Katleen Mae A.

Godoy
BSBA 1F
ECONOMICS

1. Economic Growth and the Business Cycle

Economic Growth: GDP(Gross Domestic Product), Productivity, Investment, Consumption, and Inflation.
Business Cycle: Expansion, Peak, Contraction, Recession, and Recovery.
EXAMPLES:
Economic Growth
● The Philippines experienced a 6% annual GDP growth from 2010-2019, largely due to strong
remittances, increased consumer spending, and a thriving services sector, especially in
BPO(business process outsourcing).
● The government initiated extensive infrastructure projects under the "Build, Build, Build" Program
from 2017-present, focusing on transportation, roads, and public utilities to stimulate economic
growth and attract foreign investment.
Business Cycle
● The Philippines experienced a significant economic boom from 2016-2019, with a rising GDP, low
unemployment, and increased foreign direct investment, largely due to a young workforce and
strong consumer demand.
● The COVID-19 pandemic significantly impacted the economy, causing a 9.6% GDP contraction
and rising unemployment. However, recovery began in 2021 with increased vaccination efforts.

2. Benefits from Growing Economy

Keywords: Increased Employment, Higher Income Levels, Improved Living Standards, Investment
Opportunities, Innovation and Technology, Enhance Public Service, and Consumer Confidence.
EXAMPLES:
● Job Creation:The BPO(Business Process Outsourcing) sector has generated millions of jobs,
providing numerous Filipinos with employment opportunities.
● Infrastructure Development: By improving roads, bridges, and public transportation, programs like
"Build, Build, Build" have increased accessibility and unity.

3. Cost of Growth in the Economy

Keywords: Inequality, Environment Degradation, Inflation, Resource Depletion, Labor Exploitation, Cost of
Living Increases, and Market Volatility.
EXAMPLES:
● Environmental Degradation: Deforestation, pollution, and biodiversity loss brought on by fast
industrialisation and urbanisation can have an adverse effect on agriculture and human health.
● Income inequality: The gap between the rich and the poor can grow as a result of economic
growth that disproportionately benefits some industries or geographical areas.

4. Variations or Fluctuations in the Economy

a. Trend
Keywords: Indicates underlying growth or decline over time.
EXAMPLES:
● Economic Growth Trend: Strong consumer spending, remittances from overseas Filipino
workers (OFWs), and a thriving services sector have powered the Philippines' long-term upward
trend in GDP growth, especially in the 2000s and early 2010s.
● Inflation Rate Trend: Inflation in the Philippines has fluctuated over the last few decades, with
notable upticks in some instances (such as following the global financial crisis) but a general
stabilisation in recent years within the BSP's target range.
Katleen Mae A. Godoy
BSBA 1F
ECONOMICS

b. Seasonal Fluctuations
Keywords: Regular, predictable changes in economic activity tied to seasons or specific periods.
EXAMPLES:
● Agricultural Production: Prices for rice and other agricultural products fluctuate seasonally in
the Philippines because rice production usually rises during the wet season (June to November)
and falls during the dry season (December to May).
● Retail Sales: Because so many people buy gifts, food, and decorations for the holidays, retail
sales frequently increase during the Christmas season (November to December), which boosts
the economy.
c. Irregular or Random Fluctuations
Keywords: Unpredictable changes, economic shocks, Natural disasters, and Political events.
EXAMPLES:
● Natural Disasters: Supply chains and production can be abruptly disrupted by typhoons,
earthquakes, and floods. For example, the Philippines' infrastructure and agricultural output were
badly damaged by Typhoon Haiyan in 2013, which caused economic contractions in the impacted
areas.
● Global Economic Events: Worldwide, including in the Philippines, unexpected events like the
COVID-19 pandemic caused abrupt economic disruptions that resulted in a steep drop in
economic activity, higher unemployment, and changes in consumer behaviour.

d. Business Cycle
Keywords: Includes expansion, peak, contraction (recession), and trough, reflecting changes in GDP and
employment levels.
EXAMPLES:
● The Philippine economy experienced growth after the 2008 global financial crisis, but the
COVID-19 pandemic in 2020 led to a recession and gradual recovery efforts.

5. Unemployment
a. Unemployment in the Philippines
Keywords: Youth Unemployment, Underemployment, Job Mismatch, Labor Market, Brain Drain, and Skills
Gap
EXAMPLES:
● The Philippines faces high youth unemployment, particularly among 15-24-year-olds, due to lack
of work experience and skills mismatch.
● Underemployment, particularly in informal sectors like street vending.
b. Types of Unemployment
1. Frictional Unemployment: Job Search, Short Duration
2. Structural Unemployment: Technological changes, Industry shifts
3. Cyclical Unemployment: Economic downturns, Recovery Phases
4. Seasonal Unemployment: Agricultural Employment, Tourism industry
EXAMPLES:
● Frictional Unemployment: A recent college graduate takes a break to look for a job that fits with
their professional objectives. After relocating to a new city, a person spends some time looking for
a job that fits their preferences and skill set.
● Structural Unemployment: Factory workers lose jobs due to automated machinery, while
newspaper journalists face job loss due to declining traditional print media jobs due to digital
media growth.
Katleen Mae A. Godoy
BSBA 1F
ECONOMICS

● Cyclical Unemployment: A business fires workers during a recession because there is less
demand for its goods from customers. During a recession, fewer people are investing in new real
estate, which results in the layoff of a construction worker. During a recession, a restaurant
reduces staff, resulting in job losses as people cut back on eating out to save money.
● Seasonal Unemployment: Because their jobs are only available during planting and harvesting,
farm workers are left jobless after the harvest season.
During the summer, when the resort is closed for skiing, the staff at the ski resort are
unemployed.
c. Cost of Unemployment
Keywords: Economic costs, Opportunity cost, Social Costs, and Fiscal cost
EXAMPLES:
● Lost Output: When unemployment is high, there is less production, which lowers the GDP of the
nation. For example, business closures during the COVID-19 pandemic resulted in a decline in
economic output, particularly in sectors like retail, hospitality, and tourism.
● Diminished Consumer Spending: When household income and consumer spending fall, fewer
people are working. A slower economy may result from this, affecting industries like retail, real
estate, and small businesses.

6. Inflation
Keywords: Consumer Price Index (CPI), Inflation Rate, Hyperinflation, Stagflation, Deflation, Purchasing
Power, Price Stability
EXAMPLES:
● High Inflation: Because of economic instability, Venezuela has experienced extremely high rates
of inflation, which have led to sharp declines in the value of its currency and higher costs for
necessities.
● 2018 saw a sharp rise in inflation in the Philippines, accompanied by notable increases in the cost
of food and petrol. The effects of tax reforms, a declining peso, and rising oil prices worldwide
were some of the causes of this.
a. Measurement of Inflation
Keywords: Consumer Price Index (CPI), Producer Price Index (PPI), GDP Deflator, Inflation Rate
Calculation, Basket of Goods, Base Year Comparison, Annual Inflation Rate, Core Inflation (excludes
food and energy), Headline Inflation, Indexing
EXAMPLES:
● CPI(Consumer Price Index: Monthly CPI data is released by the Philippine Statistics Authority
(PSA). For example, if the January 2024 CPI is 125, it means that prices have gone up by 25%
from the base year, which is usually 2012.
● PPI( Producer Price Index): A 5% quarterly increase in the manufacturing sector's PPI indicates
that producers are dealing with higher costs, which could eventually result in higher prices for
consumers.
b. Causes of Inflation
1. Demand-Pull Inflation: Aggregate Demand (AD),Excess Demand, Consumer Spending Surge,
Expansionary Fiscal Policy, Monetary Supply Increase, Interest Rates, Economic Boom.
EXAMPLES:
● Increased Consumer Spending: Prices will rise if demand for goods and services rises as a
result of economic growth and rising disposable incomes
● Government Stimulus Programs: Households may receive financial assistance from the
Philippine government, which would increase demand for domestic goods.
Katleen Mae A. Godoy
BSBA 1F
ECONOMICS

2. Cost-Push Inflation: Production Costs, Wage-Price Spiral, Raw Material Prices, Supply Chain
Disruptions, Imported Inflation, Currency Depreciation, Commodity Prices (e.g., oil)
EXAMPLES:
● Rising Production Costs: Businesses will pass on higher production and transportation costs to
customers if geopolitical tensions drive up oil prices globally.
● Wage Increases: Businesses may raise product prices to offset the higher labour costs if labour
unions are able to negotiate higher wages for manufacturing sector factory workers.
3. Supply Shock Inflation: Supply Chain Crisis, Natural Disasters, Pandemic Impact, Commodity
Shortages, Energy Crisis, Agricultural Shortfalls, Price Shock.
EXAMPLES:
● Natural Disasters: In the Philippines, Typhoon Haiyan in 2013 destroyed a large number of
agricultural areas, causing food shortages and price increases.
● Global Economic Events: Unexpected price increases may result from trade restrictions or
international conflicts. For example, a conflict in a major oil-producing nation may cause oil prices
to rise, which would impact production and transportation costs globally.
c. Effects of Inflation in the National Economy
Keywords: Reduced Purchasing Power, Interest Rate Increases, Wealth Redistribution,Menu Costs, Shoe
Leather Costs, Uncertainty and Investment, Increased Cost of Living, Erosion of Savings, Inflationary
Expectations, Real Income Decline.
EXAMPLES:
● Reduced Purchasing Power: Customers discover that their money now buys less than it did in
the past as the cost of necessities like food, transportation, and healthcare increases. For
example, families might have to alter their diets or cut back on other necessities if the price of rice
rises sharply.
● Increased Cost of Living:
● Costs for housing, utilities, and other daily expenses rise as a result of inflation. Many
households, particularly those with fixed incomes, such as retirees, whose pensions do not rise in
tandem with inflation, may find it difficult to cover their monthly expenses as a result.
d. Control of Inflation
Keywords: Monetary Policy, Interest Rate Adjustment, Fiscal Policy, Supply-Side Policies, Price Controls,
Inflation Targeting, Exchange Rate Policy, Wage Controls, Reserve Requirements, Central Bank
Interventions.
EXAMPLES:
● Monetary Policy
Interest Rate Adjustments: In order to decrease the money supply and control inflation, the
Bangko Sentral ng Pilipinas (BSP) has the authority to raise the benchmark interest rate. For
instance, the BSP may raise interest rates to promote saving and curb consumer spending if
inflation rates surpass the target range (for instance, above 4%).
● Fiscal Policy
Increasing Taxes: Tax increases may result in less money available for spending by consumers.
For example, lowering the demand for luxury goods by raising the value-added tax (VAT) on them
can help control inflation.