lesson 3

• Underdevelopment is an economic condition characterized by low production and standard of living
• Inequality refers to the unequal access to wealth and income
• Poverty is the condition where a population is only able to meet its basic subsistence needs such as food, clothing, and shelter
• Sustainable Development

  Considers the impact of human activities on the environment and believes that environmental degradation has significant economic impact. Implementation of responsible and environmentally-responsible economic policies can contribute to addressing environmental problems
• Development

  A significant change in the quality of life of individuals such as less poverty, improved health and nutrition, better education, clean environment, greater freedoms and more opportunities, and a richer culture
• Unemployment refers to the portion of the labor force that is willing to engage in productive activities
• Factors in Determining the State of Economic Growth

  Level of Production - economic growth is measured by the increase in a country's GDP, which is often compared with the population. This indicator mainly focuses on material wealth. An increase in GDP, among other indicators of economic growth, does not necessarily translate to concrete improvements in the lives of the citizens
• Measures of economic equality

  • Gini Coefficient
  • Kuznet's ratio
• Kuznet's ratio

  Compares the income of the highest-earning or richest 20% of the population with the lowest-earning or poorest 40%. The ratio of the income between the top 20% and the low 40% indicates the level of inequality in a population. The higher the value of the ratio, the greater the inequality, and vice versa
• The Earliest Economic Theories Equated Economic Development With Prosperity

  • Capitalism
  • Marxism
  • Contemporary Economics
• Quality of Life

  Considers aspects such as health, nutrition, education, environment, and income distribution in analyzing development
• Gini Coefficient

  A ratio indicating how much a certain population's distribution of income deviates from a set standard of equality. A Gini coefficient of zero (0) indicates perfect equality, while a value of one (1) indicates the greatest possible level of inequality
• Absolute Poverty

  Refers to the severe deprivation of basic human needs which include food, safe drinking water, sanitation facilities, and more. It is not defined merely by low income but also by lack of access. People who earn $1 or less per day are considered to experience absolute poverty
• Structural Unemployment


  Arises when workers experience longer periods of frictional or cyclical unemployment, leading to irregular periods of employment and unemployment
• Inflation refers to the sustained and continual increase in the prices of goods and services
• Invisible Underemployment

  Refers to workers who work normal or more hours in their jobs, but their talents are underutilized or they receive inadequate compensation
• Underemployment

  Refers to the state of an individual being employed, but talents and expertise are underutilized or not a match to the job
• Unemployment

  Refers to the portion of the labor force that is willing to engage in productive activities, yet fail to do so
• Frictional Unemployment

  Occurs when a worker is 'between jobs' and looking for another
• The higher the value of the ratio, the greater the inequality, and vice versa
• Professions needed abroad

  • Caregivers
  • Nurses
  • Medical practitioners
• Stagflation

  A period of high inflation, slow economic growth, and high unemployment
• Compressed Workweek Proposal

  A compressed 4-day work week where employees work more than 12 hours a day with a day off during weekdays
• Consumer Price Index (CPI)


  Used by economists to measure inflation based on the prices of selected commodities regularly purchased by households
• Underemployment problem forecasted to decline
• Cyclical Unemployment

  Brought about due to changes in the economy or the business, seen during a downturn when there is less demand for workers
• Hyperinflation


  Very high inflation affecting the value of currency and purchasing power
• Means to address employment and underemployment

  • Improve the skills of the labor force
  • Ensure they are trained in professions vital to the economy
• Visible Underemployment


  Refers to workers who work for less than the normal work hours and look for additional work
• Seasonal Unemployment


  Occurs at certain times of the year, mainly seen in industries such as tourism, retail, construction, and agriculture
• The ratio of income between the top 20% and the lowest-earning or poorest 40% indicates the level of inequality in a population