Chapter 13

• Anna Eleanor Roosevelt: 'An economic policy which does not consider the well-being of all will not serve the purpose of peace and the growth of well-being among the people of all nation'
• Macroeconomics

  The study of the economy as a whole
• Macroeconomics makes us appreciate how much can be sacrificed to achieve a certain level of quality of life in term of money to buy the everyday basket of goods
• Inflation

  The increasing purchasing power of money to acquire goods and services
• Deflation

  The decreasing purchasing power of money to acquire goods and services
• The Economic Cycle

  1. Peak

  2. Trough

  3. Recession

  4. Depression
• Recession

  Two consecutive quarters of decline in economic activity, characterized by increased unemployment
• Depression

  Long-term downturn in economic activity, characterized by an economic slowdown and by sustained fall in the economy in years
• Fiscal Policy

  The use of government spending and taxation to influence the economy
• Monetary Policy

  A set of actions available to a nation's central bank to achieve sustainable economic growth by adjusting the money supply
• Inflation

  Unemployment
• Schools of Thought in Economics

  • Keynesian Theory
  • Neo-Keynesian Theory
  • Classical Economic Theory
  • Monetarist Theory
  • Supply-side Theory
• Keynesian Theory

  Macroeconomic advocacy on more government expenditures, lowering of taxes to pull-out an economy from depression
• Neo-Keynesian Theory

  The market is not self-regulating; hence, there is a need to stimulate the economic growth by combining fiscal and monetary policies
• Classical Economic Theory

  It explains that an economy will result in full-employment in the long-run with the dynamic movements of value, price, supply, demand and distribution without government intervention
• Monetarist Theory

  The most important factor that affects the economic cycle is the changes in the money supply
• Supply-side Theory

  Free trade, lowered taxes, and decreased government interventions are key to economic growth and development
• Direct Taxes

  Taxes imposed on properties and incomes and need no intermediary in the collection
• Indirect Taxes

  Sales and value-added taxes levied on goods and services by an intermediary, who may or may not pass the tax to the consumers
• Other Categorization of Taxes

  • Regressive Taxes
  • Progressive Tax
  • Proportional
• Regressive Taxes

  Taxes imposed across the board and take a negative impact on the poor, which must be disproportionate to the rich taxpayer
• Progressive Tax

  As the income increases, the tax rate increases, or the use of brackets
• Proportional


  Wherein the same percentage of tax is imposed on anyone, regardless of economic status
• Under the leadership of R. Duterte, the Republic Act 10963, otherwise known as the Tax Reform for Acceleration and Inclusion Act", or simply TRAIN law was signed
• Government around the world impose taxes to raise money to return it to the household and firms as services
• There is no perfect tax system, as people are deemed to do imperfect decisions, although there is an infinite attempt to do things seamlessly
• Environmental goods

  Clean air, clean water, and natural forests and wildlife
• Environmental goods have economic value and are faced with environmental costs while we are aiming for economic growth and development
• Carbon tax

  A kind of Pigouvian tax, making it more costly for some firms to continue operations
• Creating "markets for the environment" is the aim of environmental economics
• Government Strategy on Pollution

  • Laws to allow specific level of pollutants produces, known as having permit markets
  • Price incentive for the use of renewable energy
  • Researches for more efficient use of alternative sources of energy
  • Investing in technology that may be used to lessen the effect of pollution
• The hope is that we continue to identify the sources of the environmental problems an continue to give prescriptive or incentive-based solutions to cutting the supply and demand of the root causes
• Negotiated in 1997, the Kyoto Protocol set binding limits and targets on greenhouse gas emissions in 150 countries but not USA
• Under the Kyoto Protocol, advanced industrial states are required to make reductions in six "baskets" of gases within a five-year commitment period, 2008-2012
• Healthcare economics

  The effectiveness, efficiency, and fairness of outcome of the healthcare system in a country
• Healthcare is a special type of market because the demand for its utilization can never be known
• Category of a Healthcare System

  • Private System
  • Socialized Healthcare System
  • Mixture of all the system
• Single Payer System

  All hospitals, doctors and consultants are paid by the government, as well as the basic drugs and other services. Citizens are all required to have a health insurance.
• In the Philippines, there is the Philippine Health Insurance Corporation (PhilHealth), mandated to provide health insurance coverage and ensure affordable, acceptable and accessible healthcare services for all citizens of the country
• According to PSA, by 2017, 66% of the population has any form of Philhealth insurance, both for the urban and rural areas, 24% of the citizens has other forms of insurance such as the Government Service Insurance System (GSIS), the Social Security System (SSS) or private insurance