Monetary Policy - this when the government controls the economy through the BSP

(Banco Sentral ng Pilipinas) when the government determines the economy's quantity of
money.
Fiscal Policy - is one policy that the government uses to affect the economy through its
tax and expenditure decisions.
Inflationary Gap - measures the difference between the current level of real gross
domestic product (GDP) and the GDP that would exist if an economy was operating at
full employment.
Inflation - a measure of the rate of rising prices of goods and services in an economy.
Circular Flow of Macroeconomics – summarizes the transaction between the different
economic agents.
Household – owns the factors of production, consume goods and services
Firms – hire factors of production to produce goods and services
Banks
Government
Rest of the World
3 types of Leakages
Savings (Banks)
Tax (Government)
Import Spending (ROW)
3 types of Injections
Investment (Banks)
Government expenditures (Government)
Export Earnings (ROW)
Formula of Industrial Origin
The sum of Agri, Fisheries, Forestry, Industrial Sector, and Service Sector
GDP growth rate formula
GDP YR2 less GDP YR1 over GDP YR1 times 100
Globalization - is the term used to describe the interdependence of the economies
means speeding up movements and transactions (of people, products,
and services, money, technology, and cultural practices) across the
globe.
Internet Connectivity - implies a bilateral relationship (it takes two to tango) and improved
connectivity is a condition that escapes isolation and makes interdependence
“contestable” when barriers to interacting are lowered and economic agents contribute to
fostering a (potential) competition of interactions.
Making it easier for governments to filter the information their people
access from outside sources.
Disadvantages of Globalization – create more competition between countries to
countries.
Supply Curve is upward sloping because - As the price increases, suppliers can earn
higher profit levels or justify higher marginal costs to produce more.
Equilibrium – intersection between supply and demand.
Father of Modern Economics – John Maynard Keynes
John Maynard Keynes – General Theory of Employment, Interest, and Money.
Absolute Advantage - The ability of a country, individual, company or region to produce
a good or service at a lower cost per unit than the cost a which any other entity produces
that good or service.
Comparative Advantage - This ability of a firm or individual to produce goods and/or
services at a lower opportunity cost than other firms or individuals.
Protective Tariff - The government's tariff may be imposed to protect the home industries
from the cut-throat competition from the foreign-produced goods.
Revenue Tariff - The tariff, which is imposed primarily for generating more revenues for
the government.
Sliding Scale Tariff - The import duties that vary with the prices of the commodities are
termed sliding scale duties.
Ad Valorem Tariff - that means 'on the value.' When the duty is levied as a fixed
percentage of the traded commodity's value.
Retaliatory Tariff - If a foreign country has imposed tariffs upon the exports from the home
country and the latter imposes tariffs against the products of the former, the tariffs resorted
to by the home country will be regarded as the retaliatory tariffs.
How many years is the gap of meeting of WTO – 2 years
Objectives of WTO –
Its relation in the field of Trade and economic endeavor
To allow for the optimal use of the world's resources
To make positive efforts designed to ensure that developing countries
Entering into reciprocal and mutually advantageous arrangements
 To develop an integrated, more viable, and durable multilateral trading
system

Uruguay Round, the GATT extended to three new areas – IP rights, services, and
investment.
Significant agreement happened during the Tokyo Round – reduces restrictions and
barriers towards tariffs.
Fixed Exchange rate - rate that is established at a specific level and maintained through
government actions. The government must be willing to buy and sell currency in the
foreign exchange market in whatever amount are necessary to keep the exchange rate
fixed.
Managed Flexible Exchange Rate - termed a managed float, is an exchange rate that is
generally allowed to adjust due to the interaction of supply and demand in the foreign
exchange market, but with occasional intervention by government.
Flexible Exchange Rate - termed floating exchange rate, is an exchange rate determined
through the unrestricted interaction of supply and demand in the foreign exchange
market. Means that a country is NOT trying to manipulate currency prices to achieve
some change in exports or imports.
Highest Body of WTO – Ministerial Conference
Proponent of Comparative Advantage – David Ricardo
Ricardian Model - international trade is developed on the theory of comparative
advantage. According to this model, countries involved in trade specialize in producing
the products in which they have a comparative advantage.
Free Trade - is a laissez-faire approach with no restrictions on Trade. The main idea is
that supply and demand factors, operating on a global scale, will ensure that production
happens efficiently.