ECONOMIC Economic Productivity is the increase
GROWTH AND DEVELOPMENT of the volume of output at minimal
EC21_ECONGROWTH
What is the
primary goal
of the study of Economics?
ECONOMICS
Economics is the study of how society
allocates scarce resources for the
satisfaction of unlimited human needs
and wants.
How do we determine if an
economy is fulfilling its goals?
3 FUNDAMENTAL ECONOMIC GOALS
1.) Full Employment
2.) Economic Productivity
3.) Economic Equity
1.) Full Employment
Full Employment means jobs for all
members of the labor force.
2.) ECONOMIC PRODUCTIVITY
National Development is the growth
of all dimensions of the society.
production cost.
3.) ECONOMIC EQUITY
Economic Equity is when all members
of the economy share in the fruits of
the economy according to their
contribution.
It is important to note that
Economic Growth,
Economic Development
and National Development
are NOT the same concepts.
ECONOMIC GROWTH
Economic Growth is an increase in a
countrys output of goods and
services which can be caused by an
increase in the quantity and quality of
factors of production.
ECONOMIC DEVELOPMENT
While Economic Growth is the
improvement of productivity over
short-term periods, Economic
Development is growth of
productivity sustained over long
periods of time.
NATIONAL DEVELOPMENT
National Development includes moral,
cultural, political, educational and
ecological developments.
National Development only happens
with Economic Development, and
Economic Development only happens
with Economic Growth.
FACTORS OF ECONOMIC
DEVELOPMENT
1.) Human Resources
2.) Natural Resources
3.) Capital Formation
4.) Technology Change
HUMAN RESOURCES
A rise in GDP/GNI is useless if the
population rises much faster. The
quality of human resources should
accompany its rising quantity. It
requires better health care and
education.
NATURAL RESOURCES
There must be a productive and
efficient use of Natural Resources.
This can come in many forms, like
farming, tourism, industries,
residences and other uses.
CAPITAL FORMATION
For an economy to develop, capital
must be increased. This includes
equipment, structures, computers,
machines, roads, bridges and other
such resources.
TECHNOLOGICAL CHANGE
Technological development is crucial,
since it indicates the expansion of
consumption and production
possibilities.
MEASUREMENTS
* Productivity is measured with
- Gross National Income (GNI)
- Gross Domestic Product (GDP)
* Economic Growth is measured with
- GNI Per Capita / GDP Per Capita
* National Development is measured
with
- Human Development Index (HDI)
GROSS DOMESTIC PRODUCT
A countrys Gross Domestic
Product is the sum of the
monetary value of all of the final
goods and services produced
within a countrys borders at a
certain point in time.
Philippine economists usually
use another acronym to
facilitate the remembering of
the definition -- GDP, Gawa Dito
sa Pilipinas.
GROSS NATIONAL PRODUCT
A countrys Gross National
Product is the sum of the
monetary value of all of the final
goods and services produced by
a countrys citizens at a certain
point in time.
Philippine economists usually
use another acronym to
facilitate the remembering of
the definition -- GNP, Gawa Ng
Pilipino.
GDP/GNI Per Capita
Per Capita literally means Per
Head, and GDP/GNI per Capita is the
GDP/GNI divided by a countrys
population. It is, therefore, the
average productivity of each member
of society.
HUMAN DEVELOPMENT INDEX
Human Development Index (HDI) is a
ratio from 0 (lowest) to 1 (highest)
that measures many aspects of
human development, such as health,
standard of living, education, access
to livelihood and political
participation.
NATIONAL ECONOMIC AND
DEVELOPMENT AUTHORITY
The National Economic and
Development Authority (NEDA) is the
countrys premier socioeconomic
planning body, highly regarded as the
authority in macroeconomic
forecasting and policy analysis and
research.
 MONEY AND MONETARY POLICY
EC22_MONEY
Suppose that youve travelled to a busy
city, and for some reason you get stranded
there, and have lost all of your possessions
on the process of travelling there. Due to
certain conditions, youre probably going
to live in that city for the rest of your life.
List down five small possessions that
fit on your pocket that will most help
you in your new life in this city.
Suppose that youve travelled on a cruise
ship, and for some reason, you get
stranded on a deserted island, and have
lost all of your possessions on the process
of getting stranded there. Due to certain
conditions, youre probably going to live in
the deserted island for the rest of your life.
List down five small possessions that
fit in your pocket that will most help
you in your new life on this island.
MONEY
Money is the primary form of
economic communication, and
anything which a market can
generally accept as payment can be
considered as money.
EVOLUTION OF MONEY These were gold and silver bars that
were traded as money and was
* Barter Trade popular during the Age of
1.) Commodity Money Mercantilism. They were made into
2.) Metallic Money bullions, and then later, coins so that
3.) Gold and Silver their size and weight could be
4.) Paper Money standardized.
5.) Checks
6.) Plastic Money PAPER MONEY (OLD)
BARTER TRADE To avoid the dangers and
inconveniences of carrying large
It is a direct exchange of amounts of coins, papers were issued
commodities, but requires double with the promise to pay the holder of
coincidence (the instance that two the paper in gold or silver.
people have exactly what the other
person needs) to happen. PAPER MONEY (MODERN)
COMMODITY MONEY Later on, countries and governments
would issue paper notes that
It is when a product that everybody guaranteed to the holder that the
values and uses is used as a medium
money is exchangeable for value.
of exchange.
CHECKS
METALLIC MONEY
Later on, banks would also issue
It is the use of precious metals and paper notes that guaranteed to the
other metal products as commodity holder that the note is exchangeable
money because of their durability and
for value.
divisibility.
PLASTIC MONEY
GOLD AND SILVER
In credit cards and wire transfers,
banks would also issue data or signals
that guaranteed to the holder that 3.) Money as Store of Value
the signals are exchangeable for
value. MEASURES OF MONEY
VALUES OF MONEY The measures of money is based on
the moneys liquidity. Liquidity is the
1.) Intrinsic Value the value of the term used to describe how easy it is
material the money possesses. to convert any property to cash. Cash,
of course, is the most liquid of all
2.) Face Value the value that the properties (since its already cash).
money represents.
M1 Money
10-Peso Coin
* Includes cash, and deposits that can
Metals: Cupronickel, Nickel, use checks
Aluminum, Bronze
Metal Value: PhP 2.94
M2 Money
Face Value: PhP 10
* Broad money, includes small time
20-Peso Bill deposits, savings deposits, and
money-market accounts
Material: Abaca, Cotton
Material Value: PhP 3 to 4 M3 and M4 Money
Face Value: PhP 20 * Near-money, includes large deposits
CONTROLLING THE MONEY SUPPLY
FUNCTIONS OF MONEY
1.) Money as a Medium of The supply of money is important in
Exchange regulating the price levels in the
country. To do this, the Bangko
2.) Money as a Unit Sentral ng Pilipinas uses tools of
Account monetary control.
1.) Reserve Requirements
* By changing the required amount of
money that all banks must hold, the
BSP can control how much loans a
bank can make, thus controlling how
much cash a bank can release.
2.) Discount Rate
* The discount rate is the interest rate
that the BSP charges when banks
borrow from the BSP. By controlling
the discount rate, the BSP can
influence how much money banks
borrow from the BSP.
3.) Open-Market Operations (Bonds)
* By buying or selling government
bonds, the BSP can control how much
money is currently circulating in the
market.
GOVERNMENT BONDS
A government bond is a way for the
government to gain additional money.
It is essentially the governments
debt. It is also a way for the
government to control the flow of
money.