Economics

1. Below is a list of topics in usually studied in economics. Determine whether each topic deals under the area of microeconomics or macroeconomics.
a. How Bangko Sentral ng Pilipinas influences the consumer spending in the Philippines.
b. How a household decides what LPG brand to buy.
c. How a firm decides whether to continue business or shutdown. d. How debt affects the income gap among Filipinos.
e. How new parents decide whether to work or stay at home with their children.
f. How the Aquino administration attracts foreign direct investments.
g. How banks implements lower interest rates on car loans. h. How the Department of Finance creates new policies on collecting more revenue from BIR and
BOC.
i. How a new entrant to the labor force decides whether to work in a private firm or a government office. j. How the government addresses the issue of urban and rural poverty.

2. Identify the economic system that each item below characterizes. a. Price system allocates the resources.
b. A central authority makes all the economic decisions. c. There is competition among the producers.
d. A master economic plan is being followed.
e. The government does not intervene in the economy.
f. All resources, goods and services, are privately owned. g. If the government fails, then the economic system will fail.
h. An authority does all the economic decision making. i. Goods and services are voluntarily exchanged.
j. Some markets are free and some are regulated.
k. Individuals are motivated by economic incentives.
l. A central authority determines how resources are allocated. m. The vulnerable sectors have no protection.

3. Determine whether each statement below is Positive or Normative.
a. The Congress should approve the Freedom of
Information Bill for transparency.
b. Total Factor Productivity increased last quarter.
c. The level of unemployment rate in this country is normal. d. The administration of President Aquino has created the largest budget surpluses since Ramos’ presidency. e. If the poverty line is raised, then those whose income level is currently at the bottom of the middle class will benefit from a tax break.
f. The Bureau of Internal Revenue collects too much taxes. g. The Bangko Sentral ng Pilipinas should to keep the inflation rate low and stable.
h. The minimum wage in National Capital Region is very low.
i. The Philippine economy is the rising star of Asia.
j. The peso to dollar exchange rate for the past five years is stable.

4.1 Use the PPF to answer the following
a. Suppose Cinna had originally expected to hire six new
Resource Writers this year. After reviewing the applicant pool, he decides to hire 10 new Resource
Writers instead. What is the opportunity cost of his decision (expressed in Flashcard Writers)?
b. Can Cinna hire 14 Resource Writers with his current budget? Justify your answer.
c. According to Cinna’s PPF, what is the maximum number of Flashcard Writers he could hire?
4.2 Match the letter of each point on the PPF to the description that best identifies it.
a. Cinna will not be utilizing his entire Flashcard and
Resource Writer budget. He could easily hire more of each. b. Cinna will hire a combination of both Resource
Writers and Flashcard Writers, but there will be more
Flashcard Writers in the mix.
c. Cinna hires only Resource Writers, thinking he will talk his friends from school into coming over for the party of the century, and later, guilt them into writing the flashcards for him.
d. Assuming there will be no sudden increase in subscriptions, this point is not within District 13’s budget. e. Cinna hires only Flashcard Writers.