APPLIED

ECONOMICS
LESSON 7:
ECONOMIC INDICATORS

Prepared by: Ms. Agatha Dela Paz

 GDP GROSS DOMESTIC PRODUCT

The GDP is primarily used to

measure the health of a
country’s economy. It reflects
the total market value or
prices of all finished goods
and services produced by a
country at a certain period.
GDP GROSS DOMESTIC PRODUCT

There are several types of GDP measurements:

Nominal GDP reflects current market prices

Real GDP adjusts current market prices for inflation

GDP growth rate tracks the economy’s growth on a quarterly basis

GDP per capita measures economic production per individual

 CPI CONSUMER PRICE INDEX

The CPI is an indicator most widely

used in the calculation of the
inflation rate and purchasing
power of the peso. It reflects the
change in the average retail prices
of a group of goods and services
purchased by households
compared to a base year.
CPI
 CPI
BASE LINE - P10,000.00

P12,000.00
CPI INFLATION

COST OF LIVING
CPI CONSUMER PRICE INDEX

How does Consumer price index (CPI) as an economic indicator

affects the economy's rise and fall?

Inflation Control Interest Rates

Purchasing Power Cost of Borrowing

Indexation
 FE FOREIGN EXCHANGE

Foreign exchange is the

conversion of one
currency into another
currency. Some currencies
are valued according to
the laws of supply and
demand.
FE FOREIGN EXCHANGE

Trade Balance

Inflation

Investment
Consumer and Business
Confidence

Government
Policy Response
FE FOREIGN EXCHANGE

Trade Balance

Inflation

Investment
Consumer and Business
Confidence

Government
Policy Response
FE FOREIGN EXCHANGE

Trade Balance

Inflation

Investment
Consumer and Business
Confidence

Government
Policy Response
FE FOREIGN EXCHANGE

Trade Balance

Inflation

Investment
Consumer and Business
Confidence

Government
Policy Response
FE FOREIGN EXCHANGE

Trade Balance

Inflation

Investment
Consumer and Business
Confidence

Government
Policy Response
FE FOREIGN EXCHANGE

Trade Balance

Inflation

Investment
Consumer and Business
Confidence

Government
Policy Response
FE FOREIGN EXCHANGE

Trade Balance

Inflation

Investment
Consumer and Business
Confidence

Government
Policy Response
 BOP BALANCE OF PAYMENT

The BOP is an indicator that

helps economists understand
how businesses happen
beyond borders. It is the
difference between inflow and
outflow of foreign exchange,
and the net effect is always
zero.
 BOP BALANCE OF PAYMENT

Current Account
Tracks the import and export of
goods and services, earnings on
foreign investments minus
payments made to foreign
investors, and cash transfers. A
surplus means a country exports
more than it imports, while a
SURPLUS
deficit means imports exceed
exports.
 BOP BALANCE OF PAYMENT

Capital Account

Records the buying and

selling of assets like real
estate, stocks, and bonds. It
reflects changes in
ownership of national assets.
 BOP BALANCE OF PAYMENT

Financial Account

Captures investments
flowing in and out of the
country, including
investments in
businesses, real estate,
stocks, and bonds.
 BOP BALANCE OF PAYMENT

Economic Rise Due to a Surplus

Economic Fall Due to a Deficit

Rapid Changes Due to Investment Flows

 BOP BALANCE OF PAYMENT

Economic Rise Due to a Surplus

Economic Fall Due to a Deficit

Rapid Changes Due to Investment Flows

 BOP BALANCE OF PAYMENT

Economic Rise Due to a Surplus

Economic Fall Due to a Deficit

Rapid Changes Due to Investment Flows

 BOT BALANCE OF TRADE

The BOT is a large component

of the balance of payment. It
is simply deals with the
difference between import
and export values. It does not
include services and
unilateral and capital
transfers.
 BOT BALANCE OF TRADE
UNDERSTANDING BOT
The balance of trade is a key
economic indicator that reflects
the difference between a
country's exports and imports
over a certain period. It's a
component of a country's
balance of payments,
specifically focusing on the
trade in goods and services.
 BOT BALANCE OF TRADE
UNDERSTANDING BOT

TRADE SURPLUS
When a country's exports
exceed its imports. This is
often seen as a positive
indicator, suggesting that the
country is selling more
abroad than it is buying from
abroad.
 BOT BALANCE OF TRADE
UNDERSTANDING BOT

TRADE DEFICIT
When a country's imports
exceed its exports. While often
viewed negatively, a trade
deficit can also indicate that a
country's residents are wealthy
enough to purchase more
foreign goods and services.
 BOT BALANCE OF TRADE
UNDERSTANDING BOT

BALANCE OF TRADE

When a country's imports

exceed its exports. While often
viewed negatively, a trade
deficit can also indicate that a
country's residents are wealthy
enough to purchase more
foreign goods and services.
 IR INTEREST RATE

An interest rate represents

the cost of borrowing
money or the amount a
lender charges for the use
of funds or assets
expressed as a percentage
of the initial amount.
IR INTEREST RATE
IR INTEREST RATE
 IR INTEREST RATE

STIMULATE OR COOL
THE ECONOMY
Lowering interest rates makes
borrowing cheaper, encouraging
spending and investment, which
can stimulate the economy.
Raising interest rates makes
borrowing more expensive,
which can cool down an
overheated economy.
 IR INTEREST RATE

INFLATION
CONTROL
Central banks may increase
interest rates to control inflation
(the rate at which prices rise) by
discouraging borrowing and
spending. Conversely, they might
lower rates to combat deflation
(falling prices), encouraging
spending and investment.
 IR INTEREST RATE

EXCHANGE RATE
INFLUENCE
Higher interest rates can
attract foreign investors
looking for the best
return on their
investments, potentially
increasing the value of
the country's currency.
 SMI STOCK MARKET INDEX

The stock market index

reflects universal market
sentiments and the general
direction of price
movements of goods and
services in various sectors
and industries.
SMI STOCK MARKET INDEX
REFLECTS BUSINESS
HEALTH
SMI STOCK MARKET INDEX
INVESTOR
CONFIDENCE
SMI STOCK MARKET INDEX
LEADING INDICATOR