Effects of

Contemporary Issues in
the Economy
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 Effects of
contemporary
economic
issues
affecting the
Filipino
entrepreneur
Purchasing Power
This is the equivalent rate of a currency expressed in terms of the value of goods or services
that a unit of money can buy. Price increases reduce the purchasing power of money that in
turn has an adverse impact on consumers' welfare. It is vital because, all else being equal,
inflation decreases the number of products or services you would be able to purchase.

The purchasing power of people is always affected in a community with contemporary issues
such as migration, unemployment, fluctuation in the exchange rate, peace, and order.
Migration
Unemployment
Fluctuation
Exchange rate
Peace, and order.
 Migration
Economic migration forms a large part of the reason
why people migrate. Discretions to transfer can be
influenced by high poverty in the country or area of
origin. Through the social systems, people receive
information from people who already migrated to other
cities or countries.

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Labor migration is a term used
which refers to people with Filipino
citizenship who reside in another
country for a restricted period of
employment. In the long term, both
high and low-skilled workers who
migrated to other country increases
the purchasing power and they have
extra disposable income. Thus, they
afford to send their children to
reputable schools with quality
education and bringing a good life to
the family.
•Causes of migration
1. Poverty
2. Unemployment
3. Quality of living
standards
4. Higher Salary
5. Economic Security
Poverty
 Poverty is about not having enough
money to meet basic needs including
food, clothing and shelter. However,
poverty is more, much more than just not
having enough money. The World Bank
Organization describes poverty in this
way: “Poverty is hunger.
Causes of
Poverty
•Issues like hunger, illness, and
poor sanitation are all causes and
effects of poverty. That is to say,
that not having food means being
poor, but being poor also means
being unable to afford food or clean
water. The effects of poverty are
often interrelated so that one
problem rarely occurs alone
Hunger
Illness
Poor Sanitation is linked to transmission of diarrheal diseases such as cholera and dysentery,
as well as typhoid, intestinal worm infections and polio.
Unemployment
This is a condition of not being
currently employed. Those not
employed will encounter
a reduction in their living standards, as
their income decreases. The jobless
person will have
less purchasing power and less
disposable income. Thus, people with
little means of living will
also adjust their spending. They will
look forward to any opportunity of help
from others and
limiting their purchasing power is not
the same good as before. Lastly, people
having no means
at all will become more aggressive and
worried about coming opportunities in
life
Quality of living standards
Higher
Salary
Economic Security
Fluctuations in the
exchange rate
The value of the
exchange rate is
important in creating
national policies,
especially in
open economies. It is
also important in
guiding the exporting
and exporting of a
country.
For example, the Philippine peso (P) in a United States
dollar (USD) in 2018 was almost P53.1424 per $1. The peso
rate of the Japanese yen (JPY) in 2018 was almost P0.46787
per ¥
1. The pesos rate of Thailand (baht) in 2018 was almost
1.6259 per TBH.
Under the fixed exchange rate, the exchange rate may also
decrease. This event is called a devaluation where the local
currency amount of currency is decreasing in other countries.
This is contrary to revaluation where the value of the local currency
in other countries is increasing. In these cases, there may be
devaluation or revaluation only if the government announces it.

Greater prices lead to a diminishing in the purchasing power of

a dollar. As a result, buyers often adjust their purchasing behavior
and spend less of their disposable income. This effect of decreased
purchasing power led to a decrease in overall consumer spending
around the country.
 Oil Price
Increases
During big-time oil price
increases in the country, you
can hear everyone complaining
about how harder it will be to
make ends meet. Some will go
to the extent of politicizing the
price increase just to be able to
throw some blames on the
President. It’s more than a peso
increase per liter. People are
complaining because whenever
there is an increase in gasoline
there is a tendency of
decreasing purchasing power
and spend less on the disposal
of income.
Peace and Order
Peace and order are vital elements in
maintaining economic development, social
order, and political firmness. Through the
help of the executive orders of the
government, it helps in maintaining social
order, political stability. A condition of peace
and order enables the growth of funds,
generates more employment opportunities,
and attracts more tourists. Peace is the
absence of aggression and is characterized by
healthy social and international connections,
fairness, and parity.
 EXAMPLES:
Purchasing Power
1. If a can of sardines costs P14.50 two years ago,
today, it costs P17.75. With the presence of
inflation, consumers purchasing power decrease.

2. People do labor migration due to poverty,

unemployment, wanting to improve the standard of
living, higher salary, and economic security
3. Low unemployment is the key to economic stability. High and long-term unemployment can cause significant stress
on a nation in three key areas:

Individuals - Unemployed people cannot fulfill their financial obligations and can become mentally stressed, ill, and
even homeless.

Economic efficiency - During times of high unemployment, many job seekers will accept new jobs below their skill
level, a situation called “underemployment,” which translates to a loss of human capital for an economy’s labor
market. Unemployed workers will also significantly decrease their consumer spending, which is one of the driving
forces of economic growth.

Socio-political stability - If unemployment remains high, citizen dissatisfaction

can rise to the point of widespread civil unrest.
4. Oil prices are influenced by the three major factors: supply, demand, and geopolitics.

Supply - Supply, and demand have to do with how much oil is available.

Demand - Demand on the other hand is determined by how much need is for
oil at a given time.

Geopolitics - Since supply is determined by the big oil-producing countries, tension with
one of those nations can cause major problems. So, if there’s war or conflict in an oil-
producing region, crude inventories could seem threatened, and that could ultimately alter
the price of oil
5. Peace and order is an essential ingredient in maintaining
economic development, social order, and political stability. A
condition of peace and order facilitates the growth of
investments, generates more employment opportunities, and
attracts more tourists.