1. GOOD MORNING CLASS

3. ECONOMICS AS AN APPLIED SCIENCE LESSON 1.2.

4. Identify the basic problems of the Philippine economy. Analyze basic economic problems and propose solutions to the problems using the principles of applied economics. Learning Objectives: At the end of this lesson, the students should be able to;

5. Economics as an Applied Science. Applied Economics is the application of economic theory and econometrics in specific settings with the goal of analyzing potentials outcomes. ECONOMIC THEORY- is a model that is used to explain how economies function.

6. ECONOMY- is an area of the production, distribution and trade, as well as consumption of goods and services. ECONOMETRICS- It is an application of statistical methods of economic data in order to give empirical content to economic relationships.

7. It is typically characterized by the application of the core, referring to economic theory and econometrics, as means of dealing with practical issues in fields that include demographic economics, labor economics, business economics, agricultural economics, monetary economics, economic history and many more.

8. John Neville Keynes is attributed as the first to use the phrase “applied economics” to designate the application of economic theory to the interpretation and explanation of particular economic phenomena. Economics as an applied science involves the application of economic theories and principles to real-world issues and problems. It seeks to understand how individuals, businesses, and governments make decisions regarding the allocation of resources, production, distribution, and consumption of goods and services.

9. We should be able to improve human welfare among Filipinos by the investigation and analysis of economic problems in the real world. The concept of scarcity and choice should encourage us as individuals to help in our own way to provide solutions to the country’s economic problems.

10. APPLIED ECONOMICS IN RELATION TO PHILIPPINE ECONOMIC PROBLEMS. A solid understanding of economic principles and how they are applied in real-life situations can serve as significant tools to help address the country’s economic problem. For example, understanding the existence of scarcity can help Economics students analyze how to maximize the use available resources in order to overcome scarcity.

11. Knowledge of economic theories such as Law of Supply and Demand can help in analyzing why prices are high and what the government can do to help bring down prices.

12. The Philippines’ Basic Economic Problems The Philippine economy has grown significantly during President Benigno Simeon Aquino’s administration. With a growth rate of the country’ Gross Domestic Product of 6.8% in 2012, improving to 7.2% in 2013, and slowing down to 6.1% in 2014. These rates are an improvement of past rates preceding President Aquino’s term.

13. The Philippines’ Basic Economic Problems The Philippine economy has grown significantly during President Benigno Simeon Aquino’s administration. With a growth rate of the country’ Gross Domestic Product of 6.8% in 2012, improving to 7.2% in 2013, and slowing down to 6.1% in 2014. These rates are an improvement of past rates preceding President Aquino’s term.

14. It is also higher than its Asian neighbors such as Malaysia, Thailand, South Korea, Hongkong, India, and Indonesia (CIA World Factbook 2013). Despite this admirable growth, people, especially the poor, have been complaining of non-inclusive growth. Millions of Filipinos are claiming they experience hunger or they still live below the poverty level.

15. Unemployment is still a main problem of the Philippine economy despite improvements reported by the National Statistic Office. Unemployment in the Philippines decreased to 6.4% in the 2 nd quarter of 2015 from 7.0% in the previous year. Philippines’ unemployment rate average is 8.85% from 1994 until 2015, reaching an all time high of 13.90% in the 1 st quarter of 2000 and a record low of 6.0% in the 4 th quarter of 2014.

16. In July 2015, the Labor Force Survey (LFS) released by the Philippine Statistic Authority (PSA) showed the country’s unemployment rate at 6.4% or an estimated 2.68 million individuals. Another significant socio-economic problem in the country is poverty. As reported by the National Statistics Coordination Board, in 2016, poverty incidence of the population registered at 26.4%, 26.5% in 2009, 25.2% in 2012, and 28.8% in the first semester of 2014.

17. The booming population growth in the Philippines is another basic economic problem that can be connected to the issue of scarcity. When population become too big, economic resources may no longer be enough to support the growing population. According to the 2010 census, the Philippine population stood at 92.3 million. As of 2014, it has reached more than 100 million-growing by 2% from the previous year and one of the highest in Asia.

18. The population of the Philippines represents 1.37% of the world’s total population. This is apparently the reason why schoolrooms are not enough for our children who are of school age.

19. BASIC ECONOMIC PROBLEMS OF THE COUNTRY UNEMPLOYMENT POVERTY POOR QUALITY OF INFRASTRUCTURE INCOME INEQUALITY

20. BASIC ECONOMIC PROBLEMS OF THE COUNTRY UNEMPLOYMENT COMMON CAUSES The number of people entering the job market has been greeter than the job created. The rural-urban migration increase due to employment opportunities May of the unemployed individuals are college.

21. RURAL TO URBAN MIGRATION Few services Lack of job opportunities Unhappy life Poor transport links Natural disaster Shortage of foods Access to services Better job opportunities More entertainment facilities Better transport links Improve living condition Hope for better way of life

22. WHAT CAN BE DONE TO SOLVE UNEMPLOYMENT? 1. Appropriate economic policies for labor-intensive industries. 2. Improve the educational system of the country especially in the rural areas. 3. Minimize rural-urban migration by improving the economic environment in rural areas. 4. Proper coordination between government and the private sector to solve the problem of job mismatch. 5. Provision of more investment opportunities to encourage local and international investment.

23. POVERTY Increase in population. Increase in the cost of living. Unemployment. Income inequality.

24. WHAT CAN BE DONE TO SOLVE THE POVERTY PROBLEM. Reduce unemployment. Appropriate policy on labor income. Provision of unemployment benefits for those who will be unemployed due to natural or man made calamities. Ex. Typhoon, Bombing of Terrorist, Earthquake.

25. Increase social services like education, healthcare and food subsides for sustainable poverty reduction. SubsistenceSustainable Self- existing Appropriate policy on labor income.

26. POOR QUALITY OF INFRASTRUCTURE 91 st OUT OF 144 COUNTRIES POOR INFRASTRUCTURE QUALITY LOST ABOUT $250 BILLION ECONOMIC GROWTH.

27. WHAT CAN BE DONE TO IMPROVE THE QUALITY OF INFRASTRUCTURE 1. The government shall implement fiscal reform program. 2. Continue reforming in key sectors-particularly power, roads and water- to improve cost recovery, competition, and institutional credibility and to sharply reduce corruption. 3. Improving central oversight of the planning and coordination of investment. 4. Focus on investment through public-private partnerships to achieve faster delivery of service.

28. INCOME INEQUALITY Income- is the money that an individual earned from work or business received from investments. Income inequality- refers to the gap in income that exist between the rich and the poor.

29. MAJOR CAUSES OF INCOME INEQUALITY 1. Political culture. “palakasan” “utang na loob” Ex. Voting for the wrong person during election. 2. Indirect taxes- poor people shoulder this taxes like the Value Added Tax – 12%.

30. Income Taxes

31. WHAT CAN BE DONE TO SOLVE THE PROBLEM OF INCOME INEQUALITY 1. Policies to enforce progressive rates of direct taxation on high wage earners and wealthy individuals. 2. Direct money transfer and subsidize food programs for the urban and rural poor 3. Direct government policies to keep the price of basic commodities low.

32. 4. Raise minimum wage. 5. Encourage profit sharing.

33. The country’s problems vary with times and circumstances. It is now a challenge for the students to observe and identify what these problems are.

34. INDIVIDUAL ACTIVITY

35. Directions: 1. Read each scenario carefully and consider the economic factors at play. 2. Analyze the choices available to you and the potential outcomes of each decision. 3. Make your decision by selecting the option that you believe aligns best with economic theory and your goals. 4. After selecting your choice, you will see the consequences of that decision and learn from the results. 5. Reflect on the outcome and consider how you could apply economic principles to make more informed decisions in the future.

36. Scenario 1: You are a small business owner facing a labor shortage due to increased competition for skilled workers. To attract and retain employees, you have the option to: A) Increase wages and benefits B) Reduce working hours C) Implement automation technology D) Outsource some tasks to lower-cost providers Defend your answer.

37. Scenario 2: You are a government policymaker tasked with reducing income inequality in your country. Your options include: A) Implementing a progressive tax system B) Increasing minimum wage C) Providing subsidies for low-income households D) Offering free education and healthcare for all citizens Explain your answer.

38. Scenario 3: You are a consumer deciding whether to purchase a luxury item or save the money for a rainy day. Consider the opportunity cost of each choice and select the option that aligns best with your long-term financial goals.