doctors,
hospitals, and patients have incentives to produce the most effective care possible at the
lowest cost possible. The point is, if you mess up the incentives, the policy's not gonna
work. When Vietnam was under French colonial rule, the regime issued a bounty on rats
to exterminate them, giving money to people for handing in rat tails. I guess because
piles of rat bodies were too gross. The plan backfired. To make as much money as
possible, the rat-catchers cut the tails off the rats and released them, allowing them to
make baby rats. The policy increased the rat population. It made things worse.
Mr. Clifford: People sometimes criticize economists asking "Why didn't they predict the
2008 financial crisis?" or, "why can't they agree on what the government should do or
shouldn't do when there's a recession?" These criticisms fail to distinguish between
macroeconomics and microeconomics.
Specifically, all these complaints are about
macroeconomics. Macroeconomics studies the
economy as a whole; it looks at the whole
nation's output, unemployment, interest rates,
government spending, and growth.
Macroeconomics answers questions like "Will
unemployment rise if there's an increase in
taxes?" "Will and increase in the money supply
boost output or just increase inflation?" "Will a slump in European economies cause the
US economy to slow down?" Macroeconomists get more airtime because they predict
the direction of the overall economy, and work
with the media and businesses and congress
and the Federal Reserve, but less than half of all
economists are macroeconomists; there's a
whole other side of economics that looks at
different questions. "How many workers should
we hire to maximize profit?" "If our main

competitor releases their product in May, when is the best time to release our product?"
and "Which is better for fighting climate change, a gas tax, or increase in fuel efficiency?"
These are all microeconomic questions. They're not about predicting GDP or measuring
unemployment, but they are crucial questions that economists must answer. Also, if you
don't know what GDP is or what a high or low unemployment rate is don't worry, we'll get
there. So macro and micro-economists are two different groups asking different
questions under one academic umbrella. If economics was biology, macroeconomics
would be ecology while microeconomics would be cell biology. If economics was physics,
macro would be cosmology and relativity while microeconomics would be Newtonian
mechanics.
Adriene: Obviously we're glossing over the details, but we promise to cover everything in
the next few weeks from supply and demand to monetary policy, we'll cover it all. Except
for maybe the giant pools of money. We can't promise you that learning economics will
make you wealthy, but we can promise that learning economics will enlighten your mind
and make you a more informed decision-maker. And that makes us all better off.

Welcome to Section 2 of Applied Economics Course, for the succeeding activities you
will discover the different economic systems and you will understand how to perform
research. Happy learning!
In this section, you will learn more about the basic concepts of Applied Economics,
you’ll find out the key points through the help of the WIKI. Also, you will learn how to
prepare research on different economic measures.
LEARNING OUTCOME(S)
Differentiate the types of Economic Systems that are used around the world.
Identify and describe the different economic measures used and how they
affect the citizens of a country.
Describe the different steps in performing basic research.
SECTION OUTLINE
Activity: Different Economic Systems Week 2
Milestone: World Economic Measures Week 3-4
Wiki: Basic Research Week 5-6

Title Different Economic Systems
Timeline Week 2
Differentiate the types of Economic Systems that are used around the
Objectives
world.
1. Now that you’ve been introduced to economics and how it affects us all, it is time for
you to research the different economic systems.
2. After reading the documents titled “How do economic systems work?” below and
“Different Economic Systems” attached to this module, you need to answer the
following questions.
a. What are the different economic systems?

b. What are some examples of each of the economic systems in modern society?
c. What makes each economic system different from one another?
d. What are the expected outcomes of each of the economic systems?
e. How are resources owned and allocated for each of the economic systems?
f. What are the advantages and disadvantages of each of the economic systems?
3. Write your answers on a long size bond paper.
Adriene: Today we're going to focus on macroeconomics and talk about economic
systems and the nation that likes them. So to pick up where we left off, we all have wants.
Food, cell phones, a good education, a P500,000 gold Apple watch, but like the Rolling
Stones tell us, you can't always get
what you want. We don't have an
infinite amount of resources like
raw materials, workers, and time,
so we have to make choices. We as
a social order have to figure out
three things: what to produce, how
to produce it, and who gets it. Answer these three questions and you've got an economic
system! There's a ton of backstory here about the history and evolution of economic
thought. For today, we're gonna talk about the world today. Let's take a look at two
different economic systems: market economies and planned economies.

Mr. Clifford: It all comes down to who
owns and controls the factors of
production. These are the major
inputs required to produce stuff and
Karl Marx classified them as land,
labor, and capital. He even wrote a
book about it, Das Kapital. In a
planned economy, the government
controls the factors of production,
and it's easy to assume that's the
same thing as communism or
socialism but that's not quite right.
According to Karl Marx,
So true communism is a classless society. When we say classless, we are talking about a
social order where everyone owns the factors of production, and output is distributed
equally. Kind of like China, and Cuba, and the former Soviet Union, except not at all. In
practice, no country has ever been truly communist. There's a lot of socialist countries.
Often, socialism has both private property and some public ownership and control of
industry. The goal is to meet specific collective objectives and to provide free and easy
access to things like education and healthcare. In both communism and socialism, there
is economic planning, and the government, usually in the form of some bureaucratic
agency, helps decide what to produce, how to produce it, and who gets it. Now if an
economy is completely controlled by the government, down to the number of shoes that
should be produced, that's called a command economy.
Adriene: On the other side of the spectrum, we have free market economies. In free
market or capitalist economies, individuals own the factors of production, and the
government keeps its nose out of the stuff and adopts laissez-faire or hands-off
approach to production, commerce, and trade. In free market economies, businesses
make things like cars, not to do good for mankind but because they want to make a
profit. Since consumers, that's me and you, get to choose which car we want, car
producers need to make a car with the right features at the right price. Economists call
this the invisible hand. If consumers prefer one company's car, that business will make
more profit and have an incentive to produce more cars. Car companies that don't offer

the cars people want will disappear. Maybe
you've heard of the DeLorean? It was a cool
looking car, but not a car that many people
wanted to buy. Apparently, it was expensive,
underpowered, and poorly-made. And it didn't
actually travel through time. Anyway, this
concept applies to all other markets, like cell
phones or shoes. Scarce resources will go to
the most desired use, and they'll be used
efficiently, more or less. After all, if a business is
wasteful and inefficient or makes something that no one wants to buy, then some other
business will make a similar product that's either better or cheaper or both. If there's no
consumer demand for a product, resources won't be wasted producing it. We often take
markets for granted, but look at the alternative. Assume instead that a government
agency was in charge of deciding exactly which types of cars and cell phones and shoes
to make. Do you think they could quickly respond to changes in tastes and preferences?
If there was only one government monopoly producing cars, do you think they'd be
produced efficiently?
Mr. Clifford: So the invisible hand of the free market is the idea that individuals and
businesses meet society's needs when they seek their own self-interest. Competitive
markets with profit-seeking businesses will have an incentive to produce high-quality
products as efficiently as possible. In the words of Adam Smith, "It's not from the
benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from
their regard to their own interest." Now, it looks like the free market is perfect and we don't
even need a government, but that's not quite right. There's a bunch of things the
government must do because free markets won't. First, is to maintain the rule of law. We
need laws and police and contracts and courts to keep everything orderly. Second, we
need public goods and services, like roads and bridges and education and defense,
because goods can't get to consumers if bridges are falling, and consumers can't make
good choices if they're not educated, and no one cares about buying the new iPhone if
there's a bomb dropping on your head. Third, the government sometimes needs to step
in when markets get things wrong, but what does that even mean?
Adriene: Let's go back to producing cars. The free market produces what we consumers
want to buy, and when we buy, we're thinking about what a car looks like. If it's the color
we want, maybe if it's safe, what it costs. Most of us aren't worried about air pollution. We
don't think much about who made our car, what they were paid, what the conditions at
the factory were like; that's when the government steps in to regulate production. In a
free market economy like the United States, you might think that the government doesn't

tell car producers what types of cars to produce and how to produce them, except that it
does. Cars need to meet strict emissions and safety standards, and laws are dictating
how much manufacturers can pollute and how workers should be treated, and here's the
big takeaway: modern economies are neither completely free market nor planned.
There's a spectrum of government involvement. For example, on one end we have North
Korea. They have a command economy where production is entirely controlled by the
government. On the other end, we have countries like New Zealand; they have private
property, few taxes, and few regulations. In the middle, we have the rest of the world. So
most modern economies are mixed economies with both free markets and government
intervention.
Mr. Clifford: And a great way to explain a mixed economy is by looking at something
called "the circular flow model." A modern economy is made up of households, which are
individuals like you and me, and businesses. Businesses sell goods and services to
households in the product market -- that's anywhere goods and services are bought and
sold. The households need to pay for those goods and services, but where do they get
the money? The households earn the money by selling the resources, like labor, to
businesses. Now, this is done in the resource market. The businesses use the money they
earn from selling products in the product market to pay for resources in the resource
market, and households use the money they earn in the resource market to buy products
in the product market. But there's another key player in the economy: the government.
Figure 1. The Circular Flow Model

The government also buys products and resources. For example, they'll buy cars from
businesses and hire government employees like policemen to drive them. The
government pays for public goods like roads and bridges and public services like
firefighters and teachers. They also provide transfer payments to individuals in poverty
and subsidies to businesses to produce things like fuel-efficient cars. But where does the
government get the money? Well, they get some of it from taxing households and
businesses and they get some of it from borrowing, but we'll talk about that later. So
basically, that's it. That's the circular flow of products, resources, and money, and the
interactions between businesses, individuals, and the government. Now, it gets more
complex when you add in international trade and the financial sector, but for now, the
simplified circular flow shows how the modern economy works.
Adriene: We've established that economies differ based on the amount of government
involvement, but it's important to keep
in mind that economies can change.
Over time, Denmark and Canada have
adopted more elements of a planned
economy, like universal healthcare.
China, on the other hand, has added
more free market elements to its
economy and now has less
government ownership and control of
production, so communist China has a
socialist market economy. But which type of economy is better and how much should the
government get involved? It's hard to find support for command economies outside
North Korea, and many nostalgic Cubans and Russians. Those who support socialism
would point out Denmark's high standards
of living and low-income inequality, but free
market enthusiasts might point out China's
massive economic growth and growing
middle class after backing away from
central planning. Ultimately, the optimal
amount of government involvement
depends on your values. For example, what,
if anything, do you think the government
should do to help people in poverty? Do you think it's up to each individual to provide for
themselves, come what may, or do you think the government should step in as a safety
net and help pay for food and healthcare? What if the person made choices that got
them in financial trouble, like gambling, or made them sick, like smoking? Should society
help then? Well, economists aren't good at answering these types of questions. Sorry. It's

not that they're heartless. It's just they don't operate in the realm of feelings. In the words
of economist Thomas Sowell, "There are no solutions, only trade-offs." Sure, it would be
great if we could end poverty or provide healthcare for everyone, but we're gonna have
to give something up to do it. Forcing car producers to meet emissions and safety
regulations will increase production costs and likely increase the price of cars, but it also
reduces pollution and fossil fuel consumption, which will hopefully improve public health
and save money in the long run. There is always an opportunity cost, and deciding if it's
worth it--well, that's up to you and your elected officials and a bunch of lobbyists. Deng
Xiaoping transformed China from a country with debilitating poverty and famine to the
economic powerhouse it is today. Regarding this debate, he said,
Mr. Clifford: To wrap this thing up. In practice, almost all countries are somewhere
between the extremes of a command economy and a completely free market economy.
That's because mixed economies seem best at handling the circular flow of goods,
money, and resources. But the debate over free markets and government control will
never end.
Adriene: Well, actually, it will end, when humanity ends, because microscopic organisms
don't divide themselves into factions based on economic theory, but anyway, that's why
you need to be informed about the merits and the limits of economic systems and be
willing to support solutions that get the job done, as opposed to getting stuck in one
ideology. Economic theories and models can seem great in the abstract, but when
they're kicked out into the real world and have to govern the affairs of billions of people, it
turns out that some flexibility is a very important thing.

Title Milestone: World Economic Measures
Timeline Week 3-4
Identify and describe the different economic measures used and how
Objectives
they affect the citizens of a country.
Tools Long Size Bond Papers and Pen
1. Now that you have an idea about the different economic systems, it is time for you to
know the different economic measures.
2. Read the reading article titled “World Economic Measures” attached to this module
and answer the following questions.
a. How is GDP different from GNP?
b. How are frictional unemployment, structural unemployment, and cyclical
unemployment different from one another?
c. How does supply of a product affect the price of goods?
d. How does the demand for a product affect the price of goods?
e. How would you explain the Consumer Price Index?
f. What is a Consumer Basket in terms of the Inflation Rate?
g. How is the Demand Pull Inflation different from the Cost Push Inflation?
h. How do the GDP, Inflation Rate, and Unemployment Rate affect each other?
i. Why are GDP, Inflation Rate, and Unemployment Rate used to measure a
country’s economic performance?
j. How do these measures relate to the Human Development Index (HDI)?
3. Use the rubric below to come up with quality output. To get a passing grade for the
milestone, make sure to target at least Level 3 across all criteria.
INFORMATION LITERACY RUBRIC
Level 1 Level 2 Level 3 Level 4

CRITERIA
(Beginning) (Developing) (Intermediate) (Proficient)
I cannot I can state I am able to I am able to

identify and what needs to identify and consistently
state what be done but state what state and
needs to be not why it has needs to be explain what
done. to be done. done. needs to be
I cannot I am able to I am able to done and why
explain the identify and explain the it has to be
Understanding reason(s) why I distinguish reason(s) why I done.
of Research need to some of the need to I am able to
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4. Write your answers on long size bond papers.

Title Basic Research Wiki
Timeline Week 5-6
Objectives Describe the different steps in performing basic research.
1. Read the WIKI titled "Basic Research". This provides information on how to perform
Basic Research.
2. List down the important notes that you think will help you discuss concepts on
Economics. Look for other definitions in the dictionary or thesaurus.
3. Write your answers in your Economics notebook. Happy learning and enjoy writing
your new discoveries!
Research is a process that enables an individual to systematically find answers to

questions or things he or she wants to know about. Have you ever wondered why the sky
is blue? It seems like a very basic question right? Do you know the answer? How much
detail do you think you can provide to support your answer? If you don’t know the answer
or you don’t have a lot of details to support it, research can certainly help you. We will
cover the fundamental steps to successfully perform basic research.
Why do I need to learn Basic Research?
Learning how to do research will enable you to find answers to ANY question you
have. Do you want to know how to be rich? Research can help you with that. Do you
want to know how a car engine works? Research can help you with that. How about
making your crush like you? You can bet that research can also help you with that!
You can increase your knowledge and awareness on any topic if you know how to do
research! Isn’t that amazing?
When you start working, you will be given tasks that you will not know how to
perform. What are you going to do? Are you going to tell your supervisor that you’re
sorry and that you don’t know how to do the task? Of course not! Being the smart
person that you are, you will use the power of research to learn about that task in
order to successfully perform it.

What does Basic Research look like?!
Research doesn’t always have to be formal. It doesn't always have to be performed

in a laboratory or library. Research can be basic and informal. It can be performed
using a search engine, by talking to people, or by administering a survey. There are
many ways to go about research and it would vary depending on the information you
want to know about.
Image source: Ayala Education - Reference Guide
How do I perform Basic Research?
STEP 1: Gain Context
Gain context (building awareness) on the assigned topic. Do not just search for
the actual words used in the assignment. Meaning, if you were asked to research about
the “Efficacy of a Ketogenic diet”, you do not simply copy and paste “Efficacy of
Ketogenic diet” in a web search (like Google) and use the first article that comes up. You
have to first identify the topic in the assignment and increase your awareness around it.
In this case, you want to build awareness around “Ketogenic diet”. You can ask questions
like:
What is a ketogenic diet?

What is a diet?
What are examples of Ketogenic diet?
Who invented the Ketogenic diet?
What is the importance of Ketogenic diet?
These are just a few examples of search strings you can start with.
As you can see, building awareness around a specific topic is a mini research in

itself. If you do not do this, it would be hard for you to proceed to the next steps.
You will know that you have gained enough context when you can answer the
basic What, Who, Why, How, Where questions. If you can answer the questions above,
then you most likely have enough context. You may then proceed to the next step.
Tip: Wikipedia is a good starting point for building awareness around a specific
topic. Take note that this is just a starting point. You still have to look at other sources that
will validate the information you got from Wikipedia.
STEP 2: Identify the Goal/Purpose
Identify the purpose of the assigned research task. It is important that it is clear to
you why you are doing this research. Ask yourself “Why am I doing this?”, “How is this
relevant, useful, valuable to me?”. Do not simply copy the research assignment and add
“To know about” in the beginning of the sentence. For example, “To know about the
efficacy of a Ketogenic diet” is NOT a valid research goal.
An example of a purpose for the assigned topic is “To determine if Ketogenic diet
is superior to other forms of diet with respect to maximum weight loss”. You can add
more if you want like, “To determine the health benefits and risks associated with
Ketogenic diets”.
Once you are clear on the purpose, you may proceed to the next step.
STEP 3: List what you want to know
List everything you want and need to know about your assigned research task in
order to satisfy your purpose in Step 2. You can begin by listing
What you already know.

What you don’t know.
What else you want to know.
You should end up with a long list of questions and statements. These questions
and statements will help guide how extensive your research would be. Through this, you
will know what to include and exclude in your research. This will help narrow your scope
from a broad range of topics you might encounter in your research.
STEP 4: Pick and Evaluate your sources
Pick and evaluate your sources. What does this mean? You can find sources from
many different places. You can use the Internet, textbooks, academic journals,
interviews, surveys, or publications.
There are sources that are good for certain types of information and there are
sources that are not good for certain types of information. For example, the National
Center for Biotechnology Information (NCBI) is a good resource for medical related

studies. The Health and Fitness section on PinoyExchange.com forum is not.
STEP 5: Do your research
Execute your research. You should now find the answers for the list you created in
STEP 3 and use the sources you identified from STEP 4. Compile all your results in a
document or spreadsheet. Make sure that you neatly organize and categorize your
findings so you can easily use them to interpret results.
Since most of our research will be done through the internet. Here are basic rules
that you need to abide by:
1. Don't look at Ads. They are almost always biased.

2. Use pictures only for context building. Do not use them as a basis for research.
3. If you start to read an article and it seems to be written more to entertain than to
inform, it’s probably not a useful source. Skip it.
4. If an article is pushing (mostly) strong opinions, it’s probably not a useful source
(unless you are searching for different viewpoints / opinions on a matter and this
is one). Skip it.
5. Clarify the assignment with your teacher and provide him/her updates on your
progress regularly.
6. Consider the title of the article. Is it relevant? If not, it may not be useful and you
might just waste time reading it.
7. Verify the source. Google the source (STEP 4)
8. Read the content thoroughly.
● Stop at words you don’t know and Google them or use the dictionary or
thesaurus.
● Stop at key ideas, think about them, discuss them, explore them,
understand them.
● Read for meaning. Read to learn.
● Form further questions you want to answer.
● Ask your facilitator to help you understand a concept that you get stuck
on.
● If the content is not relevant, or it is written more for entertainment or
opinion, skip it. Otherwise, read the entire article. AGAIN, READ THE
ENTIRE ARTICLE!
● Focus only on articles and parts that are relevant and will help you answer
the questions and statements in STEP 3 of the Basic Research process.
● Write down new terms and keywords you find.
● Write down new concepts and key ideas you find.
● Develop your next research “string?” to put in Google.
9. Check the website for validity, accuracy, relevance, thoroughness, and
completeness. See guide below.
Valid:
a. There are other sites that comment about and link to the source.
b. The website is accredited. Check who accredited it.
c. Well known news sources. (e.g. CNN, Inquirer, Bulletin, etc.) write about
this site.
d. Well known universities local and abroad (e.g. Harvard, MIT, Stanford,
Ateneo, UP, De La Salle) refer to this site.
e. Information from this site is repeated by other verified sources.
f. Teacher can confirm it is a valid source (and tells you why).
Accurate:
a. You have lots of data, facts, terminology, examples, details are given. You

probably feel almost overwhelmed by the amount of information being
given.
b. If you have a lot of general statements and non-specific “discussion” then
it’s probably not accurate.
Relevant:
a. When the content addresses all your questions in STEP 3 and none of
them are unrelated. You can be pretty confident that you have a relevant
source.
b. When most of the content veer away from either STEP 2 (purpose/goal) or
STEP 3, then the source is probably not relevant.
Thorough:
When you feel confident you can face many questions about the BROAD
topic(s) and many detailed and DEEP questions about your specific
answers/solution/product - you have probably been thorough.
Complete:
If you can respond to questions about the Broad Topic (TEP 1) and Core
Question (STEP 2). You can be pretty confident that you have a complete source.
STEP 6: Evaluate your output
Evaluate if your output is thorough and complete. You’ve spent many hours doing
your research and you think you have done enough, but how do you know if you did
excellent research work? These criteria will help you assess the quality of your output.
Notice that thoroughness and completeness are also in this step because this time you
are applying the criteria against ALL OF YOUR OUTPUT and not just on one source.
Thorough
1. When you feel confident you can face many questions about the BROAD topic(s)
and many detailed and DEEP questions about your specific
answers/solution/product you have probably been thorough.
2. When you complete these “tests” you can be pretty confident you have
completed your research.
Complete
1. When three valid sources are telling you the same things and the 3rd or 4th
source is not communicating anything new you can presume that you probably
have complete information.
2. Make sure you can respond to questions about the Broad Topic and Core
Question.
3. When you complete all these “tests” you can be pretty confident you have
complete research.

In this section, you will learn how one action on the economy affects itself. This will be
seen through playing a game on your tablet/phone called SimCity Buildit. Good luck
and enjoy!
LEARNING OUTCOME(S)
Determine the cause and effects of actions on the economy.
SECTION OUTLINE
How the Economies of the World Work Week 7-8

Title Milestone: How the Economies of the World Work
Timeline Week 7-8
Objectives Determine the cause and effects of actions on the economy.
Tools Long Size Bond Papers and Pen
1. At the beginning of the course, you were asked to play a game called “SimCity Buildit”.
The game lets you build a city with you acting as a mayor of it.
2. Now, it is time for you to do this milestone and answer the questions related to the
game.
3. Answer the following questions and see how economics is applied in this game.
a. What level have you reached? Please insert here the screenshot of your city.
b. What type of Economic System is present in the game? Explain and provide a
valid proof.
c. What is/are the role/s of the Mayor?
d. Cite a situation in the game that shows the following and explain.
i. Law of Supply and Demand
ii. Production of goods and services
iii. Customer Satisfaction
iv. Government Involvement
v. Tax Contribution
vi. Trading
e. How do you develop your City? Explain by citing situations from the game.
f. What services do you provide to your City? Indicate at least 3 services.
g. What economic problem/s arise/s in your City? How did you resolve it?
h. What is/are your realization/s after playing the game?
4. Use the rubric below to come up with a quality output. To get a passing grade for the
milestone, make sure to target at least Level 3 across all criteria.
MILESTONE 2 RUBRIC

CRITERIA
I do not use I use 1 concept I use several I use several

any Economic in Economics concepts in concepts in
concepts in to justify the Economics to Economics to
explaining the actions that we justify the justify the
Application of reasons for our have taken actions that we actions that we
Economic actions during during the have taken have taken
Knowledge the game. game. during the during the
(50%) game. I can game. I can
only explain explain these
some of these concepts in my
concepts in my own words.
own words.

I am unable to I am able to I am able to I am able to
recognize the relate the relate the relate the
Analysis of the relationship connections connections connections
Cause and between the between some between most between all the
Effects of actions that we of the actions of the actions actions that we
Actions performed to we performed we performed performed in
(50%) the results that in the game to in the game to the game to
we were able their results. their results. their results.
to obtain.
5. Write your answers on long size bond papers.

In this section, you are expected to create and design your own economic system
based on the existing economic systems in the world. Be creative and good luck!
LEARNING OUTCOME(S)
Create your own case study of the proposed economic systems.
SECTION OUTLINE
Final Output: Preferred Economic System Week 9-10

Title Final Output: Preferred Economic System
Timeline Week 9-10
Objectives Create your own case study of the proposed economic systems.
Tools Long Size Bond Papers, Pen and Folder
1. Now that you are done exploring the different economic systems and your
milestones, you will workout now with your Final Output.
2. You will create a case study of the proposed economic systems attached to this
module. To do this, you have to do the following:
a. Critique the proposed economic systems attached to this module. Consider the
following economic concepts in critiquing the economic systems.
i. Factors of Production
ii. Distribution of resources
iii. Working conditions
iv. Strategy of how goods can be acquired by consumers
v. Role of the government
1. Economic Policies
2. Government control over the economic system
vi. Economic Policies on the country’s GDP, inflation rate, and unemployment rate
vii. Economic Policies on Human Development Index
b. Choose which among those economic systems are the best for you.
3. Follow the case study template below.
4. Then, use the rubric below to come up with a quality output. To get a passing grade
for the final output, make sure to target Level 4 across all criteria.
5. Use long size bond paper for your Final Output.
FINAL OUTPUT RUBRIC

CRITERIA
Identifies and
Identifies and Identifies and Identifies and
demonstrates a
demonstrates a demonstrates demonstrates
Identification of weak sophisticated
acceptable accomplished
the Main understanding
understanding understanding understanding
Issues/ of the main
of some of the of some of the of most of the
Problems issues/problems
(30%) issues/problems issues/problems issues/problems
in the case
in the case in the case in the case
study.
study. study. study.
Analysis and Presents an Presents a Presents a Presents an

Evaluation of incomplete superficial thorough insightful and
Issues/ analysis of some analysis of some analysis of most thorough
Problems of the identified of the identified of the issues analysis of all

(35%) issues. issues. identified. identified issues.
Supports
Supports diagnosis and
diagnosis and opinions with
No action Little action
Recommendat opinions with strong
suggested and suggested and/
ions on limited arguments and
inappropriate or inappropriate
Effective reasoning and well-documente
solutions solutions
Solutions/ evidence; d evidence;
proposed to the proposed to the
Strategies Presents a Present balance
(35%) issues in the issues in the
somewhat and critical view;
case study. case study.
one-sided Interpretation is
argument. both reasonable
and objective.
CASE STUDY TEMPLATE:

Preferred Economic System
Introduction:
[Provide a summary of your case study.]
Chosen Economic System:

[State your chosen Economic System and briefly describe it.]
Case Study Analysis:

[State your detailed analysis of your chosen Economic System. Why did you choose it?
Focus on the 3 items below:]
1. Good Points:
[State at least three (3) good points of your chosen economic system.]
2. Problem(s)/Loopholes:
[State at least three (3) problems encountered in the chosen economic system or
something that you think needs revision/improvement.]
3. Proposed Solution(s):
[State your solutions to the problems you see in your chosen economic system.]
Recommendation:
[Detail how your chosen Economic System will be better than those other proposed
economic systems.]
Conclusion:
[Summarize your main points.]

ECONOMIC SYSTEMS
What is an Economic System?
An economic system is the

combination of the various
agencies and entities that provide
the economic structure that defines
the social community. These
agencies are joined by lines of trade
and exchange goods. Many
different objectives may be seen as
desirable for an economy, like
efficiency, growth, liberty, and
equality. An economic system may
involve production, allocation of
economic inputs, distribution of
economic outputs, landlords and
land availability, households (earnings and expenditure consumption of goods and services in
an economy), financial institutions, firms, and the government.
Alternatively, an economic system is the set of principles by which problems of

economics are addressed, such as the economic problem of scarcity through allocation of finite
productive resources.
The scarcity problem, for example, requires answers to basic questions, such as:
-What to produce?
-How to produce it?
-Who gets what is produced?
Table of Contents
● The Four Types of Economic Systems

1. Traditional Economic System
2. Command Economic System
■ Advantages of Command Economic Systems
■ Disadvantages of Command Economic Systems
29
3. Market Economic System
■ Advantages of a Free Market Economy
■ Disadvantages of a Free Market Economy
4. Mixed Economic System
■ Advantages of Mixed Economies
■ Disadvantages of Mixed Economies
1. Traditional Economic System
The traditional economic system

is the most traditional and ancient type
of economy in the world. Vast portions of
the world still function under a traditional
economic system. These areas tend to
be rural, second- or third-world, and
closely tied to the land, usually through
farming.
In general, in a traditional
economic system, a surplus would be
rare. Each member of a traditional economy has a more specific and pronounced role, and
these societies tend to be very close-knit and socially satisfied. However, they do lack access to
technology and advanced medicine.
2. Command Economic System
In a command economic system, a large part of

the economic system is controlled by a
centralized power. For example, in the USSR
most decisions were made by the central
government. This type of economy was the core
of the communist philosophy.
Since the government is such a central feature of

the economy, it is often involved in everything
from planning to redistributing resources. A
command economy is capable of creating a
healthy supply of its resources, and it rewards its
people with affordable prices. This capability also means that the government usually owns all
the critical industries like utilities, aviation, and railroad.

In a command economy, it is theoretically possible for the government to create enough
jobs and provide goods and services at an affordable rate. However, in reality, most command
economies tend to focus on the most valuable resources like oil.
China or D.P.R.K. (North Korea) are examples of command economies.
Advantages of Command Economic Systems
● If executed correctly, the government can mobilize resources on a massive scale.

This mobility can provide jobs for almost all of the citizens.
● The government can focus on the good of society rather than an individual. This
focus could lead to more efficient use of resources.
Disadvantages of Command Economic Systems
● It is hard for central planners to provide for everyone’s needs. This challenge
forces the government to ration because it cannot calculate demand since it sets
prices.
● There is a lack of innovation since there is no need to take any risk. Workers are
also forced to pursue jobs the government deems fit.
3. Market Economic System
In a free-market economy, firms and

households act in self-interest to determine how
resources get allocated, what goods get
produced, and who buys the goods. This is
opposite to how a command economy works,
where the central government gets to keep the
profits.
There is no government intervention in a

pure market economy (“laissez-faire“). However,
no truly free market economy exists in the world.
For example, while America is a capitalist nation, our government still regulates (or attempts to
control) fair trade, government programs, honest business, monopolies, etc.
In this type of economy, there is a separation between the government and the market.
This separation prevents the government from becoming too powerful and keeps their interests
aligned with that of the markets.

Historically, Hong Kong is considered an example of a free market society.
Advantages of a Free Market Economy
● Consumers pay the highest price they want to, and businesses only produce
profitable goods and services. There is a lot of incentive for entrepreneurship.
● This competition for resources leads to the most efficient use of the factors of
production since businesses are very competitive.
● Businesses invest heavily in research and development. There is an incentive for
constant innovation as companies compete to provide better products for
consumers.
Disadvantages of a Free Market Economy
● Due to the fiercely competitive nature of a free market, businesses will not care for
the disadvantaged like the elderly or disabled. This lack of focus on societal
benefits leads to higher income inequality.
● Since the market is driven solely by self-interest, economic needs have a priority
over social and human needs like providing healthcare for the poor. Consumers
can also be exploited by monopolies.
4. Mixed Economic System
A mixed economy is a combination of

different types of economic systems. This
economic system is a cross between a market
economy and command economy. In the most
common types of mixed economies, the market
is more or less free of government ownership
except for a few key areas like transportation or
sensitive industries like defense and railroad.
However, the government is also usually

involved in the regulation of private businesses.
The idea behind a mixed economy was to use
the best of both worlds – incorporate policies that are socialist and capitalist.
To a certain extent, most countries have a mixed economic system. For example, India
and France are mixed economies.

Advantages of Mixed Economies
● There is less government intervention than a command economy. This results in

private businesses that can run more efficiently and cut costs down than a
government entity might.
● The government can intervene to correct market failures. For example, most
governments will come in and break up large companies if they abuse monopoly
power. Another example could be the taxation of harmful products like cigarettes
to reduce a negative externality of consumption.
● Governments can create safety net programs like healthcare or social security.
● In a mixed economy, governments can use taxation policies to redistribute income
and reduce inequality.
Disadvantages of Mixed Economies
● There are criticisms from both sides arguing that sometimes there is too much
government intervention, and sometimes there isn’t enough.
● A common problem is that the state run industries are often subsidized by the
government and run into large debts because they are uncompetitive.

CITED SOURCES
Prateek Agarwal (2020, April 20). Economic Systems

https://www.intelligenteconomist.com/economic-systems/
Introduction to Economic Systems | Boundless Business. Economic Systems

https://courses.lumenlearning.com/boundless-business/chapter/introduction-to-econo
mic-systems/

World Economic Measures
What is Economics?
Economics is a social science concerned with the production, distribution, and

consumption of goods and services. It studies how individuals, businesses, governments,
and nations make choices on allocating resources to satisfy their wants and needs,
trying to determine how these groups should organize and coordinate efforts to achieve
maximum output.
Economics is the science of scarcity. Scarcity is the condition in which our wants
are greater than our limited resources.
Scarcity
Scarcity refers to the basic

economic problem, the gap between
limited – that is, scarce – resources
and theoretically limitless wants. This
situation requires people to make
decisions about how to allocate
resources efficiently, to satisfy basic
needs and as many additional wants
as possible.
The resources that we

value—time, money, labor, tools, land,
and raw materials—exist in limited
supply. There are simply never enough
resources to meet all our needs and
desires. This condition is known as
scarcity.
Scarcity in Economics
When faced with limited resources, we have to make choices. Again, economics
is the study of how humans make choices under conditions of scarcity. These decisions
can be made by individuals, families, businesses, or societies.
Let’s consider a few decisions that we make based on limited resources. Take the
following:
1. What classes are you taking this term?
Are you the lucky student who is taking every class you wanted with your
first-choice professor during the perfect time and at the ideal location? The odds
are that you have probably had to make trade-offs on account of scarcity. There
is a limited number of time slots each day for classes and only so many faculty
available to teach them. Every faculty member can’t be assigned to every time

slot. Only one class can be assigned to each classroom at a given time. This
means that each student has to make trade-offs between the time slot, the
instructor, and the class location.
2. Where do you live?
Think for a moment, if you had all the money in the world, where would you live?
It’s probably not where you’re living today. You have probably made a housing
decision based on scarcity. What location did you pick? Given limited time, you
may have chosen to live close to work or school. Given the demand for housing,
some locations are more expensive than others, though, and you may have
chosen to spend more money for a convenient location or to spend less money
for a place that leaves you spending more time on transportation. There is a
limited amount of housing in any location, so you are forced to choose from
what’s available at any time. Housing decisions always have to take into account
what someone can afford. Individuals making decisions about where to live must
deal with limitations of financial resources, available housing options, time, and
often other restrictions created by builders, landlords, city planners, and
government regulations.
Problems of Scarcity
Every society, at every level, must make choices about how to use its resources.
Families must decide whether to spend their money on a new car or a fancy vacation.
Towns must choose whether to put more of the budget into police and fire protection or
the school system. Nations must decide whether to devote more funds to national
defense or to protect the environment. In most cases, there just isn’t enough money in
the budget to do everything.
Economics helps us understand the decisions that individuals, families,

businesses, or societies make, given the fact that there are never enough resources to
address all needs and desires.
Opportunity Cost
Since resources are limited, every time you choose how to use them, you are also
choosing to forego other options. Economists use the term opportunity cost to indicate
what must be given up to obtain something that’s desired. A fundamental principle of
economics is that every choice has an opportunity cost. If you sleep through your
economics class (not recommended, by the way), the opportunity cost is the learning you
miss. If you spend your income on video games, you cannot spend it on movies. If you
choose to marry one person, you give up the opportunity to marry anyone else. In short,
opportunity cost is all around us.
The idea behind opportunity cost is that the cost of one item is the lost
opportunity to do or consume something else; in short, opportunity cost is the value of
the next best alternative.
Since people must choose, they inevitably face trade-offs in which they have to
give up things they desire to get other things they desire more.
Opportunity Cost and Individual Decisions
In some cases, recognizing the opportunity cost can alter personal behavior.
Imagine, for example, that you spend ₱50 on lunch every day at work. You may know

perfectly well that bringing a lunch from home would cost only ₱20 a day, so the
opportunity cost of buying lunch at the restaurant is ₱30 each day (that is, the ₱50 that
buying lunch costs minus the ₱20 your lunch from home would cost). Thirty pesos each
day does not seem to be that much. However, if you project what that adds up to in a
year—250 workdays a year × ₱30 per day equals ₱7,500—it’s the cost, perhaps, of a
decent vacation. If the opportunity cost were described as “a nice vacation” instead of
“₱30 a day,” you might make different choices.
Opportunity Cost and Societal Decisions
Opportunity cost also comes into play with societal decisions. Universal health
care would be nice, but the opportunity cost of such a decision would be less housing,
environmental protection, or national defense. These trade-offs also arise with
government policies. For example, when COVID19 Pandemic came in January 2020,
President Rodrigo Duterte has issued an order to temporarily stop the entry of all visitors
from China's Hubei province, where Wuhan — epicenter of the novel coronavirus — is
located, based on one of the reports of CNN Philippines last January 31, 2020.
Examples of opportunity cost
- A student spends three hours and ₱200 at the movies the night before an exam.
The opportunity cost is the time spent studying and that money to spend on
something else.
- A farmer chooses to plant corn; the opportunity cost is planting a different crop or
alternate use of the resources (land and farm equipment).
- A commuter takes the train to work instead of driving. It takes 70 minutes on the
train, while driving takes 40 minutes. The opportunity cost is an hour spent
elsewhere each day.
Basic Economic Problems of the Society
To meet the needs of its people, every society must answer three basic economic
questions:

A society (or country) might decide to produce candy or cars, computers, or
combat boots. The goods might be produced by unskilled workers in privately-owned
factories or by technical experts in government-funded laboratories. Once they are
made, the goods might be given out for free to the poor or sold at high prices that only
the rich can afford. The possibilities are endless.
Although every society answers the three basic economic questions differently, in
doing so, each confronts the same fundamental problems: resource allocation and
scarcity.
Factors of Production
Having established that resources are limited, let’s take a closer look at what we
mean when we talk about resources. There are four productive resources (resources
have to be able to produce something), also called factors of production:
Factors of production are the inputs needed for the creation of a good or service.
The factors of production include land, labor, entrepreneurship, and capital.

Branches of Economics
Economics can generally be broken down into macroeconomics, which

concentrates on the behavior of the aggregate economy, and microeconomics, which
focuses on individual consumers and businesses.
MACROECONOMICS MICROECONOMICS
1. A division of Economics that is 1. Is concerned with the behavior of

concerned with the overall performance individual entities such as the consumer,
of the entire company. the producer, and the resource owner.
2. It studies the economic system as a 2. It is more concerned with how foods

whole rather than the individual economic flow from the business firm to the
units that make up the economy. consumer and how resources move from
the resource owner to the business firm.
3. It is about the nature of economic 3. It is also concerned with the process of

growth, the expansion of productive setting prices for goods.
capacity, and the growth of national
income. 4. It studies the decision and choices of
the individual units and how these
decisions affect the prices of goods in the
market.
Furthermore, microeconomics is the study of small economic units such as

individuals, firms, and industries (competitive markets, labor markets, personal decision
making), etc. while macroeconomics is the study of the large economy as a whole or in its
basic subdivisions (National Economic Growth, Government Spending, Inflation,
Unemployment, etc).
Microeconomics
The Basics of Supply and Demand
In a market characterized by perfect competition, price is determined through the

mechanisms of supply and demand. Prices are influenced both by the supply of
products from sellers and by the demand for products by buyers.
Demand and the Demand Curve
Definition
Demand is the quantity of a product that buyers are willing to purchase at

various prices.
The quantity of a product that people are willing to buy depends on its price.
You’re typically willing to buy less of a product when prices rise and more of a product
when prices fall. Generally speaking, we find products more attractive at lower prices,
and we buy more at lower prices because our income goes further.

Figure 2. The Demand Curve
For instance, let's assume the product in question is a television set. If TVs are
sold for the cheap price of ₱3,000 each, then a large number of consumers will purchase
them at a high frequency. Most people would even buy more TVs than they need, putting
one in every room and perhaps even some in storage.
Essentially, because everyone can easily afford a TV, the demand for these
products will remain high. On the other hand, if the price of a television set is ₱50,000, this
gadget will be a rare consumer product as only the wealthy will be able to afford the
purchase. While most people would still like to buy TVs, at that price, demand for them
would be extremely low.
Supply and the Supply Curve
Definition
Supply is the quantity of a product that sellers are willing to sell at various
prices.
The quantity of a product that a business is willing to sell depends on its price.
Businesses are more willing to sell a product when the price rises and less willing to sell it
when prices fall. This fact makes sense: Businesses are set up to make profits, and there
are larger profits to be made when prices are high.
Figure 3. The Supply Curve

Going back to the example of the television set, if the input costs to produce a TV
are set at ₱3,000 plus the variable costs of labor, production would be highly unprofitable
when the selling price of the TV drops below the ₱3,000 mark.
On the other hand, when prices are higher, producers are encouraged to
increase their levels of activity to reap more benefits. For example, if television prices are
₱1,000, manufacturers can focus on producing television sets in addition to other
possible ventures. Keeping all variables the same but increasing the selling price of the
TV to ₱50,000 would benefit the producers and provide the incentive to build more TVs.
The behavior to seek maximum amounts of profits forces the supply curve to be upward
sloping.
An underlying assumption of the theory lies in the producer taking on the role of a
price taker. Rather than dictating prices of the product, this input is determined by the
market and suppliers only face the decision of how much to produce, given the market
price. Similar to the demand curve, optimal scenarios are not always the case, such as in
monopolistic markets.
Supply and demand form the most fundamental concepts of economics.

Whether you are an academic, farmer, pharmaceutical manufacturer, or simply a
consumer, the basic premise of supply and demand equilibrium is integrated into your
daily actions. Only after understanding the basics of these models can the more
complicated aspects of economics be mastered.
Macroeconomics
Gross Domestic Product and Gross National Product
In economics, Gross Domestic Product (GDP) is used to calculate the total value
of the goods and services produced within a country’s borders, while Gross National
Product (GNP) is used to calculate the total value of the goods and services produced by
the residents of a country, no matter their location.
Essentially, GDP looks for the amount of economic activity within a nation’s
economy, while GNP looks at the value of the economic activity generated by the
nation’s people. This means that GNP will count the economic activities of expatriates
and other citizens outside the country’s borders but GDP will not, and that GDP will
consider the activities of non-citizens within those borders, but GNP will not.
Gross Domestic Product
Gross Domestic Product, or GDP, measures the

total economic value of all final goods and services
produced within a country’s borders during a
specific period of time. An expression of an
economy’s relative health—an increase in GDP
indicates a country’s economy is growing and a
decrease that it is shrinking—GDP is used by
economic policymakers, in the United States, and
across the world, to determine interest rates and
other economic policy.

Two types of GDP
How Is GDP Calculated?
GDP is calculated in one of two ways: the income approach, and the expenditure
approach. Though the latter is by far the more popular way to measure GDP, both
methods should arrive at roughly the same number.
● In the income approach, also known as GDP(I), economists add employee

compensation, gross profits, and taxes minus subsidies to arrive at a figure
representing the income an economy generates.
● In the expenditure approach, economists add total consumption, investment,

government spending, and net exports.
GDP provides us with a portrait of an economy’s well-being, meaning that when

GDP is up, the economy is healthy with high employment rates, wage increases, and a
rising stock market. For this reason, investors often pay attention to GDP increases or
decreases when crafting their investment strategies.
Gross National Product
Gross National Product, or GNP, expresses the

total value of all goods (products and services)
produced by the residents of a particular
country, regardless of national borders, thus
including their foreign assets.
This means that GNP measures the economic

activity of a country’s residents, even if that
activity does not occur within the national
economy. Similarly, it excludes non-residents’
economic activities, even if that activity occurs
within the national economy.
How Is GNP Calculated?
Also known as Gross National Income (GNI), GNP is calculated by adding

personal consumption expenditures (including health care), private domestic investment,

net exports (goods exported minus those imported), income earned by residents from
overseas investments, and government expenditures.
Because it is only concerned with the economic output of a country’s residents,

the income earned in the domestic economy by foreign residents is then subtracted from
this sum. Thus, under GNP, production of goods can occur anywhere in the world—as
long as the means of production is owned by a resident of the country under study, these
goods count towards GNP.
GNP is closely related to Net National Product (NNP), which calculates the value
of all finished goods and services produced by a country’s residents minus the amount of
capital required to produce these goods such as raw materials, energy costs, and so on.
Difference between GDP and GNP
The key difference between GDP and GNP is that GNP considers the output of a
country’s citizens regardless of where that economic activity occurred. By contrast, GDP
considers the activity within a national economy regardless of the residency of the
producers.
Consider the following situations, which GDP and GNP treat quite differently—the
way they treat these situations forms the core of their difference from one another.
The net income receipts of foreign companies owned by foreign residents that
produce goods in the country under study. Since GNP only considers citizens of a
country and their economic output, it does not include such companies in its
measurement. However, GDP measures economic output regardless of country of
residence—so it does include such companies in its measurement.
Companies owned by domestic residents producing goods for global

consumption. Think about companies like Apple, which produce goods for sale on the
global economy and often remit their profits to places with favorable corporate tax laws
like Ireland. Since GNP considers any and all output of domestic residents, it includes
these companies and their economic activity occurs outside the country. However, GDP
only measures the economic output of a given nation’s economy, so it does not consider
this international activity, nor the money remitted to foreign economies.
Similarly, GNP will always include net income receipts from the international
investments made by its residents whereas GDP will not. Conversely, GDP will always
include foreign investments within a country’s borders, whereas GNP will not.
Economists and investors are more concerned with GDP than with GNP because
it provides a more accurate picture of a nation’s total economic activity regardless of
country-of-origin, and thus offers a better indicator of an economy’s overall health. That
said, GNP is still important, especially when comparing it alongside GDP from the same
year.
Example of How GNP is different from GDP
If a Japanese multinational produces cars in the Philippines, this production will

be counted towards Philippine GDP. However, if the Japanese firm sends ₱50M in profits
back to shareholders in Japan, then this outflow of profit is subtracted from GNP. Filipino
nationals don’t benefit from this profit which is sent back to Japan.
If a Filipino firm makes a profit from insurance companies located abroad, then if
this profit is returned to Filipino nationals, this net income from overseas assets will be
added to Philippine GNP.

Note, if a Japanese firm invests in the Philippines, it will still lead to higher GNP, as
some national workers will see higher wages. However, the increase in GNP will not be as
high as GDP.
● If a county has similar inflows and outflows of income from assets, then GNP and
GDP will be very similar.
● However, if a country has many multinationals who repatriate income from local
production, then GNP will be lower than GDP.
What Is Unemployment?
Unemployment occurs when a person

who is actively searching for employment is
unable to find work. Unemployment is often
used as a measure of the health of the
economy. The most frequent measure of
unemployment is the unemployment rate, which
is the number of unemployed people divided by
the number of people in the labor force.
Understanding Unemployment
Unemployment is a key economic indicator because it signals the ability (or

inability) of workers to readily obtain gainful work to contribute to the productive output of
the economy. More unemployed workers mean less total economic production will take
place than might have otherwise. And unlike idle capital, unemployed workers still need
to maintain at least subsistence consumption during their period of unemployment. This
means an economy with high unemployment has lower output without a proportional
decline in the need for basic consumption. High, persistent unemployment can signal
serious distress in an economy and even lead to social and political upheaval.
Conversely, a low unemployment rate means that the economy is more likely to
be producing near its full capacity, maximizing output, and driving wage growth, and
raising living standards over time. However, extremely low unemployment can also be a
cautionary sign of an overheating economy, inflationary pressures, and tight conditions
for businesses in need of additional workers.
While the definition of unemployment is clear, economists divide unemployment

into many different categories. The two broadest categories of unemployment are
voluntary and involuntary unemployment.

The coronavirus pandemic affecting the U.S. and the world in 2020, for example,
is causing massive levels of involuntary unemployment.
Types of Unemployment
Digging deeper, unemployment—both voluntary and involuntary—can be broken

down into four types.
1. Frictional unemployment
Frictional unemployment occurs as a result of people voluntarily changing

jobs within an economy. After a person leaves a company, it naturally takes time
to find another job. Similarly, graduates just entering the workforce add to
frictional unemployment. Usually, this type of unemployment is short-lived. It is
also the least problematic from an economic standpoint. Frictional
unemployment is a natural result of the fact that market processes take time and
information can be costly. Searching for a new job, recruiting new workers, and
matching the right workers to the right jobs all take time and effort, resulting in
frictional unemployment.
2. Cyclical unemployment
Cyclical unemployment is the variation in the number of unemployed

workers throughout economic upturns and downturns, such as those related to
changes in oil prices. Unemployment rises during recessionary periods and
declines during periods of economic growth. Preventing and alleviating cyclical
unemployment during recessions is one of the key reasons for the study of
economics and the purpose of the various policy tools that governments employ
on the downside of business cycles to stimulate the economy.
3. Structural unemployment
Structural unemployment comes about through a technological change

in the structure of the economy in which labor markets operate. Technological
changes—such as the replacement of horse-drawn transport by automobiles or
the automation of manufacturing—lead to unemployment among workers
displaced from jobs that are no longer needed. Retraining these workers can be
difficult, costly, and time-consuming, and displaced workers often end up either
unemployed for extended periods or leaving the labor force entirely.
4. Institutional unemployment
Institutional unemployment is unemployment that results from long-term

or permanent institutional factors and incentives in the economy. Government
policies, such as high minimum wage floors, generous social benefits programs,
and restrictive occupational licensing laws; labor market phenomena, such as
efficiency wages and discriminatory hiring; and labor market institutions, such as
high rates of unionization, can all contribute to institutional unemployment
Remember
● Unemployment occurs when workers who want to work are unable to find jobs,
which lowers economic output; however, they still require subsistence.
● High rates of unemployment are a signal of economic distress, but extremely
low rates of unemployment may signal an overheated economy.

● Unemployment can be classified as frictional, cyclical, structural, or
institutional.
● Unemployment data are collected and published by government agencies in a
variety of ways.
Inflation
Inflation is a quantitative measure

of the rate at which the average price level
of a basket of selected goods and services
in an economy increases over some period
of time. It is the rise in the general level of
prices where a unit of currency effectively
buys less than it did in prior periods. Often
expressed as a percentage, inflation thus
indicates a decrease in the purchasing
power of a nation’s currency.
Inflation can be contrasted with

deflation, which occurs when prices
instead decline.
Understanding Inflation
As prices rise, a single unit of currency loses value as it buys fewer goods and
services. This loss of purchasing power impacts the general cost of living for the common
public which ultimately leads to a deceleration in economic growth. The consensus view
among economists is that sustained inflation occurs when a nation's money supply
growth outpaces economic growth.
To combat this, a country's appropriate monetary authority, like the central bank,
then takes the necessary measures to keep inflation within permissible limits and keep
the economy running smoothly.
Inflation is measured in a variety of ways depending upon the types of goods and
services considered and is the opposite of deflation which indicates a general decline
occurring in prices for goods and services when the inflation rate falls below 0%.
Causes of Inflation
Rising prices are the root of inflation, though this can be attributed to different
factors. In the context of causes, inflation is classified into three types: Demand-Pull
inflation, Cost-Push inflation, and Built-In inflation.
● Demand-Pull Effect
Demand-pull inflation occurs when the overall demand for goods and
services in an economy increases more rapidly than the economy's production
capacity. It creates a demand-supply gap with higher demand and lower supply,
which results in higher prices. For instance, when the oil producing nations decide
to cut down on oil production, the supply diminishes. This lower supply for existing
demand leads to a rise in price and contributes to inflation.

Additionally, an increase in money supply in an economy also leads to
inflation. With more money available to individuals, positive consumer sentiment
leads to higher spending. This increases demand and leads to price rises. Money
supply can be increased by the monetary authorities either by printing and giving
away more money to the individuals, or by devaluing (reducing the value of) the
currency. In all such cases of demand increase, the money loses its purchasing
power.
● Cost-Push Effect
Cost-push inflation is a result of the increase in the prices of production

process inputs. Examples include an increase in labor costs to manufacture a
good or offer a service or increase in the cost of raw material. These
developments lead to higher cost for the finished product or service and
contribute to inflation.
● Built-In Inflation
Built-in inflation is the third cause that links to adaptive expectations. As

the price of goods and services rises, labor expects and demands more
costs/wages to maintain their cost of living. Their increased wages result in
higher cost of goods and services, and this wage-price spiral continues as one
factor induces the other and vice-versa.
Types of Inflation Indexes
Depending upon the selected set of goods and services used, multiple types of
inflation values are calculated and tracked as inflation indexes. Most commonly used
inflation indexes are the Consumer Price Index (CPI) and the Wholesale Price Index (WPI).
1. The Consumer Price Index
The CPI is a measure that examines the weighted average of prices of a

basket of goods and services which are of primary consumer needs. They include
transportation, food, and medical care. CPI is calculated by taking price changes
for each item in the predetermined basket of goods and averaging them based
on their relative weight in the whole basket. The prices in consideration are the
retail prices of each item, as available for purchase by the individual citizens.
Changes in the CPI are used to assess price changes associated with the cost of
living, making it one of the most frequently used statistics for identifying periods
of inflation or deflation. The U.S. Bureau of Labor Statistics reports the CPI on a
monthly basis and has calculated it as far back as 1913.1
2. The Wholesale Price Index
The WPI is another popular measure of inflation, which measures and

tracks the changes in the price of goods in the stages before the retail level. While
WPI items vary from one country to another, they mostly include items at the
producer or wholesale level. For example, it includes cotton prices for raw cotton,
cotton yarn, cotton gray goods, and cotton clothing. Although many countries
and organizations use WPI, many other countries, including the U.S., use a similar
variant called the producer price index (PPI).
3. The Producer Price Index
The producer price index is a family of indexes that measures the average
change in selling prices received by domestic producers of goods and services

over time. The PPI measures price changes from the perspective of the seller and
differs from the CPI which measures price changes from the perspective of the
buyer.
In all such variants, it is possible that the rise in the price of one component (say
oil) cancels out the price decline in another (say wheat) to a certain extent. Overall, each
index represents the average weighted cost of inflation for the given constituents which
may apply at the overall economy, sector or commodity level.
The Formula for Measuring Inflation
The above-mentioned variants of inflation indexes can be used to calculate the

value of inflation between two particular months (or years). While a lot of ready-made
inflation calculators are already available on various financial portals and websites, it is
always better to be aware of the underlying methodology to ensure accuracy with a
clear understanding of the calculations. Mathematically,
𝐹𝑖𝑛𝑎𝑙 𝐶𝑃𝐼 𝐼𝑛𝑑𝑒𝑥 𝑉𝑎𝑙𝑢𝑒

𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝐼𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛 = 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝐶𝑃𝐼 𝑉𝑎𝑙𝑢𝑒
Say you wish to know how the purchasing power of $10,000 changed between
Sept. 1975 and Sept. 2018. One can find inflation index data on various portals in a
tabular form. From that table, pick up the corresponding CPI figures for the given two
months. For Sept. 1975, it was 54.6 (Initial CPI value) and for Sept. 2018, it was 252.439
(Final CPI value).Plugging in the formula yields:
252.439
𝑅𝑖𝑠𝑒 𝑖𝑛 𝐼𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛 = 54.6
= 4. 6234 = 462. 34%
Since you wish to know how much $10,000 of Sept. 1975 would be in Sept. 2018,
multiply the rise in inflation factor with the amount to get the changed dollar value:
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑑𝑜𝑙𝑙𝑎𝑟 𝑣𝑎𝑙𝑢𝑒 = 4. 6234($10, 000) = $46, 234. 25

To get the final dollar value of the end period, add the original dollar amount
($10,000) to the change in dollar value:
𝐹𝑖𝑛𝑎𝑙 𝑑𝑜𝑙𝑙𝑎𝑟 𝑣𝑎𝑙𝑢𝑒 = $10, 000 + $46, 234. 25 = $56, 234. 25

This means that $10,000 in Sept. 1975 will be worth $56,234.25. Essentially, if you
purchased a basket of goods and services (as included in the CPI definition) worth
$10,000 in 1975, the same basket would cost you $56,234.25 in Sept. 2018.
Pros and Cons of Inflation
Inflation can be construed as either a good or a bad thing, depending upon which
side one takes, and how rapidly the change occurs.
For example, individuals with tangible assets, like property or stocked

commodities, may like to see some inflation as that raises the value of their assets which
they can sell at a higher rate. However, the buyers of such assets may not be happy with
inflation, as they will be required to shell out more money. Inflation-indexed bonds are
another popular option for investors to profit from inflation.
People holding cash may also not like inflation, as it erodes the value of their cash
holdings. Investors looking to protect their portfolios from inflation should consider

inflation-hedged asset classes, such as gold, commodities, and Real Estate Investment
Trusts (REITs).
Inflation promotes investments, both by businesses in projects and by individuals

in stocks of companies, as they expect better returns than inflation. An optimum level of
inflation is also required to promote spending to a certain extent instead of saving. If the
purchasing power of money remains the same over the years, there may be no
difference in saving and spending. It may limit spending, which may negatively impact
the overall economy as decreased money circulation will slow overall economic activities
in a country. A balanced approach is required to keep the inflation value in an optimum
and desirable range.
High, negative, or uncertain value of inflation negatively impacts an economy. It

leads to uncertainties in the market, prevents businesses from making big investment
decisions, may lead to unemployment, promotes hoarding as people flock to stock
necessary goods at the earliest amid fears of price rise and the practice leads to more
price increase, may result in imbalance in international trade as prices remain uncertain,
and also impacts foreign exchange rates.
Example of Inflation
Imagine your grandma stuffed a $10 bill in her old wallet in the year 1975 and
then forgot about it. The cost of gasoline during that year was around $0.50 per gallon,
which means she could have then bought 20 gallons of gasoline with that $10 note.
Twenty-five years later in the year 2000, the cost of gasoline was around $1.60 per gallon.
If she finds the forgotten note in the year 2000 and then goes on to purchase gasoline,
she would have bought only 6.25 gallons. Although the $10 note remained the same for
its value, it lost its purchasing power by around 69 percent over the 25-year period. This
simple example explains how money loses its value over time when prices rise. This
phenomenon is called inflation.
However, it is not necessary that prices always rise with the passage of time.
They may remain steady or even decline. For instance, the cost of wheat in the U.S. hit a
record high of $11.05 per bushel during March 2008. By August 2016, it came down to
$3.99 per bushel which may be attributed to a variety of factors like good weather
conditions leading to higher production of wheat. This means that a particular currency
note, say $100, would have gotten a lesser quantity of wheat in 2008 and a greater
quantity in 2016. In this case, the purchasing power of the same $100 note increased
over the period as the price of the commodity declined. This phenomenon is called
deflation and is the opposite of inflation.
While it is easy to measure the price changes of individual products over time,
human needs extend much beyond one or two such products. Individuals need a big and
diversified set of products as well as a host of services for living a comfortable life. They
include commodities like food grains, metal and fuel, utilities like electricity and
transportation, and services like healthcare, entertainment, and labor. Inflation aims to
measure the overall impact of price changes for a diversified set of products and
services, and allows for a single value representation of the increase in the price level of
goods and services in an economy over a period of time.
Remember
● Inflation is the rate at which the general level of prices for goods and services is
rising and, consequently, the purchasing power of currency is falling.
● Inflation is classified into three types: Demand-Pull inflation, Cost-Push inflation,
and Built-In inflation.

● Most commonly used inflation indexes are the Consumer Price Index (CPI) and
the Wholesale Price Index (WPI).
● Inflation can be viewed positively or negatively depending on the individual
viewpoint and rate of change.
● Those with tangible assets, like property or stocked commodities, may like to
see some inflation as that raises the value of their assets.
● People holding cash may not like inflation, as it erodes the value of their cash
holdings.
● Ideally, an optimum level of inflation is required to promote spending to a
certain extent instead of saving, thereby nurturing economic growth.
Human Development Index (HDI)
The HDI was created to emphasize that people and their capabilities should be
the ultimate criteria for assessing the development of a country, not economic growth
alone. The HDI can also be used to question national policy choices, asking how two
countries with the same level of GNI per capita can end up with different human
development outcomes. These contrasts can stimulate debate about government policy
priorities.
The Human Development Index (HDI) is a summary measure of average

achievement in key dimensions of human development: a long and healthy life, being
knowledgeable and have a decent standard of living. The HDI is the geometric mean of
normalized indices for each of the three dimensions.
The health dimension is assessed by life expectancy at birth, the education

dimension is measured by means of years of schooling for adults aged 25 years and
more and expected years of schooling for children of school entering age. The standard
of living dimension is measured by gross national income per capita. The HDI uses the
logarithm of income, to reflect the diminishing importance of income with increasing GNI.
The scores for the three HDI dimension indices are then aggregated into a composite
index using geometric mean. Refer to Technical notes for more details.
The HDI simplifies and captures only part of what human development entails. It
does not reflect on inequalities, poverty, human security, empowerment, etc. The HDRO
offers the other composite indices as a broader proxy on some of the key issues of
human development, inequality, gender disparity and poverty.
A fuller picture of a country's level of human development requires analysis of

other indicators and information presented in the statistical annex of the report.

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http://hdr.undp.org/en/content/human-development-index-hdi
Pinkasovitch, A. (2020, January 29). Introduction to Supply and Demand. Investopedia.

https://www.investopedia.com/articles/economics/11/intro-supply-demand.asp
Pettinger, T. (2019, February 27). Definition of Unemployment. Economics Help.

https://www.economicshelp.org/blog/2247/unemployment/definition-of-unemplo
yment/
Pettinger, T. (2019, July 8). Difference between GDP, GNP, and GNI. Economics Help.
https://www.economicshelp.org/blog/3491/economics/difference-between-gnp-
gdp-and-gni/
Reading: The Concept of Opportunity Cost. (n.d.). ER Services Microeconomics.

https://www.investopedia.com/terms/o/opportunitycost.asp
https://courses.lumenlearning.com/suny-microeconomics/chapter/reading-the-concept
-of-opportunity-cost/
Silver, C., et.al. (2019, June 25). Scarcity. Investopedia.

https://www.investopedia.com/terms/s/scarcity.asp
Silver, C., et.al. (2020, April 3). What is Unemployment?. Investopedia.

https://www.investopedia.com/terms/u/unemployment.asp#:~:text=Unemployme
nt%20occurs%20when%20a%20person,the%20health%20of%20the%20econo
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Three Economic Questions: What, How, For Whom?. (2020, December 8). Encyclopedia.
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d-maps/three-economic-questions-what-how-whom
Understanding Economics and Scarcity. (n.d.). Lumen Microeconomics.

https://courses.lumenlearning.com/wm-microeconomics/chapter/understanding
-economics-and-scarcity/

Utopian- Dystopian
ECONOMY
(Score standard system)

What is Market Economy?
Free Market Economy is an economic system where companies or businesses have their
own freedom, without the control of the government, to gain profit on their own ways. In other
words, they have their own individual freedom. And Also the economic decisions are based on
the basic principles of supply and demand. Profit is the motive for increasing work rather than
quotas.
Problem Statements:
What kind of balance system can we have for the people to be disciplined, motivated and eager
to be financially, socially, morally and economically satisfied?
Utopian- Dystopian System
This economy focuses on people being eager, motivated and behaving accordingly to
attain financial stability and make life more meaningful as it is. This is through Government
helping them find Jobs, teaching them what values matter the most, media guiding them to be a
better person through wisdom and philosophies. If you become a very good person you will
receive privileges that will give you much happiness and comfort. The goal was very clear: it's like
a perfect world where all people are satisfied. Utopia indeed.
But, the way it will be executed compromises, equality, consequences not following rules
results to suffering and privacy will just remain to be a dream. Your life will be watched as if
you’re a criminal. And the way you live will be according to very simple numbers known as credit
score. This will determine your identity and how valuable you are in society. Shame will be
evident. People will be like robots where willingness to do good is very rare because it will always
be for the reward and avoidance of punishment. Dystopia indeed.

How does it work?
Score standard
● All people will have a Score standard starting from 1000 at the age of 18 years
old.
● When people do good deeds such as:
○ A
○ B
○ C
○ D
○ E
○ F
There will be corresponding scores that will be added in their credits..
● When people do wrong things such as:

○ A
○ B
○ C
○ D
○ E
○ F
There will be corresponding points that will be deducted in their credit
score.
Privilege
● People will be ranked according to their scores
● 700-1000 and above are considered high scores
● 700-799 as a score, will give you a privilege to own lands, buy plane and
train tickets, enjoy hotel rooms and all other government services.
● 700-899 as a acore, added privilege are discounts to public markets
ranging from 5-10%
● 900-999 as a score, added privilege are 20% discounts on public
transport, allowed to acquire loans in banks, discounts in hospital bills will
also be given.
● 1000 and above as a score, added privilege is you will be considered as a
celebrity and a model for the whole country, receiving respect and special
rewards from the government.
● Banner of pride will be posted in each community when you have done
something good.
Consequences
● Below 700 as a score, you will not receive any of the privileges and
progress in life may seem to be so slow.
● Banner of shame will be posted in each community when you have done
something wrong.
● You will still be able to purchase things and avail health services as it is
necessary.

Services/business
● All businesses will be watched also.
● Products that are unnecessary and contribute bad effects on health and
the environment will be banned.
● Only products and services that are good and necessary will be allowed.
● There is a strict implementation of using sustainable resources, recycling
wastes, and giving benefits to workers and etc.
● Businesses will not be allowed to operate if they don’t have a sustainable
resources plan. They should follow it until the end.
● Businesses are not focused only in making profit but also giving satisfied
and worthy services/products to people. Having this violated, will cause a
decrease to their score as well as to the business reputation.
● Entrepreneurs having too much cash in banks, will have a decreased
score also as it is a sign that their cash is being stagnant and not being
used in more meaningful goals.
● Businesses are personally owned but services/products depend on the
approval of the government.
Work
● All must have a work, as it will affect your score.
● One of the country’s priorities is to assess every citizen on what work they
are suited to especially if the person is undecided. As long as the person is
willing to let the government decide, he/she will have a job.
● Extensive programs will be offered to really assess what job they are
suited to have.
What are the ways and aspects that must be changed and done in order to achieve
this?
How will it be achieved?
Surveillance Cameras
● People will be watched through this.
● All roads, communities, workplaces.
● Advanced technologies will get all the data of each person to make sure
everything is being tracked.
Information bringers
● There will be people who will be assigned to watch people out in each
community.
● Writing all the good things and bad things he/she caught.
Scores track Department

● All regions will have this and this is where all the reports will go.
● They will provide machines all over the place for people to track what their
scores are or what have they done wrong.
● They are the ones who will add point credit scores.
● Privacy of people is an unusual word to them because they know
everything you do. ‘

Cell phone Apps
● Credit score App
○ This will show your credit score and you can use this in the
privileges you want to avail.
○ Services will have their own sensors that will verify your score
through this app.
Education
● There will be extensive courses in the curriculum such as:
○ How to find your vocation and settle in a meaningful life
○ How to be confident, solve conflicts and know yourself
○ How to have satisfying relationships with people
○ How to always calm down and not lose temper over things.
● Another course is:
○ Money management
○ Basic laws
○ Driving lesson
Media and entertainment Companies
● Celebrities will not be known already as best singers, dancers and actors.
● Here Media and entertainment companies will have people who became
a really good model in certain good qualities. Such as:
○ Most forgiving person
○ Most courageous person
○ Most honest person
● This will help people to have a role model and only do good and
meaningful things for the country.
News outlets
● There will still be news about what is happening.
● Yet there will be philosophers who will talk about calmness and maturity.
● These lessons will guide them into information that really matters, and will
help them to flourish as a country and a good citizen
How will the discredited or people with lower scores recover?
How to recover?
Scores recovery Department
● This department will give you options on how to gain a score.

● It can be in a form of donation: the amount of donation corresponds to different
scores.
● Donations will be added to the taxes of people being intended to use in building
infrastructures and citizens' needs.
● Giving free services in the government for 1 year.

● All these will have corresponding scores.
The need to recover:

● Being discredited will cause you so much trouble.
● When your score remains low for 3 consecutive years, you will be in a blacklist
● Blacklisted people will experience worse lifetime consequences.
○ Blacklisted people will be required to join the Military Forces.
Recommendation:
This Utopian- Dystopian economy is better than the free market.
In the free market, people always treat people as an enemy, crimes are rampant.
Respect with each other is not a thing and being unsafe is normal. Freedom is being abused and
people who are not being productive just because they are in high positions are the ones being
rich. Also, people in the free- market are selfish and only think about themselves.
Here in our economy, everyone will be equally satisfied as long as they keep their SSS
high. Everyone will live life meaningfully because unnecessary things that boost greediness,
enviousness and laziness will be banned. They will be forced to do good deeds with each other
and help the country prosper and reach economic stability. They will do this because there are a
lot who are watching every step they do.
Related Literature:
Utopian and dystopian fiction
Utopia and dystopia are genres of speculative fiction that explore social and
political structures. Utopian fiction portrays a setting that agrees with the author's ethos,
having various attributes of another reality intended to appeal to readers. Dystopian
fiction (sometimes combined with but distinct from apocalyptic literature) offers the
opposite: the portrayal of a setting that completely disagrees with the author's ethos.[1]
Many[quantify] novels combine both, often as a metaphor for the different directions
humanity can take, depending on its choices, ending up with one of two possible futures.
Both utopias and dystopias are commonly found in science fiction and other
speculative-fiction genres, and arguably are by definition a type of speculative fiction.
The complicated truth about China's social credit system
China's social credit system expands that idea to all aspects of life, judging
citizens' behaviour and trustworthiness. Caught jaywalking, don't pay a court bill, play
your music too loud on the train — you could lose certain rights, such as booking a flight
or train ticket. "The idea itself is not a Chinese phenomenon," says Mareike Ohlberg,
research associate at the Mercator Institute for China Studies. Nor is the use, and abuse,
of aggregated data for analysis of behaviour. "But if [the Chinese system] does come
together as envisioned, it would still be something very unique," she says. "It's both unique
and part of a global trend."

Conclusion:
This economy focuses on people being eager, motivated and behaved accordingly to
attain financial stability and make life more meaningful as it is. This is through Government
helping them find Jobs, teaching them what values matter the most, media guiding them to to
be a better person through wisdom and philosophies. If you become a very good person you will
receive privileges that will give you much happiness and comfort. The goal was very clear: it's like
a perfect world where all people are satisfied. Utopia indeed.
Nowadays people lack willpower and discipline, no matter how much we want a utopian
economy we will not have it if we will not use force and control. In this economy the way it will be
executed compromises, equality, privacy will just remain to be a dream and consequences of
not following rules results in suffering.. Your life will be watched as if you will do crime anytime.
The way you live will be according to a very simple number known as Score standard. .This will
determine your identity and how valuable you are in society. Shame will be evident. People will
be like robots where willingness to do good is very rare because it will always be for the reward
and avoidance of punishment. Dystopia indeed.
Bibliography:
https://www.wired.co.uk/article/china-social-credit-system-explained
https://en.wikipedia.org/wiki/Utopian_and_dystopian_fiction#Dystopian_fiction

UNIVERSITY OF NUEVA CACERES
City of Naga
MODUS VIVENDI ECONOMY

Introduction
Modus Vivendi Economy is an economy that achieves settlement for a nation through
compromises made by the government. In this economy, the government as the central do all
the economic decisions. It focuses on addressing economic problems involving infrastructure
distribution, unemployment, and agricultural performances.
Problem Statement
Having unjust infrastructure distribution causes some problems like cities becoming crowded,
what government intervention can be done to address it?
How can we provide job opportunities as one of the main problems of the country by altering the
infrastructure distribution? What other means could attain the provision of job opportunities?
How possible can make the alteration in unjust infrastructure distribution resolve the problem,
anemic agriculture performance? What other possibilities could be done to have big growth in
the agriculture performance?
● Unjust Infrastructure distribution

● Lack of job opportunities
● Anemic agriculture performance
Recommendation
Governmental Infrastructures
The government decides where kinds of infrastructure are the preferred location. The
infrastructures are technically state-owned. There are types of economic infrastructure which
are the Health & Education, Energy (Electricity), Water, Transportation, Technology (networks),
Culture & Environment, Safety & Resilience, Public Attraction, Waste & Sewage, Financial, and
Standard & Rules. The government will equally allocate these infrastructures in different areas in
a country through the help of the department of areas. These infrastructures has different levels
based on the scope of specific infrastructure. For instance, if the health infrastructure needs to
cover or provides a service in a wide area, the government has the control to upgrade this
infrastructure to widen its service. Since the government solve the unjust infrastructure
distribution, the level of infrastractures are just composed of two which are the barangay and
the city or municipality level to avoid the possibility of having an overcrowded area.
Infrastructure Levels:
Barangay Level Infrastructures - covered one barangay.
City/Municipality Level Infrastractures - covered one municipality or city.
The infrastructures that are in process of allocation will affect the residential areas and
agricultural areas as well, however, residents that will be relocated has the will to decide where
they want to move to another location whether within the nation or outside the country. Their
relocation will be also covered by the government.
Gubernatorial Agencies
Through the alterations in the infrastructure distribution, gubernatorial agencies will be
implemented. Gubernatorial agencies are owned by the government and distributed exclusively

in each city. Citizens are only possible to get a white and blue collar job except for agricultural
jobs through this gubernatorial agencies. Once a citizen is working without the authorization of
the assigned GA in their location, the citizen will not be allowed to work anymore. GAs will help
citizens to get a job within the area that they are located. The infrastructures that were fairly
distributed that is located in the citizens' area will be automatically their workplaces. Lastly, 10%
of the salaries of the workers handled by the GAs will be lend to the gubernatorial agencies itself.
This percent will serve as their other tax for the economy.
Department of Areas
In this department, there are three classifications involved, the agricultural department,
infrastructural department and residential department. Each department has their own
responsibilities in their assigned areas. They are mainly the decision makers in terms of the
allocation of each area. Each department will critically decide the preferred locations of areas
through collaborative process, however, the government has still the last statement with all the
decisions made.
Agricultural Department Infrastructural Department Residential Department
This department of Infrastructural Department This department has the role

agriculture will be enhanced primarily decides the of allocating the residents as
and mainly responsible for preferred locations of the necessary in the economy.
reserving the agricultural infrastructures and industrial
areas.
lands even developing it in
other areas as necessary.
COMPROMISES
● Relocation of residents but covered by the government.
● Unemployed citizens will be forced to enter vocational training as it is free in the first try. If
failed, citizens will be forced to thrown in the agricultural jobs.
● Each land in the nation is owned by the government, citizens have no right to complain in
terms of relocation. Besides, it will be covered by the government.
● Upgrading of residential and infrastructure areas is possible to happen if the population
is starting to increase.
Related Literature
Indian Experience
Looking at the relationship between infrastructure and inequality observed in the 17

major Indian states (Bajar and Rajeev, 2016) have found that this relationship depends on the
type of infrastructure being considered and the level of development that the state/region falls
under. The impact of infrastructure variables on a consumption inequality measure indicates
that some components of infrastructure, mainly power and roads, tend to increase interpersonal
inequality at the regional level. This is especially true for lower income states. With increased
access to roads and electricity, the consumption of goods such as higher end cars, access to
material for building more expensive houses, expenses on social functions, and durable goods
such as television sets, refrigerators and the like, increases for those people who had higher
income (and by implication the demand for these goods) to begin with but did not have access
to markets. With a better roads network, productive opportunities may have been made
available to those who did not have access earlier, but the benefits from these may have
accrued more to the already rich in terms of better investment opportunities which led to ever

higher returns that translated into more consumption inequality. However, for higher income
states the impact of infrastructure was largely insignificant. It can therefore be inferred from the
study, that expansion of regional infrastructural facilities may enhance the average
consumption level among segments of the population but these impacts are not uniform across
the populace, and is accompanied by increased inequality within the states. Interestingly,
improvement in expenditure on social services helps bring convergence through reduced
interpersonal inequality. A study by Datt and Ravallion (2002), used 20 household surveys for
India’s 15 major states and concluded that a lack of basic education, along with other factors,
acts as an impediment on the ability of the poor to participate in productive opportunities for
economic growth. In Bajar and Rajeev (2016) per capita expenditure on social services by state
government is shown to have a negative impact on inequality. This is especially significant in the
low income states which highlights the importance of government's role as well as targeted
social programs which can have significant impact in reducing inequality by providing access to
education, health and other social services to all and not just a “lucky” few in society.
AFRICA
Africa’s growth performance has improved markedly during the last decade. Ten out of
48 countries experienced sustained economic growth in excess of 5 percent for the past three
years or longer. But that performance still falls short of the 7 percent growth needed to achieve
substantial poverty reduction and attain the Millennium Development Goals. Infrastructure has
played a significant role in Africa’s recent economic turnaround and will need to play an even
greater role if the continent’s development targets are to be reached. Across Africa,
infrastructure contributed 99 basis points to per capita economic growth over the period 1990 to
2005, compared with only 68 basis points for other structural policies (Calderon, 2008). That
contribution is almost entirely attributable to advances in the penetration of telecommunication
services. The deterioration in the quantity and quality of power infrastructure over the same
period has had a significant retarding effect on economic growth. If these deficiencies could be
cured, the effect would be remarkable. Simulations suggest that if all African countries were to
catch up with Mauritius in infrastructure, per capita economic growth in the region could
increase by 2.2 percentage points. Catching up with Korea’s level would bring about economic
growth per capita up to 2.6 percent per year. In a number of countries—including Cote d’Ivoire,
Democratic Republic of Congo (DRC), and Senegal—the impact would be even larger.
Conclusion
Modus Vivendi economy is to execute three institutions that will resolve three economic
problems aforementioned, the infrastructure distribution, unemployment, and agricultural
performances. In this economy, Governmental Infrastructures will solve the fairness of its
distribution by critically deciding the preferred locations with a collaborative process through the
department of areas. In mainly changing the distribution in infrastructure, the three economic
problems could somehow be addressed as it is experienced already by some countries like
Africa and India. To fully address the two remaining economic problems, Gubernatorial Agencies
is to execute for unemployment wherein it would handle workers and aspiring workers and give
jobs within their areas with the use of the equally distributed infrastructure and Department of
Areas to focus on not only agricultural areas but industrial and residential areas.
Upon the gathered related literature, it was not said that it fully eliminate such problems but it
made their countries achieve big growth as supposed to happen in this economy as well.

Bibliography:
https://www.un.org/development/desa/dspd/wp-content/uploads/sites/22/2018/07/1-2.pdf
http://siteresources.worldbank.org/EXTPRAL/Resources/africa_country_diagnostic.pdf
https://www.fef.org.ph/calixto-chikiamco/structural-weaknesses-in-our-economy-what-to-do/

Own Economic System:
EMPATHETIC ECONOMY
Introduction:
Empathetic Economy is an economic system which has a single political system

based on regional governments. The authority and control of one general state
government is shifted to regional governance. Being led on by a local minister and
regional executive departments every region, this economic system allow both the
private sectors and the government to be responsible for handling the resources and
distributing them to their consumers. However, the Government's influence in the
economy stems through taxation, price regulation, trading relation to other regions,
compensations for employees and other public services such as health and education.
Country-wide policies are implemented to improve not just the economic growth, but the
people’s welfare as well.
Problem Statement:
1. How can the people of a mixed economy ensure social inclusion and fair access
to goods and services?
2. What are the policies that should progress in order to improve GDP, Inflation Rate,
and Unemployment Rate?
3. How can a mixed economy attain high achievement in its social and economic
dimensions?
Recommendation:
1. How can the people of a mixed economy ensure social inclusion and fair access
to goods and services?
● Regional-based Government. Having this policy, the development and
welfare of the people will be nourished. Having one leader with the power
similar to a state president who will focus on one region means delivering
basic goods and services with optimum efficiency and effectiveness.
Individuals, including the indigents can now take part in society because a
central government is present in every region, a focal attention that they
stand in need of.
● Private Sector and Local Government Enterprises. These 2 enterprises will
take hold of the responsibility of handling and distributing resources to the
consumers. Private sectors are those businesses owned by private
individuals operating for profit. While on the other hand, LGEs are those
profitable entities owned by the government. Either one plays a vital role
especially for those rural regions far from urban and innovative life. This will
enable them to acquire goods and services despite their native origin.

2. What are the policies that should progress in order to improve GDP, Inflation Rate,
and Unemployment Rate?
● One Municipality, One LGE Policy. This policy enables every consumer to
satisfy their basic needs. Having one LGE means not just the opportunity
to purchase goods that you wish to purchase but also an opportunity to be
employed.
● Aid Zonal Workers Policy. This policy means that every producer company
(Private & LGE) should manifest support for workers who wish to work
outside the region. This fosters camaraderie between regions and aids in
terminating unemployment.
● Service License. Unlike other economic system which only provides license
to white-collar jobs, empathetic economic system aims to certify every job
present in the region. But, even without a license, people can work with
enterprises in order for them to enhance their skills.
● Pay Grade & Step Policy. This policy provides a framework for
compensation by defining the amount of pay available at each step in the
employment process both in private sectors and LGEs. This contributes to
the economy by providing employees fair and effective amount of
compensation allowing them to satisfy their need to purchase goods and
services.
3. How can a mixed economy attain high achievement in its social and economic
dimensions?
● Considering the welfare of people also means improving country’s GDP,
Inflation Rate, and Unemployment Rate. Therefore in an empathetic
economy which has a strengthened measure of economic growth, HDI is
expected to be as its best as well. But aside from this, welfare in terms of
education, health, and living will also be observed considering that every
region has its own executive departments. Regional Executive
Departments will work effectively on researching strategies to improve
measures of HDI, and satisfy the needs of the people.
Related Literature:
“The success of the mixed economy depends on the integrity of governmental and
social support for ethical principles of compassion, empathy, and respect for individual
and minority rights.” (Greg Young, June 2017)
“Improvement of local economy is considered as one of the pros of a regional-based

government. This system allows local governments have more power over their
resources. This also aims to use the majority of local funds for their own development
and without needing a go signal from a state government” (Margaux Torres, October
2019)

“ Many employers use an employee grade-level system that helps differentiate between
positions and standardize compensation across equivalent skill sets and responsibilities.
This type of system helps ensure fair and consistent treatment and compensation for all
employees.” (F. John Reh, August 2019)
Conclusion:
● In an Empathetic Economy, the authority and control of one general state

government is shifted to regional governance.
● The Government's influence stems through taxation, price regulation, trading
relation to other regions, compensations for employees and other public services
such as health and education.
● Individuals, including the indigents can now take part in society because a
central government is present in every region, a focal attention that they stand in
need of.
● Private Sectors and LGEs enable people from rural regions far from urban and
innovative life to acquire goods and services despite their native origin.
● Providing a lot of job opportunities and fair compensation to workers will
eventually lead to economic growth.
● Regional Executive Departments will work effectively on researching strategies to
improve measures of HDI, and satisfy the needs of the people.
Bibliography:
● How Does a Pay Grade Work For Employees? Susan Heathfield -

https://www.thebalancecareers.com/how-does-a-pay-grade-work-1918221
● Learn About the Fundamentals Of Position Grade Levels F. Reh -

https://www.thebalancecareers.com/employee-grade-levels-2276045
● Do You Have the Top Skills Employers Want? Alison Doyle -

https://www.thebalancecareers.com/top-skills-employers-want-2062481

Own Economic System
Introduction:
Countries have developed different economic systems to organize and distribute

available resources, services, and goods around the country, as well as to regulate factors of
production. Some countries have the same economic system, the only difference is the way
each country manage their resources to have a more developed economy.
With the current problems occurring in the Philippines, this economic system aims to
solve some of it. Problems are really inevitable. Philippine society have been facing economic
issues that somehow degrading it’s chance to keep pace on the countries with fast growing
economies. Some economic challenges that the Philippines confront are somehow being solved
but as we observed this society, solutions are not that visible.
To eradicate some of the problems in the Philippines, this Newfangled economic system
will focus more on the goods and services provided by the local people wherein the aim is to
lessen down the importation of foreign products and maximize the use of local products.
Regarding the taxes, it will be adjusted depending on its type and on the state of a person or
group. Tax collected will be distributed mainly to the Department of Health, Department of
Education and Department of Public Works and Highways to satisfy the needs of every family
with regards to the reliable, affordable, and quality social services.
Problem Statement:
Economic problems normally arise in a country, it’s inevitable. Meanwhile in the

Philippines, there are a lot of problems that occur and some of those are-firstly, the in-demand
foreign products in the Philippines overpowering the local products. Secondly, since the
government is giving tax unfairly, there is a constant increase in the tax burden. Lastly,
reliable,affordable and good quality services given by the government is not enough to handle
all the people in the Philippines. With these problems, the economy of the country gets weaker
as time goes by, which can lead to a poor country if neglected.
Recommendation:
Since the goods coming from other country is overpowering ours, this new economic
system will be of help to prevent other countries from importing fair amount of foreign goods in
the Philippines, because if it continues, it can lead to the loss of the local products’ value. At the
moment, some of the country’s resources is considered at risk knowing that traders from other
countries are so into importing nowadays and the local workers suffer as their own product is
being neglected because of its high price. Thus, people tend to buy other countries' products
because they are a lot cheaper than the products made in the Philippines. An example of this is
the rice planted by the local farmers. Since rice is the staple food in the Philippines and a lot of
farmers in the Philippines plant rice for a living, the government should prioritize first the local
products in order for it to have more sales in the market. On the other hand, trading with other
countries is also good to enable other Filipino working abroad to acquire products from their
own country, as well as for the foreign people to experience the goodness of the products made
in the Philippines and most especially, for the country to earn more profit.

With regards to how the consumers will acquire the products, direct distribution is the
most advisable to use. Direct distribution is when the company either directly sends the product
to end customers or when the channel length is very short. Consumer will gain a lot of control
over the product and its performance if it will be directed to them. Compared to the indirect
distribution where the channel length is very long. Direct distribution keeps you closer to the
customers, not like the indirect where it puts distance between you and the customers.
Although sizeable costs can come along with the chosen distribution, still it would benefit the
companies since the customers' feedback pertaining to its performance are positive.
Furthermore, in order to make the system better in terms of trading of goods, the process
is first, the government will analyze what products are in demand in the Philippines and in other
countries. They will inform the producers like farmers, businessmen, laborers and the like for
what are those things and let them do their job. After that, the producers will sell their products
to the government, with a price based on the amount and quality of the products. The
government will then be in charge of selling and distributing the products to the local markets
and trading some of in demand products in other countries. Moreover, Importation of foreign
products will happen only if there is a lack of supply of a particular product in the country, while
exportation of local products will happen if there is an excessive production of it. The selling price
will be adjusted wherein the tax is added. Individual income tax and other taxes such as
value-added and environmental taxes will be lessened, while corporate tax will be raised.
However, the rate for corporate tax still depends on the financial state of a company/business.
The contribution of the government in this system is only small, and one of their roles is to
manage the taxes. They are the ones who collects the taxes from the people distribute it to
different sectors. Government interfere in redistributing wealth by taxing the private sector, and
using funds from taxes to promote social objectives. They will set the date when to pay taxes in
order to organize the money and immediately be used to provide good social services. Tax will
be distributed mainly to the Department of Health to give free medications for poor people;
Department of Education to give free education from kindergarten until Grade 10 and
scholarships for senior high school and college students that can’t afford school fees and;
Department of Public Works and Highways to have a more improved system of managing
transportation such as implementing the “one private vehicle per family” policy, supplementing
more public transportation, ensuring that a person, before acquiring a vehicle, must have first a
parking lot, lastly securing that there is a fixed transport terminals in every place around the
Philippines, especially to urban areas.
In terms of the working conditions that the new Economic System have, employees
should be a graduate of senior high school or college in order for them to have a stable job in
which can help to lessen the unemployment rate in the country. Also, workers will only be given a
chance to have one job in exemption for other people who work and have a business. With this,
A lot of people will be given an opportunity to work and pay for their bills and other needs and in
the best case, lower the rate of poverty in the country. Workers, excluding the self-employed
workers like farmers, will get paid by their employers, which they have the right to decide how
much to give to their employees as their salary. However, the government has a condition in
which the salary of a person should not be less than the job’s minimum wage set by them. In
addition, the amount of tax that will be deducted from their salaries will vary on the person's job,
number of persons in the family or on the situation.
Related Literature:
According to an essay of a company registered in England and Wales, tax is an enforced fee
that is charged on individuals and organizations by government or its agency on a product,

income, or service. Taxation mainly refers to the actual act in which government or its taxing
authority (Such as Malawi Revenue Authority) actually collects tax from individuals and
organizations.
Even though a lot may complain about collecting higher tax, this collection will all
proceed in providing various good social services may it be in an economic development
project, provision of social services like national security, salaries for civil servants, etc. It will be
spread over as wide as possible reaching all the individuals in the community may it be in the
different sectors. It is a oll
According to the House Bill No. B9 Introduced by Representative Russell R. Lapong, An

act Institutionalizing one private vehicle per family avoiding traffic congestion, Be it enacted by
the Senate and House of Representatives of the Philippines in Congress assembled; SECTION 1.
Title. This act shall be known as “one private vehicle per family avoiding traffic congestion act”,
SECTION 2. Declaration of Policy. The provision of this act shall control, as far as they apply, the
registration and operation of vehicles and the licensing of owners, dealers, conductors, drivers,
and similar matters.
In connection with our recommended policy regarding the one private vehicle per family
in the suggested economic system, this house bill fully supports our recommendation as it
shows relevance on what we are trying to imply in the country. It doesn’t just solve one problem
but lots of road related problems such as traffic, public and private parkings, etc.
Aside from rice, which is an example of product coming from other countries that
Filipinos are more patronizing rather than the rice coming from our farmers, Filipinos tend to be
picky when it comes to the brand of what they purchase. In a blog by Catherine Armecin, based
on her opinions, “Filipinos prefer imported products over the local ones. Yes, it is more expensive,
but aside from the price they are convinced that when an item is produced overseas it is better
than anything they can buy locally.” Filipinos are so impressed with products coming from the
overseas without thinking that the local products are being inferiorize. She also said there that
the colonial mentality in the country has two dimensions: First, the lack of patriotism or active
awareness, appreciation and love of the Philippines; second, an actual preference over
imported things which we strongly agree. For not to lose the local products’ value, Philippines
should really lessen the importation of foreign products which is the goal of this economic
system that we’ve made. Also, for this to be well implemented Filipino consumers should also
cooperate. Patronizing local products means more work for our countrymen. As a result,
unemployment in our country wouldn’t be another problem.
Conclusion:
The newly proposed Economic System of the Philippines is better than the recent one as
it will make the country stronger and richer economically. Given some of the current problems in
the country such as: (1) Foreign products overpower the local products, (2) Tax burden has
increased, and (3) Lack of reliable, affordable, and quality social services, here are the ways to
make the country’s economy better: (1) Limit the importation of foreign products and maximize
the use of local products, (2) Lessen the Individual income tax and other taxes such as
value-added and environmental taxes, and raise and adjust corporate taxes depending on the
financial state of a company/business, (3) Tax collected will be distributed mainly to the
Department of Health, Department of Education, and Department of Public Works and
Highways to have a better social service.

Bibliography:
https://www.cleverism.com/4-types-of-distribution-channels-in-marketing/
http://www.rd.go.th/publish/fileadmin/user_upload/AEC/AseanTax-Philippines.pdf
https://www.scribd.com/document/421843857/Republic-of-the-Philippines
https://www.ukessays.com/essays/economics/explaining-the-primary-purpose-of-taxation-eco
nomics-essay.php
https://philippineone.com/711-2/

University of Nueva Caceres
City of Naga
A Definite Free Market Economy
in the Philippines

Abstract
This study was conducted to propose an economy that is
better than the ongoing economy in the Philippines.
Specifically, it seeks to solve the monopolistic economy that
has been taking place in the country.
Monopolies are defined as “A market structure characterized
by a single seller, selling a unique product in the market. In a
monopoly market, the seller faces no competition, as he is the
sole seller of goods with no close substitute.”
Looking at the landscape of the Philippines, it would be
safer to say that it is a mixed economy, with the State having a
tight grip on the market, and with some of its policies working
in favor of the ruling oligarchs. The State colluded with
favored players in the market by using regulations, taxes, and
subsidies to pick and choose winners. In doing so, there does
not exist, to a certain degree, a genuine competitive market.
The lack of competition and the ineffective economic system
is what’s hampering the economic growth of the country. Should
these two things be solved, the economic system of the
Philippines would be healthier.
The proposed solutions are a.) Changing the mixed economy
to a free market economy, b.) Government’s regulations on
preventing monopolies and c.) Prioritizing economic growth by
strengthening the industrial and agricultural sector.

Table of Contents
Description Page Number
Chapter 1
Introduction 5
Problem Statement 8
Recommendation 8
Chapter 2
Related Literature 27
Chapter 3
Conclusion 26
Chapter 4
Bibliography 27

Chapter 1
Introduction
Philippines’ economy suffered due to ruthless politics, a
feeble manufacturing industry, an entrenched oligarchy, being
geographically fragmented, two armed insurgent ideologies, etc.
The list is long , formidable and challenging to any sort of
economic growth. The two main problems in the status quo,
however, are a.) the ongoing monopolistic competition and the
crony capitalism, and b.) the economic system itself.
Monopoly and crony capitalism in the country.
Monopolies are defined as “A market structure characterized
by a single seller, selling a unique product in the market. In a
monopoly market, the seller faces no competition, as he is the
sole seller of goods with no close substitute.” Monopolies
aren’t so bad and they are encouraged with products and services
like energy, telecommunications and water. These are called
natural monopolies. A competition between these products will
only cause conflict and hamper economic growth. Now monopolies
become a problem in the market when consumers get the raw end of
the deal. Since there is a lack of competition, companies and
firms can raise prices however they want because there are no
actors to compete with their supply and prices. Society is
better off with a variety of choices which what should happen in
capitalism. However, because of the limited competition, private
owners, and even the government officials, can lobby their own
interests and prevent competition from rising up. This is called

crony capitalism. They can influence the government regulations
of prices and products that people call for transparency and
accountability.
Philippine’s economic system.
The Philippines’ is a mixed economy. Some argue that the
Philippines is becoming too “capitalist,” with so-called
neoliberal policies here and there. However, classical liberals
and libertarians said that the country is not even close to
being a “capitalist” nation, if by “capitalist” they mean free
market capitalist.
“Free markets” mean to say is that the degree of freedom of
the market from the government is great. As opposed to the
government altering the price system and its associated market
signals via fiscal policy, monetary policy, subsidies for
favored players in the market, arbitrary seizure of property,
and many others.
Looking at the landscape of the Philippines, it would be
safer to say that it is a mixed economy, with the State having a
tight grip on the market, and with some of its policies working
in favor of the ruling oligarchs. The State colluded with
favored players in the market by using regulations, taxes, and
subsidies to pick and choose winners. In doing so, there does
not exist, to a certain degree, a genuine competitive market.
One only needs to look at Internet Service Providers to see
that. One will be easily pressed to say that what we have is an

oligopoly, with competition being hampered because of either
lobbying efforts or by the high barriers to entry like Telstra.
The verdict
The lack of competition and the ineffective economic system
is what’s hampering the economic growth of the country. Should
these two things be solved, the economic system of the
Philippines would be healthier.
Problem Statement
This research sought to solve the problems that hamper the
economic growth of the country namely: monopolies and the
ineffective economic system. The goal is to remove the highly
monopolized system while improving our sectors for a higher GDP.
Specifically, this research sought to answer the following
questions:
1. What is the process of transforming the Philippines
from a mixed economy to a free market economy and make
it sustainable?
2. What are the government’s regulations to prevent
monopolies in the country while fulfilling its role in
the free market economy?
3. How can the country’s GDP increase in the new economic
system?
Recommendation

Markets enable mutually beneficial exchange between
producers and consumers, and systems that rely on markets to
solve the economic problem are called market economies.
According to Paul Samuelson, an American economist, one of the
basic solutions to an economic problem is the free market
economy.
Free Market Economy
In a free market economy, resources are allocated through
the interaction of free and self-directed market forces. Market
economies work by allowing the direct interaction of consumers
and producers who are pursuing their own self-interest. The
pursuit of self-interest is at the heart of free market
economics. The factor of production are as follows:
● What to produce: determined by consumer’s preferences
● How to produce: determined by producers seeking
profits
● For whom to produce: determined by the purchasing
power
This economic system promotes the production and sale of
goods and services, with little to no control or involvement
from any central government agency. It is primarily based on
supply and demand. Order and power in a free market are
decentralized, with individuals making all of their own
voluntary economic choices.
In a free market economy, firms and households act in their
own self-interest to determine how resources get allocated, what

goods get produced, and who buys the goods. A free market
economy is functions in an opposite manner as a command economy
works, where the central government gets to keep the profits and
choose how to use them. The competition creates overall
efficiency and low prices.
Figure 1: Flow of free market economy
Changing the country to a free market economy.
1. Improving the income tax system
The Philippine income tax system has not been amended in a
long time. The last time is 1977. The problem with not updating
the tax system is this phenomenon called “bracket creep,” a
movement into higher and higher tax brackets because of
inflation. Due to inflation, the purchasing power of the
Philippine peso weakens over time. Meaning to say, 1 peso in
1997 is “not equal” to 1 peso now in 2017. If Php 100 pesos
before could buy you 2 pieces of Chicken with rice, while now it
can only buy you 1 piece of Chicken with rice, then the “power”
of your money to buy that same good before has now diminished.
You cannot use the same nominal amount to buy the same good from
before.

Even for private businesses it is also painful when
compared to our Southeast Asian neighbors — We have the highest
rate. Here in the Philippines, the corporate tax rate is set at
30%. This means that after deducting operation costs and
depreciation from the revenue, which would equate to the
company’s profit, 30% of that will go to the State. Instead of
allowing a company to use that money to invest in itself, or to
offer bonuses to its employees when a certain profit level is
hit, 30% gets stolen. Make no mistake about it, incentives
change with and without a tax.
2. Remove Anti-Competitive Market Conditions
In a free market system, not only are consumers free to
abstain from business X to buy from business Y, but laborers
eventually end up being free as well. Free, in a sense, that if
a person is not happy with his or her employer, he or she can
always quit and go to another employer willing to take him or
her in. A competition among firms for consumers to buy their
product is also a competition for the most skilled and capable
laborers in the labor market.
There is an upward pressure in labor prices in the labor
market assuming we are in a free market system. If a laborer
feels that the pay is too low given the employer’s requirements
and current working conditions, then said laborer can always
move to another company, assuming there is one. The firm with
the best package deal for the laborer usually attracts the best
laborers — with “best” being subjective.

In the Philippines, however, it is hard to find genuine
competition in the market because of high-barriers to entry and
high costs associated with hiring labor. The Heritage Foundation
defines labor freedom as “a quantitative measure that considers
various aspects of the legal and regulatory framework of a
country’s labor market, including regulations concerning minimum
wages, laws inhibiting layoffs, severance requirements, and
measurable regulatory restraints on hiring and hours worked.”
This means that there are more costs associated with hiring
laborers.
The lack of business freedom is also a problem. The
Heritage Foundation’s definition of business freedom is how easy
it is to start a business, obtain a license, and close a
business. And each of them include the number of procedures
involved, the time it takes for said procedures, the cost
associated with them, some additional minimum requirements
needed, et al. The harder it is to start a business, the harder
it is for consumers and laborers to have more choices in their
hands.
3. Strengthen Private Property Rights
A free market system would strongly be recognized by its
strong property rights framework. Without it, the free market
would not be able to function properly as arbitrary seizures of
property can easily be done by both the State and individuals or
groups of individuals. A private property framework would ensure
clear definitions as to who owns what, and what happens when one
violates another individual’s right to property.

For example, if you knew you were going to be robbed
tomorrow, and there was nothing you could do about it, how would
you feel? What do you think are the actions that you will take?
How will you live your life differently if you knew this could
happen every day and it was pervasive? Having a strong private
property framework can ameliorate this feeling.
It could address our problems with land reform. It is a
framework to determine who owns what with a strong and strict
enforcement of such laws, and disarms the government from
arbitrary seizures of property and from enacting eminent domain.
Stolen lands can be seized justly to give it back to those who
rightly own them. Private individuals cannot just arbitrarily
start construction in a land owned by someone else.
Environmental destruction cannot just be done if someone either
clearly owns the area, or if someone else’s property will be
damaged in the process.
Preventing Monopolies
Since private owners control the allocation and
distribution of resources, the government’s role in the economy
is limited. Some of the functions are preventing monopolies,
allowing fair and equal access to markets for all, protecting
the nation and its markets through military means. Because the
government is no longer taking part in the economic growth, they
can focus their own resources on security and law enforcement.
The government can regulate monopolies through:

● Merger policy. The government has a policy to
investigate mergers which could create monopoly power.
If a new merger creates a firm with more than 25% of
market share, it is automatically referred to the
Competition and Markets Authority (CMA). The CMA can
decide to allow or block the merger depending on
whether it believes it is in the public interest.
● Breaking up a monopoly. In certain cases, the
government may decide a monopoly needs to be broken up
because the firm has become too powerful. This rarely
occurs.
● Investigation of abuse of monopoly power. This may
include unfair trading practices such as:
○ Collusion (firms agree to set higher prices)
○ Collusive tendering. This occurs when firms enter
into agreements to fix the bid at which they will
tender for projects. Firms will take it in turns
to get the contract and enable a much higher
price for the contract.
○ Predatory pricing (setting low prices to try and
force rival firms out of business)
○ Vertical restraints – prevent retailers stock
rival products
○ Selective distribution For example, in the UK car
industry firms entered into selective and
exclusive distribution networks to keep prices
high. The competition commission report of 2000

found UK cars were at least 10% higher than
European cars
The government can also have supply-side policies that can
benefit the free market such as:
● Investment in infrastructure, e.g. new roads, railways
lines and broadband internet – increases productive
capacity and reduces congestion.
● Privatisation and deregulation – increase efficiency
and productivity.
Prioritizing Economic Growth
The new system of the Philippines is patterned with the
economic system of Singapore. Singapore has a highly developed
and successful free-market economy. It enjoys an open and
corruption-free environment, stable prices, and a per capita GDP
higher than that of most developed countries. The reason why
they have high economic growth is because their sectors are
thriving specifically industrial and services sector.
Since the Philippines will have a free market system, we
will have an efficient use of our labor resources. What the
government will prioritize now are the agricultural and
industrial sectors. Once we improve these sectors, we will have
a higher GDP.
Industry which is, no doubt, important, will not progress
unless agriculture is sound, stable, and progressive. Because of
this interdependence these sectors are complementary, and not
competitive. In the development of an underdeveloped economy,

there is as such no conflict between agricultural and industrial
development.
The free market economy influences numerous factors for the
good which are mostly beyond the government’s influence such as:
● The rate of technological innovation tends to come
from the private sector and it is hard for the
government to influence this.
● Industrial relations and workers' motivation are
driven by the private sector. The government’s
influence on worker morale and motivation is limited
at best.
● Entrepreneurs who set up a business are largely
self-motivated. Though government regulations and tax
rates can influence the willingness of an
entrepreneur’s willingness to take risks.
● Level of savings can influence growth (e.g. see
Harrod-Domar model) Higher savings enable higher
investment, but it can be hard for the government to
influence savings.

Chapter 2
Related Literature
Philippine Monopolies
The Philippine economy is hampered by monopolies,
duopolies, and oligopolies in key markets, the World Bank said
in a study presented on Monday.
The multilateral lender said the Philippine economy is
"more concentrated" than other economies in the region and that
fostering fair market competition in key sectors can boost
economic growth.
Economical Development of Philippines
The GDP per capita for the Philippines is $4,700. The
Philippines dependency ratio is alright. The number of older
Filipino people is less than the working class. There is also a
growing baby population. The unemployment rate of the
Philippines is 16.3%. The population below the poverty line is
about 26.5%.
The Human Development Index for the Philippines includes:
● .773 - HDI Health
● .679 - HDI Education
● .535 - HDI Income
Exports:
● Electronic devices, machinery, and other products
Imports:
● Fuels, machinery equipment, iron, steel

Major trade partners:
● The United States, Japan, and China
Free Market Economy
Among all of the states throughout the globe, there is no
entirely free market economy—all economies have some constraints
upon them in the form of government regulations, to a greater or
lesser degree. An absolutely free market does not include
standard measures like import and export tariffs, prohibitions
on certain products, sales taxes, and more. Markets tend to be
the most free in countries that emphasize the values of
capitalism and private property, which naturally promote
laissez-faire economics (a term often used synonymously with the
idea of the free market).
The central elements that make up a market economy
includes:
● There is voluntary production and consumption of
goods, with overall freedom for every individual to
make their own choices
● Overwhelmingly, there is private ownership and control
of resources and property, including the means of
production as well as the labor supply
● Self-interest is the primary motivator for all
economic decisions
● The government’s role in the economy is limited (e.g.
to preventing monopolies, allowing fair and equal

access to markets for all, protecting the nation and
its markets through military means)
● Competition creates overall efficiency and low prices
Agricultural and Industrial Sector
Interdependence between agriculture and industry becomes
strengthened through various linkages generated in these two
sectors. The three most important linkages are : production
linkages, demand linkages, and saving-investment linkages.
Production linkages arise from the interdependence between
agriculture and industry through the use of productive inputs.
Agriculture draws some raw materials, like chemical fertilisers,
pesticides, electric power, agricultural machinery and
implements, etc. from the industry. Agriculture is also
dependent on industry for the supply of materials for building
up social and economic overheads in the agricultural sector.
Further, many raw materials and inputs used in industrial
production, e.g., cotton, jute, sugarcane, tobacco, etc. is
supplied by the agricultural sector. Such production linkages
demonstrate that a 10 p.c increase in agricultural output
results in an increase in indu5.trial output by as much as 5
p.c.
Demand linkages between the two sectors suggest that demand
for one sector’s product pulls demand for another sector in an
upward direction. Urbanisation and industrialisation are
synonymous. Under the impact of Green Revolution, agriculturists
now experience rising rural incomes which has brought a change

in the pattern of tastes and preferences of rural people.
Increased rural income has resulted in an entry of industrial
consumer goods, like TV, refrigerator, modem, car, footwear,
refined sugar, edible oils, motorbikes, etc.
In the urban areas, we see some sort of demand saturation
of some of these products of consumer goods industries. The
impact of rising urban incomes and industrialisation has a
favourable impact on the demand for food, vegetables, fruits,
various raw materials produced in the agricultural sector. It
has been an article of faith in India that the demand stimulus
for industrial expansion would likely come mainly from
agriculture with low social and economic costs.
Finally, there is a savings-investment linkage between
these two sectors. A self-reliant agriculture capable of
exporting surplus food-grains helps in saving scarce foreign
exchange resources of the country. Now these resources can be
better utilised for importing capital goods and crucial raw
materials needed for industrialisation effort.
As agricultural production and productivity rises above the
subsistence requirement, the volume of marketable surplus
increases which provides sinews of industrialisation,
particularly in the rural sector. Again, the rising volume of
savings and capital formation consequent upon rising farm
incomes give strong stimulus to demand for manufactured goods.
Investment in one sector pulls investment of other sectors up
thereby accelerating overall growth rate of the economy.


Chapter 3
Conclusion
When we solve the lack of competition and the
ineffectiveness of our current economic system, there will be
massive economic growth that will be seen in the GDP. Monopolies
and crony capitalism can hamper the economic development. Some
might argue that free market economies will just recreate the
problems that the country is facing in the mixed economic
system. Free market systems do not encourage monopolies and
doesn’t mean profit comes at the expense of others.
Free markets are all about greater innovation due to
competition, greater economic growth and greater economic
freedoms.
Successfully transitioning to this economic system, and
sustaining it, will give the Philippines the chance to be one of
the greatest economies in Asia.

Chapter 4
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hy-singapore/singapore-economy---a-brief-introduction


Output: Design Your Own Economic System
1. Our economy is a mixed economy where the products that get produced in our
economy are the needs of people like water, food, electricity, and telecommunications.
This economy will produce industrial products that will address the daily necessities of
people such as oil, sugar, and charcoal.
The products are being produced by mostly the producers which is the people of
the private owner who owns the business. To produce products, the private owner will
hire workers that will be a big part of the production process. However, the government
is involved in regulating natural monopolies.
The consumers are the ones who will receive the product. They will consume the
product that addresses their needs.
2. The workers will produce the products and the business owner will get the goods.
While the government will collect taxes from the products that gets produce and bought.
The private individuals which owns a business will sell the goods to the people. The
people will be receiving their salary and they will use the money to buy products.
Products are being controlled by the business owner, not by the government. The
business owner will get their profit and the profit will serve as the salary of the people.
The money that the owners get will be used to produce more products and to pay their
taxes so that the government will also receive money.
3. The government will create a central plan that will guide the economy of the
country. The government will identify what products need to be produced to fulfill the
needs of the consumers. After identifying the scarce commodities, the government will
inform the private individuals who produces goods so that they will know what are the
products that are needed to produce first. Identifying what products are in demand will
help the economy to not produce more supply of products and avoid the increase of
price. Since all of the resources are owned by the country, the government will be the
one to allocate the resources to the private individuals who needed a resources to
produce products.
4. The private business owners will be paying the workers. The salaries that the
workers will receive come from the profit of private-owned businesses since the workers
are working on the private-owned businesses. While the government workers will get
paid by the government. Salaries of the government workers will come from the
state-owned businesses.
The skill of the worker will depend on the job the worker wants. If they want to
join state-owned businesses, we highly recommend that the workers will have good
communication skills and time management skills. However, if they don’t have that skill,
they will depend on the skill that they have to have a specific job for their skills. But if
they want to work in state-owned businesses but they don’t have the skill that we
recommend, the government will help the unemployed people to have or undergo the
training program for them to learn skills and knowledge in working.
The type of environment that the workers be in will depend on the job that the
workers have. They will be the one to choose if they want to be employed in

state-owned businesses or in the private-owned businesses. In the state-owned
businesses, it is where the government will manage the business. And private-owned
businesses has a big part of the economy where the private owners can have a
business as much as they want.
5. The private owners will put up a store in different places. We will also give an
affordable price but good quality of product to the consumers.
6. The policies that the government creates is requiring people that doesn't have a
job to undergo training program where they can learn different skills. Taxation and
regulation of goods with negative externalities, with this policy the government can help
the economy and the people at the same time (ex. Increasing taxes on cigarettes).
In our economic system the majority of the businesses are owned by the private
entrepreneurs or owners and the government will not have a hundred percent control in
the economy. However, the government still have control when it comes to allocating
resources of scarce commodities and collecting taxes.
7. The GDP of the state will be great since we have a Training and Skill
Development Center that help people to enhance their skills. Because of these,
state-owned and privately-owned businesses have ski
lled workers. The Inflation rate will be low. Since we have a lot of skilled workers the
economy can produce more supply of products. The unemployment rate of the country
will be low because the state-owned and private-owned businesses offer more job
opportunities to individuals.
8. The HDI will be great because the people will have a lot of opportunities to work
on. Especially to those people that are unemployed they will be given a chance to be
employed since they undergo the process of the training and skill development center of
the government. The country will grow because the product will only surrounds to the
people of the country and they were the ones who will patronize the goods of the
product. The tax will be paid to the government by the private owners and the
consumers, it will build a lot of improvements to the country.


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UNIVERSITY OF NUEVA CACERES

J. Hernandez Ave., Naga City

JOMAR CEZAR ABORQUEZ VINCENT ESTEVE GRAZA

No part of this course module/study guide may be reproduced or transmitted in any

Published in the Philippines by the University of Nueva Caceres

Printed in the Philippines

SECTION 1 INTRODUCTION TO ECONOMICS 1

SECTION 2 ECONOMIC SYSTEMS OF THE WORLD 8

SECTION 3 THE WORLD AND ECONOMICS 23

SECTION 4 YOUR OWN ECONOMIC SYSTEM 26

Figure 1 The Circular Flow Model 12

SECTION 1 INTRODUCTION TO ECONOMICS

SECTION 2 ECONOMIC SYSTEMS OF THE WORLD

SECTION 3 THE WORLD AND ECONOMICS

SECTION 4 YOUR OWN ECONOMIC SYSTEM

THIRD QUARTERLY ASSESSMENT Week 11

(I) INTRODUCTORY (E) ENABLING (D) DEMONSTRATIVE

*Additional: Notebook, Pen, Folder(long), Brown Envelope(long), Bond Papers

At the end of the section, you should be able to:

APPLIED ECONOMICS Module | 1

APPLIED ECONOMICS Module | 2

APPLIED ECONOMICS Module | 3

Mr. Clifford: And believe it or not, we just

APPLIED ECONOMICS Module | 4

APPLIED ECONOMICS Module | 5

APPLIED ECONOMICS Module | 6

APPLIED ECONOMICS Module | 7

Describe the different steps in performing basic research.

Milestone: World Economic Measures Week 3-4

Wiki: Basic Research Week 5-6

APPLIED ECONOMICS Module | 8

a. What are the different economic systems?

3. Write your answers on a long size bond paper.

APPLIED ECONOMICS Module | 9

APPLIED ECONOMICS Module | 10

APPLIED ECONOMICS Module | 11

Figure 1. The Circular Flow Model

APPLIED ECONOMICS Module | 12

APPLIED ECONOMICS Module | 13

APPLIED ECONOMICS Module | 14

INFORMATION LITERACY RUBRIC

Level 1 Level 2 Level 3 Level 4

I cannot I can state I am able to I am able to

APPLIED ECONOMICS Module | 15

I cannot I can explain I can explain I can explain

I cannot I am able to I am able to I am able to

APPLIED ECONOMICS Module | 16

4. Write your answers on long size bond papers.

APPLIED ECONOMICS Module | 17

Research is a process that enables an individual to systematically find answers to

Why do I need to learn Basic Research?

APPLIED ECONOMICS Module | 18

Research doesn’t always have to be formal. It doesn't always have to be performed

Image source: Ayala Education - Reference Guide

How do I perform Basic Research?

STEP 1: Gain Context

What is a ketogenic diet?

APPLIED ECONOMICS Module | 19

STEP 2: Identify the Goal/Purpose

STEP 3: List what you want to know

What you already know.

STEP 4: Pick and Evaluate your sources

APPLIED ECONOMICS Module | 20

STEP 5: Do your research