Applied Economics

Effects of Contemporary
Economic Issues
Affecting the Filipino
Entrepreneur

Prepared by: Mrs. Maricon M. Baligat

 OBJECTIVES OF THE SESSION

At the end of the lesson the learners:

1. Analyze the effects of contemporary economic issues

affecting the Filipino entrepreneur

Grade-12 ABM
Applied Economics
 Applied Economics
Effects of Contemporary Economic Issues Affecting
the Filipino Entrepreneur
Entrepreneurship is the ability to know what products
and services are needed by people and to be able to
provide these things at the right time, at the right
place and to the right people and at the right price.
The person who does entrepreneurship is called
“entrepreneur”.

Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
 An entrepreneur organizes his own business, assumes all the
risk and returns on his investment, decides on what, how and
how much of a food or service will be provided and monitors
and controls all the activities of the business.
 As an entrepreneur, it is very important to identify the
different contemporary issues for you to understand the
current situation in the market that might affect your business
operation and to be equipped with possible solutions to
prevent problems that will be encountered by the business.

Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
Directions: Consider yourself as a young entrepreneur, imagine
how your business will go by looking at the Business Model
below.

Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
Contemporary Issues Affecting the Filipino Entrepreneurs
Investment and Interest Rate
Investment is an asset or an item that is purchased with the goal of
generating income from the investment or the appreciation of
investment which is an increase in the value of the asset over a period
of time. The added value of the investment is called interest.

Interest rate, in relation to investment, is the rate at which a bank or

bond issuer will pay investors or savers, for access to their money. For
example, a bank will pay a small interest rate to get a consumer to keep
his or her money in a bank account.

Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
Main Types of Investment
A. Stocks. When you invest in stocks, you’re buying
a share of ownership in a corporation. You become a
shareholder. Investment returns and risks vary
depending on the type of stock, and depending on
factors such as the economy, political scene, the
company's performance and other stock market
factors.

Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
Main Types of Investment
B. Bonds. When you buy a bond, you’re lending money to a company
or governmental entity, such as a city, state or nation. Bonds are issued
for a set period of time during which interest payments are made to the
bondholder. The amount of these payments depends on the interest rate
established by the issuer of the bond when the bond is issued. This is
called a coupon rate, which can be fixed or variable. At the end of the
set period of time (maturity date), the bond issuer is required to repay
the par, or face value, of the bond (the original loan amount). Bonds
are subject to a number of investment risks including credit risk,
repayment risk and interest rate risk.

Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
Main Types of Investment
C. Cash equivalent. Cash equivalent investments protect your
original investment and let you have access to your money.
Examples include Savings Account, Money market Accounts
and Certificates of Deposits (CD’s). These types of investments
generally deliver a more stable rate of return. But cash
equivalent investments aren’t designed for long-term investment
goals such as retirement. After taxes are paid, the rate of return
is often so low that it doesn’t keep pace with inflation.

Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
Effects of Contemporary Issues Affecting the
Filipino Entrepreneurs
Rising interest rates make the cost of borrowing
money and getting credit tougher to obtain.
On the other hand, lower or declining interest
rates lead consumers and businesses to slow down
savings, and increase their debt levels, as loans and
credit are easier to obtain.

Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
Effects of Contemporary Issues Affecting
the Filipino Entrepreneurs
1. Rentals
In economics, rent refers to the amount that is
paid to the owner of a factor of production in
excess of the cost that is to be necessarily
incurred on utilizing such factors in the
production process.
Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
If an entrepreneur rented a space for his
business, rental fee is an expense account
included in the Income Statement. Rental fee
varies based on location and size of the office
space.
Bigger spaces have higher cost, and office
spaces located in urban areas are cheaper than
in rural areas.
Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
2. Minimum Wage
 Minimum wages have been defined as “the minimum amount of
remuneration that an employer is required to pay wage earners for
the work performed during a given period, which cannot be reduced
by collective agreement or an individual contract”.
 Minimum wage rates are determined by factors such as poverty
threshold, prevailing wage rates as determined by the Labor Force
Survey, and socio-economic indicators such as inflation, and
employment figures which insures better workers protection.

Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
 Business owners typically oppose minimum wage increases, arguing
that they will have to trim staff to provide the higher wage,
especially small business owners.
 However, they cannot do anything about it because once imposed
and they don’t follow, they may face legal consequences.
 On the other side, over and above minimum wage is the voluntary
productivity-based pay, which encourages workers and enterprises to
become more competitive and productive by rewarding employees
supplementary pay based on the quality of their performance.

Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
3. Taxes
Tax is a compulsory contribution to state
revenue, levied by the government on workers'
income and business profits, or added to the
cost of some goods, services, and transactions
in order to fund government spending and
various public expenditures.

Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics
Imposition of higher taxes by the
government result in the reduction of
disposable income of the
entrepreneurs/taxpayers, thus lessen
savings and investment however, lower
taxes would also mean fewer funds for
government projects.
Grade-12 ABM
Fundamentals of ABM 2
Applied Economics
 Applied Economics

Directions: As a CEO of your business firm,

how will you strengthen your business
operations when you are faced with the
previously identified
contemporary economic issues?

Grade-12 ABM
Fundamentals of ABM 2
Applied Economics