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National Economy (Macroeconomy).pptx
- 4. CONSUMP TION The purchase and use of goods and services
- 5. EMPLOYM ENT Refers to people at work
- 6. PRODUCTI ON The processing or combining factors of production into goods and services
- 7. INCOME The payment for the inputs used in production and for the goods and services consumed
- 10. WHAT IS THE PHILIPPINE ECONOMY It shows a growing economy. The outward movement of the arrows indicates expanding consumption, employment, production, and income. It happens when consumers spend their earnings wisely, and entrepreneurs invest their revenues profitably.
- 12. WHAT IS THE PHILIPPINE ECONOMY The figure shows the opposite scenario. Consumption, employment, production, and income are shrinking as the inward movement of the arrows suggests. The economy, in this case, could be experiencing a very serious inflation or deflation
- 14. MACROECONOMIC SECTORS John Maynard Keynes divided national economy into four major interacting sectors: consumer, business, government, and the rest of the world. Their interrelationship portray how most economics operate these days.
- 15. • CONSUMER SECTOR – Comprised of private consumers. Also known as household sector. • BUSINESS SECTOR – Profit-seeking organizations. Invariably called firms, companies or enterprises. • PUBLIC SECTOR – The Philippine government itself is the biggest economic entity in the country. • FOREIGN SECTOR – The rest of the world belongs to this sector.
- 16. THE CIRCULAR FLOW OF INCOME, GOODS, AND SERVICES
- 17. THE CIRCULAR FLOW OF INCOME, GOODS, AND SERVICES The term circular flow of income or circular flow of economic activity refers to “a simple economic model which describes the circulation/flow of income between producers and consumers". In the circular flow model, producer and consumer are referred to as "firms" and "households" respectively.
- 18. SIGNIFICANCE OF STUDY OF CIRCULAR FLOW OF INCOME • Measurement of National Income- National income is an estimation of aggregation of any of economic activity of the circular flow. It is either the income of all the factors of production or the expenditure of various sectors of economy • Knowledge of Interdependence- Circular flow of income signifies the interdependence of each of activity upon one another. • Unending Nature of Economic Activities- It signifies that production, income and expenditure are of unending nature, therefore, economic activities in an economy can never come to a halt. National income is also bound to rise
- 20. • they supply different factors of production • members of household also work as consum • they serve as workers in the economy • they are the tax payers HOUSEHOLD BUSINESSES • Produce goods and services and supply them in the market. • Firms purchase inputs or raw materials from households to use them in the production process. • Just as household’s consumer goods and services to satisfy their wants, similarly firms produce goods and services to make
- 21. GOVERNMENT
- 22. • Government earns revenue either from tax or non- tax sources both from households and firms. • Government provides essential public services such as maintenance of law and order, defense services, judiciary etc. The government plays a key role in all types of economic systems—capitalist, socialist and mixed. In a capitalist economy, the government does not interfere. It simply establishes and protects property rights. It sets standards for weights and measures, and the monetary system. GOVERNMENT
- 23. THREE SECTOR MODEL • Three sector model is created by adding the Government sector to the Two sector model • Government spends a part of its tax revenue as factor payments to the households and a part in the form of transfer payments as pension and food subsidy etc. HOUSEHOLD BUSINESSES GOVERNMENT
- 25. • consists of banks and non-bank intermediaries who engage in the borrowing (savings from households)and lending of money. • the leakage that financial institutions provide in the economy is the option for households to save their money. FINANCIAL INSTITUTIO NS
- 26. FOUR SECTOR MODEL . This circular flow of model shows the four macro economic sectors of the economy i.e. household, business firm, government, and financial institutions. HOUSEHOLD GOVERNMENT BUSINESSES FINANCIAL INSTITUTIONS
- 27. FOUR SECTOR MODEL . If the households save a part of their income in the financial market (such as banks, insurance companies, stock market etc), this reduces the expenditure of household on goods and services. • Ultimately it reduces the flow of money/income of the economy.
- 28. FIVE SECTOR MODEL • Here we assume that only business forms can interact with the foreign countries and dealt with the export and import of the country. • Money goes through import from the economy again return HOUSEHOLD GOVERNMENT FINANCIAL INSTITUTIONS BUSINESSES FOREIGN SECTOR
- 29. HOUSEH OLDS GOVERNM ENT BUSINE SSES OUTPUT / PRODUC T MARKET INPUT / RESOUR CE MARKET Goods and Services Goods and Services Factors of Production Land, Labor, Capital and Entrepreneurship Rent, Salary, Interest and Profit Factor Income Payment for Goods and Services Reven ue Taxes Taxes Public Services Public Services Land, Labor, Capita l Rent, Salary and Profit Goods and Servic es Gov’t Spendi ng
- 30. HOUSEH OLD GOVERNM ENT PRODU CT MARKE T FOREIGN SECTOR Expor t Impor t OFW s Remittan ces Foreign Loan / Foreign Aid Foreign Debt
- 32. OTHER KEY SECTORS OF THE NATIONAL
- 33. KEY SECTORS OF THE NATIONAL ECONOMY . Production is a major economic activity. It is responsible for turning out goods and services for the economy's consumption. The national economy is divided into three production sectors. These are the agricultural sector, the industrial sector, and the service sector.
- 34. • Agricultural Sector – comprised of farming, fisheries, forestry, raising livestock and poultry.
- 35. • Industrial Sector – under this sector are manufacturing, construction, quarrying, mining, electricity, power and water generation.
- 36. • Service Sector – transportation, telecommunications, trade and commerce, real estate and housing, banking and finance, and personal and professional services are among its components.
Editor's Notes
- A resource market is a market where a business can go and purchase resources to produce goods and services. Resource markets can be distinguished from product markets, where finished goods and services are sold to consumers, and financial markets, where financial assets are traded. Product or output markets are the markets in which goods and services are exchanged. • Input markets are the markets in which resources—labor, capital, and land—used to produce products, are exchanged. a circular flow of income, goods, and services. It is a macroeconomics model that shows the interactions and interrelationships among the four macroeconomic sectors. The household are the suppliers of factors of production, which are land, labor, capital, and entrepreneurship. The firms buy these resources from the households through the input market and process them into products. Business revenues are commonly referred to as profit. The government plays an active role in the economy. It levies taxes on the incomes of the households and the revenues of the firms. The government spends those taxes on public goods and services that benefit the entire economy. The Philippine government transacts business with both the input and the output markets. Examples of government transactions in the input market are the expropriation of private lands for public use (e.g. for construction of public roads and markets) and the hiring of workers for government projects and offices. Government transactions in the output market involve the operations of government-owned and controlled corporations (GOCCs), such as the National Power Corporation (NAPOCOR), the Metropolitan Waterworks and Sewerage System (MWSS), and the Light Railway Transit Authority (LRTA).
- The foreign sector's participation in the Philippine economy is through foreign investments, foreign loans, and international trade. These are sources of foreign exchange for the Philippine economy. Foreign exchange refers to foreign currencies the country uses for trade and to service foreign debts. Foreign exchange reserves (foreign currencies held by the Bangko. Sentral ng Pilipinas) are important to the Philippine economy. There is empirical evidence that remittances contribute to economic growth, through their positive impact on consumption, savings, and investment. Remittances can also have negative impact on growth in recipient countries by reducing incentives to work, and therefore reducing labor supply or labor force participation. Figure 11.4 shows that if all forms of incomes circulate in the markets and are used productively, the economy is stable. However, if incomes leak out from the markets and are not replenished in due time, economic disequilibrium occurs. Thus, savings, taxes, and foreign exchange outflows are useful if these generate investments, jobs, and livelihood opportunities in the economy.