Economic Issues.pptx qwqwqwqwqwqwqwqwqwqw

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1. Economic Issues

2. Business Cycles in the Economy These fluctuations in economic activity that an economy experiences over a given period. Business cycles, also known as boombust or economic cycles, are movement (upward or downward) in economic activities that refer to the period of expansions and contractions in the economy.

3. Increase in indicators, such as employment , production, and income, will lead to expansions. Expansion in the economy is manifested through the increase in production and prices, as well as low interest rates among firms. This is considered as the default cycle of the economy as this is the longest among the cycles. Its complete opposite is recession.

4. The boom cycle, also known as the prosperity cycle, is obvious when outputs in production are at their peak and when the economy is considered to be at best. Rarely does an economy considered as its peak-as you would only know that when the economy starts to contract, recessions (also known as contractions) start to happen.

5. Inflation During the time of President Fidel V. Ramos the popular fish, galunggong , was called the “poor man’s fish” because it was a commodity that could be bought even by common people . Fast forward to this day, the price of galunggong has increased and other classes of our society can no longer purchase the same number as much during president’s Ramos term.

6. Price Index I s the comparison of the change in family’s cost of living from one year with current year. Base Year The year with which the current year is compared to. Consumer price Index (CPI) is the one used to determine the movement of prices for different commodities in the different industries in different territories.

7. To further understand this, we need to compute for the CPI using the formula: CPI= Cost of basket of goods in the current year / cost of basket in the base year CPI can now be computed using the information given in Tables 11.1 and 11.2 CPI =2,400 / 2,000 CPI=1.20

8. Some factors that may affect our analysis: Change in the composition of the goods in our basket Price of each commodity Assumed quantity per good Base year that is used

9. Table 11.3 Consumer price index Year CPI 2001 1.10 2002 1.38 2003 1.40 2004 1.55

10. Purchasing Power of Peso Inflation rate has been at the forefront of the factors being considered when prices are charged per commodity. In the 1990s, real estate prices have been a viable investment for everyone. Most of our baby boomers have bou ght several properties during this time. The 100,000 peso property during this time has a current price tag of 1,000,000.

11. Regulating Inflation For this family, the increase in their breadwinner’s income calls for a celebration. In the eyes of the economist, it is not. For the economist to further understand what happened, he/she looks at the numbers and divides the nominal value by, in this case the CPI.

12. Negative Inflation Inflation connotes an increase in the price levels of goods and services. Deflation- The decrease in the price levels of goods and services. Deflation happens when price levels decrease in a given economy. Hyperinflation does not have a precise definition, but a common rule of thumb is that it occurs when the rate of price inflation exceeds 50% per month. Hyperinflation also occurs when there too many money in the circulation.

13. Table 1. Hyperinflation in History

14. Zimbabwe’s case: A victim of Hyperinflation in the 21stmCentury Modern Zimbabwe is the only country that issued the highest recorded denomination of bill in history the famous $100 trillion Zimbabwean. Based on the economic records, the country entered the hyperinflationary era in March 2007 , but only started to circulate and use the said bill in early 2009.

15. Causes of Hyperinflation in Zimbabwe Drought with Land Conversion in Zimbabwe Geographically, Zimbabwe is located in the southern part of the African continent known for its dry and hot weather condition. The result of the said land conversion was felt until 2008 when tobacco, the country’s major foreign exchange crop (export product) fell 64% between 2000 and 2008.

16. Effects of hyperinflation in Zimbabwe It decreases the currency’s value and purchasing power. During the hyperinflation in Zimbabwe, however, the price increased at least a thousand times per month. This resulted in the crash of the productivity level of all it’s sectors, which resulted in a widespread shortage of even basic commodities with increased prices.

17. Wages and employment The higher the level of employment a country has, the higher the expected level of its output is, ceteris paribus .

18. Labor Force and Unemployment This section will discuss the labor force and the employment and unemployment rates. In particular, the unemployment rate is sensitive conditions in the labor market.

19. The Economic, Psychological, and social costs of Unemployment Economic Costs The economic costs of unemployment in the individual level is loss of income that is used in his/her individual consumption and savings .

20. Psychological costs He/she might also start to think that the four years with many sleepless nights, research papers submitted, daily allowance and tuition fee are wasted. Social Costs Are a result of the economic and psychological effects (Frank and Bernanke, 2013).

21. Types of Unemployment Frictional Unemployment Occurs when a person : quits his/her job before securing a new one. Is not immediately hired when fist meeting the labor force Is let go or fired by a dissatisfied employer. Except for the third condition, sometimes this type of unemployment is a good thing.

22. Structural Unemployment Another type of unemployment that is considered worse than the one discussed, which happens when workers lose their jobs because of the change in the demand of a particular good or service and/or when there is technology advancement.

23. Cyclical Unemployment If the problem of the previously discussed unemployment type lies with skills to job mismatch, cyclical unemployment occurs when the labor market does have the required skill set, and is ready to work but there is insufficient level of demand and spending of the households and firms.