MANAGERIAL ECONOMICS REVIEWER

(1st SEMESTER – Finals)

Chapter 7: Measuring National Income Produced within the Country
• refers to goods or services that are manufactured or
MEASURING NATIONAL INCOME created within the borders of a specific country.
• involves quantifying the total value of all goods and • This means that the production process, including
services produced within a country's borders over a all the necessary resources and labor, takes place
specific period. within that country's jurisdiction.
• It provides an overview of the economic activity
and productivity of a nation. During a given period
• Calculation of Gross Domestic Product (GDP) is • GDP is only concerned with new or current
used to measure national income. production.
• Old output is not counted in the GDP of the current
Gross Domestic Product (GDP) calendar year because it was already counted back
• represents the total market value of all final goods at the time it was produced.
and services produced within a country during a
given time, typically a year. 4 Categories of Economic Players
• use the goods and services that make up the GDP a
GDP: A Measure of the Nation’s Output year.
o Households
Total Market Value o Firms
• refers to the combined value of all the assets or o Governments, and
securities within a specific market or sector. o the Foreign Sector (the users of domestic products
• It represents the aggregate worth of all the who are based in another country)
individual components within that market.
GDP can measure using either one of two methods:
Final Goods and Services (1) By adding total market value of all final goods and
• refer to products that are produced for direct services produced in a country
consumption or use by end consumers. (2) By adding up the total value of money spent by
• can be tangible or intangible. households, firms, governments and foreign sector on
final goods and services and subtracting the money spent
Tangible final goods to purchase imported goods and services
• include items such as food, clothing, cars, and
electronics that are physically consumed or used by *Note: however, that the GDP values you have
individuals. computed using the first method should be the same if
and when you try computing the GDP using the second
Intangible final goods method. *
• include services such as healthcare, education,
transportation, and entertainment. "for what purpose"
It is all about the 4 components of expenditure:
Intermediate goods
• Consumption,
• Goods that are used in the production process to
• Investment,
create other goods or services.
• Government purchases and
• They are not meant for final consumption but are
• Net exports (the income that the economy gets/
used as inputs in the production of final goods.
loses whenever it undertakes international trading).
• For example: raw materials
GDP per capital
Capital Goods
• is the income per person in a certain country/city.
• are physical assets that are used in the production of
• Computed as:
other goods or services.
𝑇𝑜𝑡𝑎𝑙 𝐺𝐷𝑃
• Examples of capital goods include machinery, 𝐺𝐷𝑃 𝑝𝑒𝑟 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 =
𝑇𝑜𝑡𝑎𝑙 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛
equipment, vehicles, buildings, and technology
infrastructure.
Consumption Expenditure
• Capital goods contribute to economic growth by
• is the spending by household on goods and services
improving productivity and efficiency in the
such as food, clothing, and entertainment.
production process.
• This component constitutes the largest share of the
nation's output as well as the reason why local
consumption is one of the major drivers of
economic development in terms of GDP measure.
Investment
• spending by firms on final Goods and services, Real GDP
primarily capital goods. • the GDP is computed using the prices of a base year
• Also, a sum of expenditure on equipment, structure, and not the current year, as it measures the real
and inventories physical production of the year.
• Calculating the Real GDP
Government purchases o Example:
• are the final goods and services bought by national 2013 Real GDP
government and local government units. = (2013 quantity of apples x 2010 price of
• This is the sum of expenditures incurred by the apples) + (2013 quantity of oranges x 2010
government in providing social service to the price of oranges)
people. = (200 x Php 10) + (300 x Php 15)
• Transfer Payment = Php 6,500
o type of government purchases that are not
included in this component. Nominal GDP
o are payments made by the government for which • If the GDP is computed using the current prices.
no current goods and services are produced or
received. GDP
o Examples: Social security benefits, • use as a measure of economic well-being of a
unemployment benefits and pension paid to country that affects and influences points for
retired government workers. decision-making as regards formulation of socio-
o "Conditional Cash Transfer" is an example in economic policies, business investments, and the
Philippines under the Pantawid Pamilyang level of consumption.
Pilipino Program by the Department of Social • GDP can only increase if there is an increase in the
welfare Development. production of goods and services produced by
factors of production, specifically from the labor
Net exports component or increase in employment that will be
• are simply the difference between exports and caused by the desire of the firms to invest and put-
imports which computed as Exportsminus Imports. up businesses in the country

Exports Gross National Product: It's the Owner, not the

• are domestically produced of final goods and Location
services that are sold abroad. Imports • Gross National Product is the total market value of
• are purchases by domestic buyers of goods and all final goods and services produced within a given
services that were produced abroad. period by factors of production owned by a
country's citizens, regardless of where the output is
*If a country's net export is positive, it shows that its produced.
domestically produced goods and services are demanded • the difference between GDP and GNP is that GNP
by other countries. includes the market value of the products and
However, if a country has negative net export, it means services produced by the country's citizens
that the country buys more from other countries instead anywhere in the world.
of profiting from its domestic production.*
Total Market Value =
GDP and the Income of Capital labor (Shares or units x price) + (Shares or units x price) =
• GDP is also the sum of all the labor income and Total Market Value
capital income.
• Third way of GDP Computation: Ex: 15 Aqua Flask ₱1000 per pc, 18 Mirror ₱30 per pc
𝐺𝐷𝑃 = 𝐿𝑎𝑏𝑜𝑟 𝐼𝑛𝑐𝑜𝑚𝑒 + 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐼𝑛𝑐𝑜𝑚𝑒 = (15x1000) + (18x30)
= 15,000 + 540
Labor income = 15,540
• is the total wages, salaries, and incomes of the
employed and self-employed of most economies. The relationship between GDP and Expenditures on
• this comprises 2/3 of the total GDP. goods and services can be expressed in the following
equation:
Capital labor Y= C + I + G + NX
• is the total payments made to owners of physical Y= gross domestic product
capital, such as the rent paid, profits of business C= consumption expenditure
owners who sell factories and machines, as well as I= investments
royalty fees paid for copyrights and patents G= government purchases
• is equal to 1/3 of the GDP. NX= net exports
 Chapter 8: Money and Monetary Policy Concept of Banking
• Most basic function: accept deposits from people
Money who save and lend money to parties that need
• It has been a significant contribution to the world as funding.
it established a system that facilitates the exchange • Depositors or savers place their money in banks for
of goods and services from the seller to the buyer. the purpose of:
• Through its several functions, it was able to help o Earning interest
the entire human race identify the value of a o Security from lost, and
market’s demand on a certain product. o Storage

Types of Money Interest is the percentage that banks pay the depositors.
• Commodity Money
o Gold and Silver in the past are considered as Loan is a sum of money that one or more individuals or
commodity money. companies borrow from banks or other financial
o An item that has an intrinsic value can be used institutions so as to financially manage planned or
as a form of money. unplanned events.
• Fiat Money
o Type of money that cannot stand alone. FUNCTION OF BANKS
o Without government decree mandating its use, Financial Intermediation Process
fiat money will just be a worthless paper. • refers to the functions of deposit-taking and
o Fiat money’s value only comes from the law that credit/lending activities that banks facilitate.
gives it value in the area or country where it is Treasury Operations (investment/trading).
used. • Banks engage in the trading of the stocks of
companies.
In Rome, salt was even used to compensate for pay
Borrowing
(that’s where the word salary came from), and in Africa,
it was also used to bargain. • Liquidity is the speed at which assets can be easily
converted to the accepted medium of exchange.
Barter • Bank Run happens when the public, learning of a
• is the exchange of two different commodities possibility that the bank is no longer capable of
between two parties. returning their money, “runs” to the bank to
withdraw.
Meaning and Use of Money Trust Operations
• money as wealth. • allow the banks to be the managers of the
• people in business, accounting, or finance call it depositors’ money for a specific purpose.
cash, an amount that businessmen and accountants
Private Banking
enter in their record books and balance.
• provides additional resources and VIP treatments to
• Money is an item that is used by buyers to purchase
depositors who have maintained a certain amount of
goods and services.
untouched deposits with the bank for a specific
period.
Three Functions of Money
• Medium of Exchange Foreign Currency Denomination Unit (FDCU)
o As a medium of exchange, money facilitates the • is a function of the banks that deals with foreign
transfer of a product from one person to another. currency.
• Unit of Account International Banking
o Money as a unit of account becomes the • used to cater to our friends and relatives overseas.
measure that people use to buy the goods that • International Banking includes the remittance of
they want.
money from abroad to our country.
• Store of Value
o Money stores the value that it carries. Brokerage
o Whatever number is imprinted in that bill or • Brokers are professionals who service clients for
minted on that coin stays there. specific purposes.
Investment Banking or Underwriting
Banks • banks may lend help by distributing the company
• are institutions that serve as intermediaries between bonds on behalf of this client-company.
the savers and the borrowers.
• They are the links of the people who save and the Al-Amanah Islamic Bank.
people who borrow. • The most unique of all the banks in the Philippines
• instead of charging interest payments on the money
they lend, they just charge a certain fee for the
transaction.
 TYPES OF BANKS RP is the Repo Rate or Repurchase Rate
In the Philippines, there are seven major types of banks, • It is the rate at which BSP sells its securities to the
namely: bank.
• Universal Banks RRP is the Reverse Repo Rate or Reverse
o biggest of all in terms of asset size. Repurchase Rate
o They serve all bank functions. • It is the rate at which the banks redeem the BSP-
• Commercial Banks issued instruments.
• Thrift Banks Money Creation
• Rural Banks • The concept of money creation believed that when
o are established to service smaller institutions and money is placed in banks and financial institutions,
fellow farmers and those engaged in the it multiplies.
agriculture industry. • When we talk about money multiplying, it means
o Some banks were originally established for that its value is increasing.
agrarian reform funding.
• Cooperative Banks Chapter 9: Basic Finance
• Islamic Banks, and
Saving means placing your money in the bank or staying
• Digital Banks inside the cash box while
o are banks that do not have physical offices and
operate online using websites or software Investing using your money to make it grow by buying
assets such as stocks, property, and shares.
applications.
o They are accessible via the internet, where all Investing Portfolio is a collection of investment assets.
banking transactions transpire. Diversification means spreading your income into
different types from banks, corporate bonds,
Central Banking in the Philippines Government bills, and other Options.
• The Bangko Sentral ng Pilipinas (BSP)
o has been given independence and power to
govern all banks and nonbank financial Concept of RISK- RETURN TRADE-OFF
institutions to maintain monetary stability in The higher the risk, the higher the return.
the country.
Government bonds are low-interest and relatively low-
o the supervisor of all banks that regularly
risk.
monitors and examines the operations of the
banks and their compliance with banking rules Company equity stocks especially those in the
and regulations. Philippines Stock Exchange (PSE) are volatile and
o bank of banks accompanied by a high level of risk.
o issuer of money. (has the exclusive authority to
issue the national currency)
FINANCIAL MARKETS AND THE ECONOMY
Monetary Policy Financial Market
• This decrease in value is because of inflation. • They facilitate the trading of assets determine their
• If the BSP wants to increase prices, it decreases prices and offer opportunities for investment and
risk management.
money supply, and if it wants to decrease prices, it
Economy
increases money supply.
• refers to the production, consumption and exchange
of goods and services within a country or globally.
It has three different tools that it uses to control money
supply: Event Out Consumption Needs
• Open market operation (OMO) • When it comes to consumption individuals need
o is a term that refers to the purchase and sale of to budget prioritize their spending and make
securities in the open market by the Federal decisions about what they consume.
Reserve (Fed).. Allocating risks
• Reserve requirements
o This level can be either decreased or increased if • It involves identifying risks that individuals and
the central bank wants the money supply to organizations may face assessing them
accurately and effectively managing them.
increase, it decreases the reserve requirement.
• Interest rates Business Management
o interest that the banks use is not dictated by the • encompasses all the activities and strategies
BSP because that will be tantamount to involved in operating and leading a business
controlling and managing the bank itself. successfully.
Ethical practices
• they involve conducting business in a
responsible manner while being socially
accountable.
Real Assets • Performance of the investment
• those resources deployed to produce goods and o How good is the rate of return for the past five
services such as land, building, supplies, years?
inventories, and machines. o The investment performance is measured over a
• mostly tangible and concrete that generate income specific period of time and in a specific
for the firms and consequently. currency.
• Diversification
Financial Assets o How much have you currently invested in the
• Also known as paper assets, are evidence asset?
supporting claims or real assets by its holder. o The process of spreading investments across
• It is also a non-physical asset that gets its value different asset
from a contractual right or ownership claim.
• Financial Assets are classified into three: Financial Intermediaries
o Fixed Income Securities • like banks, credit unions, insurance companies,
▪ are financial assets that promise an even and pension funds, mutual funds and investment banks
“Fixed” percentage or amount of return are players, in ensuring functioning of financial
depending on the value of the fixed income markets and supporting our overall economy.
security that you have purchased.
o Equity Time value of money
▪ is a financial asset that gives you part • is the concept that the sum of money is worth more
ownership of the firm. now than the same sum will be at a future date due
o Derivative Securities to its earnings potential in the interim.
▪ financial instrument that derives its value
from the movement in commodity price, This is how simple interest is computed:
foreign exchange rate, and interest rate of an I = Prt
underlying asset or financial instrument. r = rate of interest
Properties t = time (expressed in years)
• are the item that a person or a business has a legal I = the amount of interest
title owner. Some of them are considered
Collectors. Compound interest
• is earning interest on interest. Meaning, every
KEY CONSIDERATION IN INVESTMENTS month, the interest that it accrues is based not only
• Investment Objectives on the principal, but also on the interest that has
o What is your purpose in investing in this asset? already been earned in prior months.
o Safety, income, and capital gains are the big Formula`s
three objectives of investing. A.) I = (P) (1 +r)^t
o Tax minimization is when you legitimately = ( 1000) (1 + 0.01)^12
arrange your tax affairs to reduce the amount of = 1,000 x 1.138
tax you pay. = 1,138
• Available funds Interest earned on interest (138 – 120) is 18 pesos.
o How much are you able to allocate for the
investment? B.) A = P (1+r/n)^nt
o Available funds are the amount of money that is P = Principal Amount
in your bank account and accessible for r = rate of interest = 100,000 (1+5%/1)^5
immediate use. t = time period = 100,000 (1+0.05)^5
• Level of risk tolerance n = number of times the interest = 100,000 (1+0.05)^5 is
o What is your risk appetite? compounded in a year = 100,000 (1.2763)
o Are you aggressive or conservative? A = Total accrued amount = 127,630
• Investment horizon
o Is this for short-term or long term?
o The investment horizon describes the time limit
of the investment portfolio or security that the
investor is likely to hold before selling it.
• Accessibility of funds
o This is a procedure which allows an individual, a
local authority or another organization to apply
for authority to access and manage the funds
belonging to an incapable adult.
• Taxation Treatment
• How are your earnings from this investment
taxed?
 Chapter 10: Fiscal Policy and Public • Policies Concerning Government Purchases of
Expenditure Goods and Services
o Private consumption is not the only source of
Keynesian Theory of Macroeconomics firm’s profit.
• John Maynard Keynes (pronounced as canes) is o It refers to the expenditure of infrastructure
one of the highly influential British economists of projects, the payment of civil service and public
the 21st century. service personnel, the purchase of office
• According to his theories, a government plays a software and equipment, and the upkeep of
vital role in the development and/ or demise of its public buildings.
policies concerning spending and taxes.
Economics of Tax
Stabilization Tool Imposition of taxes can vary from one place to
• The measures used by a government to attain its another place due to differing tax rates. And there are
economic stability aims are referred to as two things to consider in taxation, and that is:
stabilization policy. 1. efficiency in collecting its taxes.
• These policies' respective goals include releasing 2. equity - how uniform and fair would the taxes
money into the economy, making it simpler for imposed be.
people to borrow and spend money, and assisting
the market. Flypaper Theory - the party to whom taxes are imposed
is the only party who really bears the tax. (made invalid
Fiscal Policy as a Stabilization Tool by tax incidence)
• It refers to the decisions about how much the
government spends and how much tax revenue it Supply and Demand - showcases a better
collects. demonstration for tax incidence.
• To avoid recession, the government will increase
EQUALITY AND EQUITY IN TAX
spending, reduce taxes, or do both to expand the
2 principles:
economy.
• Benefit Principle
Output Gaps o People who receive the most benefit from the
government should be the one to pay more taxes.
• Occur when the level of production of goods and
services is higher than the demand, or vice versa. • Ability-to-pay Principle
• This is more popularly known as a period of o also called THEORETICAL JUSTICE
economic recession. o People who are more able to pay taxes should pay
more.
MONETARY POLICY VS. FISCAL POLICY
Monetary policy OTHER BENEFITS OF FISCAL POLICY
• is a set of stabilization tools that encourages Governments also spend for another purposes and aims
spending/ consumption of the households and to:
firm’s production level just like what fiscal policies 1. Provide public/social services
are for. 2. Create employment
• Fiscal and Monetary Policy have the same 3. Encourage competition
objectives. The only difference is the economic
instruments used. Demise - Something or someone is their end or death.
o Monetary Policies use interest rates as its Equity - how uniform and fair would the taxes imposed
instruments. be. (one of the two things to consider in taxation)
o Fiscal policies use three divisions, namely, taxes, Macroeconomics - A branch of economics that studies
transfer payments, and purchase of goods and how an overall economy behave.
services as its instruments. Recession - Is a significant, widespread, and prolonged
downturn in economic activity.
THREE DIVISIONS OF FISCAL POLICY Stabilization policy - refers to a strategy implemented
by the government of a nation to ensure that the
• Policies Concerning Taxes economy is steady.
o The salary that they received every 15th and Supreme Court - has the responsibility to limit the
30th is already called the Net Payor Disposable power of taxation.
Income (Net Payor Disposable Income = Gross Taxation - Its plenary nature is its basis and
Salary – Tax) implementation are all provided by the state's law, and
its other nature is that it has the power to destroy since
• Policies Concerning Transfer Payments its burden can be dangerously unlimited as long as it
o Pension of retired government employees and abides by the Constitution.
unemployment benefits. Taxes - An amount of money that a government requires
o Positive relationship to the level of household people to pay according to their income.
consumption. Tax Incidence - distribution of tax burden among sellers
and buyers.
Tax Rate - it is what makes different sectors have
various imposed taxes.
Chapter 11: Economic Issues CPI = Cost of basket of good in the current year /
Cost of basket of goods in the base year
BUSINESS CYCLES IN THE ECONOMY Inflation Rate = (Year 2’s CPI – Year’s 1 CPI) /
Business cycles Year’s 1 CPI
• Also known as boom-bust or economic cycles, are
movements (upward or downward) in economic Example:
1.38−1.10
activities that refer to the period of expansions and Inflation Rate between 2001 and 2002 = 1.10
contractions in the economy. Inflation Rate between 2001 and 2002 = 0.25
Depression Phase Inflation rate in percentage (%) = 0.25 x 100
• This cycle is the period in which the economy is at Inflation rate between 2001 and 2002 = 25%
its trough or bottom, a period also known as a
crisis. PURCHASING POWER OF PESO
The Boom Cycle
• Also known as the prosperity cycle, is obvious Purchasing Power of Peso (PPP)
when outputs in production are at their peak when • The value of the currency at a given time
the economy is considered to be at its best. Ceteris Paribus
Inflation • A Latin word that says "all other things being
• A general increase in prices and fall in the equal"; in economics, it acts as a shorthand
purchasing value of money; connotes an increase in indication of the effect one economic variable has
the price levels of goods and services. on another, provided all other variables remain the
Inflation Rate same.
• Prices are charged per commodity. Nominal value
Hike Inflation • A product's value in terms of its present currency
• The rate of increase in prices over a given period of value
time
Core Inflation Rate Real Value
• Is expressed in physical terms (e.g., the quantity of
• It is the modified inflation rate computation.
goods or services that can be exchanged for that
• It is also the increase in the price levels of goods,
product).
excluding food and fuel.
Outliers REGULATING INFLATION
• These are abnormal points in a group of data. Deflating
PRICE INDEX • The process of dividing the nominal value with a
price index; is the process of finding out the real
Price Index value of a commodity now after determining the
• The comparison of the change in a family's cost of year that will be considered its base.
living from one year with the current year.
Deflation
Base year • The decrease in the price levels of goods and
• The year with which the current year is compared. services.
Basket of goods - It is the goods that the consumers
buy in the market. Zimbabwe’s Case: A Victim of Hyperinflation in the
21st Century Modern Economy
Consumer Price Index (CPI)
• It is the one used to determine the movement of • Zimbabwe is the only country that issued the
prices for different commodities in different highest recorded denomination of bills in history –
industries in different territories. the famous $100 trillion Zimbabwean.
• Factors that may affect the analysis in determining • The official exchange rate between the U.S. dollar
the increase or decrease in CPI: and Zimbabwean on December 31, 2008, was US$1
o Change in the composition of the goods in our = Z$4 million.
basket • According to the U.N. Office for the Coordination
o Price of each commodity of Humanitarian Affairs, the country’s
o Assumed quantity per good unemployment was at 94%, which made Zimbabwe
o Base year that is used the bread beggar of Africa.
Hyperinflation
• Refers to a period of extremely high inflation;
occurs when there are too many moneys in the
circulation.
CAUSES OF HYPERINFLATION IN ZIMBABWE: THE ECONOMIC, PSYCHOLOGICAL, AND
• Economic mismanagement SOCIAL COSTS OF UNEMPLOYMENT
o A country’s mismanagement concerned with the Economic Costs
organization of money, industry, and trading. • The economic cost of unemployment at the
• Conversion of Agricultural Lands individual level is the loss of income that is used in
o the act or method of modifying the current his/her individual consumption and savings, if there
physical use of a parcel of agricultural land for is any left.
either a non-agricultural purpose or the same Psychological Costs
agricultural use.
• The psychological cost of unemployment may
• Fiscal
result in depression, and low morale and self-worth,
o policy enacted by the legislative branch of
government. and also affect the way he/she thinks about his/her
o It deals with tax policy and government contribution to society.
spending. Social Costs
• Monetary policies • The social costs of unemployment are a result of the
o enacted by a government’s central bank. economic and psychological effects (Frank &
o It deals with changes in the money supply of a Bernanke, 2013)
nation.
• Increasing external/ foreign debt TYPES OF UNEMPLOYMENT: CAUSES AND
o the portion of a country’s debt that is borrowed EFFECTS
from foreign lenders, including commercial Unemployment
banks, governments, or international financial • A term referring to individuals who are employable
institutions. and actively seeking a job but are unable to find a
• Corruption job.
o Dishonest or illegal behavior especially by
powerful people (such as bribery). Types of Unemployment
Frictional Unemployment
Drought
• It is a type of short-term unemployment that occurs
• A period of abnormally dry weather sufficiently
prolonged for the lack of water to cause serious when a person leaves their job to search for a new
hydrologic imbalance in the affected area. career.
• Often a sign of healthy economy.
GDP (Gross Domestic Product) • Example: New graduates who are entering labor
• Measures the monetary value of final goods and force and seeking out their first job.
services. It counts all of the output generated within
the borders of a country. Structural Unemployment
Wages and Unemployment • It is a type of long-term unemployment, an
involuntary unemployment caused by the change in
Law of Supply the demand of a particular good or service and
• An increase in the price of goods or services results technology advancement.
in an increase in their supply, and vice versa.
• The available skills of the labor market are not what
Law of Demand the company needs anymore.
• It is an indirect relationship between the price of a • Example: From Agricultural products to Industrial
good or service and the quantity of that good or goods and services.
service that consumers are willing and able to buy.
Cyclical Unemployment
Labor Force and Unemployment
• Occurs when the labor market does have the
Labor Force
required skill set but there is insufficient level of
• It is the total number of people who are currently
demand.
employed plus the number of people who are
unemployed and seeking employment.
Employment Rate
Unemployment
• Defined as a measure of the extent to which
• Referring to individuals who are employable and
available labor resources (people available to work)
seeking a job but are unable to find a job.
are being used.
Indexing
• Refers to the use of some benchmark indicator or
measure as a reference or yardstick.
THE CONNECTION OF AGRARIAN REFORM IN Chapter 12: Trade, Globalization, and the
THE ECONOMY International Economy
Agrarian Reform “TRADE CAN MAKE EVERYONE BETTER OFF” –
• Government-initiated or government-backed GREGORY MANKIW
redistribution of agricultural land, broadly overall
redirection to the agrarian system. The term Trade
land/agrarian reform was first known or used in • The action of buying and selling goods and
1846. services.
Feudal Era International Trade
• A system for structuring society around • The exchange of capital, goods and services across
relationships derived from the holding of land, international borders or territories.
known as a fiefdom or fief, in exchange for service Trade Policies
or labor. • Own measurement of each country that regulates
Agricultural Products the conduct of trade.
• Agricultural commodity or product, whether raw or • These policies govern the exports and imports of
processed. the country.
• Some of these policies include tariffs and import
The Role of Agrarian Reform in Economic quota.
Development Tariffs
• Agrarian Reform is important in the pursuit of • The tax imposed on imported goods.
economic development, and it is where countries Import Quota
earn their national income from exportation and • Is the limit imposed on the quantity of goods
local consumption. imported.
Commercial Use Export Developments
• Any activity in which you use a product or service • An interval measure being implemented by the
for financial gain. government to improve exports.
Industrial Use Absolute Advantages
• A property that is intended to be used in whole or in • An economic concept used when comparing the
part for the manufacture, conversion, processing, product of one person, firm or nation to that of
cleaning, laundering, or assembly of any product, another.
commodity, or article. Opportunity Cost
Rural Area
• Measures the trade-off between the two goods that
• It is an area of land outside the densely populated each producer faces.
urban areas in a town or city. Globalization
• Is a term used to describe how trade and technology
Different Types of Agricultural Land:
have made the world into a more connected and
Arable Land
interdependent place.
• Capable of producing crops
• Globalization is a major move in the information
Permanent Cropland
age.
• Land cultivated with crops that occupy the land for
long periods and need not be replanted after each ROLES OF TRADE LIBERALIZATION
harvest. ORGANIZATIONS:
Permanent Meadows/Pastures
• There are a number of trade liberalization groups
• The land is used permanently (five years or more) that were founded to make sure that most, if not all,
to grow herbaceous forage crops. nations in the globe profit from international
Forest Lands commerce.
• Land covered with forest or reserved for the growth • To protect countries from abuse.
of forests.
• To ensure that each member of their organizations
maximize its specialization in their respective fields
The Philippines in the Top 10 Largest Rice Producers
of expertise.
in the World
• Rice is the most widely consumed staple food, our
country’s major agricultural product is “palay”
where rice comes from.
 WORLD TRADE ORGANIZATION (WTO) MEMBERS OF APEC:
• Is the core of the trading nations in the world when • Republic of the Philippines
it comes to negotiating and ratifying their • Australia
agreements with each other. • Canada
Objective of WTO: • Brunei
• To help the sellers and producers of different goods • Chile
and services, including those who export, to • China
conduct their business under well-established • Hong Kong
policies. • Indonesia
• Japan
GENERAL AGREEMENT ON TARIFFS AND
• Republic of Korea
TRADE (GATT)
• Malaysia
• Came into the force on January 1, 1948, and was
• Mexico
updated in 1994. - GATT is an overall agreement
• New Zealand
applied "provisionally" by all controlling policies
• Papua New Guinea
(the members of the WTO that spearheaded the said
agreement). • Peru
• The agreement embodies a common understanding • Russia
between the members regarding trade and • Singapore
development. • Taipei
Objective of GATT: • Thailand
• To raise standards of living and the progressive • Vietnam
economic development of all the member-countries • United States
and place urgency for less-developed ones.

NORTH AMERICAN FREE TRADE AGREEMENT

(NAFTA)
• Est.1994
• It results the free zone in the world.
• It developed the framework for economic growth
for countries such as United States, Canada and
Mexico.
• It has solidified the notion that free trade increases
competitiveness and wealth, providing benefits
enjoyed by farmers, manufacturers, and workers. -
The largest trade bloc in the world since 2007
(when all the purchasing power and GDP of all the
members was combined).

ASIA PACIFIC COOPERATION (APEC)

• Est. 1989 by the states in Asia Pacific Region
• Composed of 21 members
• It's strengthened by its open dialogue among its
member-states, even it operates in non-binding
commitment.
• It has no treaty obligation requirements among its
members, unlike WTO or other trade organizations.