Spotting economics in

Action
An Introduction to the themselves) (overextraction); where
Economic-Naturalist Style of the common resource is non-
Thinking (and Writing) excludable but rivalrous

Cost Benefit Principle

Scarcity
- Rational individuals only take actions
- Limited availability (supply) in which the Marginal Benefit is
- Limitless wants (demand) greater than or equal to the Marginal
- Demand-side or supply-side induced Costs
- Policy interventions can help regulate - Marginal Benefit – additional
or alleviate scarcity (govt or marketing benefits to be gained
- Marginal Costs – additional costs to
dept will step in)
be incurred
- Will occur when there is a mismatch in - More than the money, there are more
supply and demand factors (peace of mind, preference)
- Price correction will happen to
eliminate scarcity (taasan ang presyo) Utility
(taxation)
- Allocation issue – concerned with the - Degree of satisfaction or pleasure
derived from an economic action
distribution of limited resources
- Loose concept and has been subject
to much criticism
Tragedy of the Commons - Nonetheless, the abstract concept of
utility has been used to explain
Excludable Non- observable action such as consumer
– Access may Excludable behavior
be regulated – Access may Not-All-Cost-Matter-
or prevented be difficult or Equally
impossible to
regulate

Rivalrous – Private Common - Sunk Cost – you will have to pay

Consumption property – resources – nonetheless (membership fees,
by one bars Housing, natural installation, processing fees,
consumption consumable resources machinery, exploration cost)
by another goods (energy)
(can’t be (forests) Economies of Sale
shared)
Non- Club Goods Public - Cost go down as volume of goods are
Rivalrous – – subscription goods – being reproduced (production level)
Can be (cable TV, streetlighting,
consumed Netflix) infrastructure Economies of Scope
repeatedly by
different - Costs go down as product selection
parties goes up (variety)
- They profit more by offering more
- Every agent has a incentive to partake products
in a common resource (to satisfy

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 Careless Crash Course in
Macroeconomics &
Monetary Theory
Economic Concept:
Business Cycles
- The economy as a Roller-Coaster (up
& down)
- Things tend to go wrong now & then –
P. Krungman
- Marked by the alternating or cyclical
phases of expansions (up) or
contractions (down) in the economy
- Fluctuation of key aspects – prices,
production (output), employment in
one direction or another (they tend to
move together)
- Recurring but not periodic (no one
should be complacent about the state
of the economy) (no can predict)
- What to do when the economy is
up/down?
Economic Concept: Policy
Response to a Recession
- “Why do you think in times of
recession, the government should
favor stimulus over austerity” (S.
Colbert)
- The main goal under a Recession is
RECOVERY
- Y=C+I+G
 Output or Production (Y) is the
sum of consumption, investment,
and government spending
 Output or Production (Y) is the
sum of SPENDING by the private
and public sector. Their spending
creates a demand for production
or output which in turn provides
incentive to produce
 Economic stimulus increases
private or public spending, which
increases demand and production.
As production increases, income
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increases, which again increases
spending
Stimulus
- “Stimulate” or kickstart economic
activity by urging the private sector to
increase demand
- In other words: get people spending
again
- Can be enacted through direct
transfers (gov’t issues check, ayuda
system, cash aid) or tax decrease
(indirect)
- Stimulus is favored (reawaken the
economy, demand
Austerity
- Aims to reduce public debt to preserve
a country’s financial position
- In other words, the government needs
to make more money, or spend less
(tightening the belt)
- Can be enacted through tax increase,
or budget cuts
- But where does the government get
the money for stimulus?
Economic Concept: [Public]
Debt
- “If you’re a family and you spend
more money than you have that’s bad.
How can a government spend more
money than it has?”
(S. Colbert)
- Accumulated deficits and
borrowings of a government
- Deficit is the annual difference
between a government’s revenue (tax)
and their spending
- Debt accumulates interest
- Philippine Debt is mostly domestic
 - Debt is dangerous when a country is
endangered to not pay it back
(financial crisis)
- Is debt inherently bad? It depends
(no). (who do you owe the money to?
How are you doing as you pay it back?
When is it due? Can you pay for it?
What are you using the debt for?)
Economic Concept: Money –
definition & background
- Medium of exchange
- Unit of Account (way to gauge the
value of something)
- Store of Value
- Social Construct? – yes, it’s built under
a collective trust
Money
- Medium of exchange used for paying
for transactions
- An intangible concept of value; fulfills
a role as a medium of exchange, a
unit of account, and a store of value
Income
- Earned as compensation for work
rendered, as well as gained from
interest or dividends (salaries,
compensation)
Wealth
- Accumulation of worth; the value of
one’s financial assets less their
liabilities (net worth, how much
money & assets you have in stock)
Currency
- The physical manifestation of money
(coins & bills, depending on the
society, place)
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Economic Concept: The
Evolution of Money
Barter
- Exchange of goods and/or services for
other goods and/or services
- Relies on the double-coincidence of
wants
Money
- Addressed several of the issues with
the barter system
- Accelerated commerce
- Began with objects with intrinsic
value (gold, cigarette, real estate)
- Evolved into paper money, or “legal
- tender”
- Presently, fiat money (paper money)
is valuable due to
- its contractual properties
Economic Concept: Print
away our problems!
- Printing more money is bad because it
cause inflation. Why?
- Inflation – sustained increase in the
price of goods and services
- Printing more money [without a
commensurate or proportional
increase in production] is bad because
it causes inflation (market adjusts as
well) (hyperinflation)
- Quantity Theory of Money (MV = PQ)
- Real variable = quantity
Economic Concept:
Inflation Good? Print
much more of it?
- Inflation in the form of Stimulus
- An increase in the money supply
(printing more money) lowers interest
rates
 - Interest Rates are an incentive to
save money
- When interest rates go down, there is
an incentive to spend money
- Increasing money supply encourages
consumers to spend – thus it’s a form
of stimulus by The Central Bank

Debt Monetization and Hyperinflation

- Debt monetization is literally “printing

away a country’s debt” (illegal in a lot
of countries)
- The Government forcibly sells bonds
to The Central Bank, which the latter
pays for by printing money
- Possibly abuses power of the
government, and excessive use of this
leads to hyperinflation