Economics Economy comes from the Ancient Greek Oikos meaning household, and nomus meaning system or management. Oikonomia/oikonomus - means management of household Is a study of man in ordinary business of life, It enquires how he gets his income and how he uses it Is the social science that analyzes the production, distribution, and consumption of goods and services Economics is a science deals with the management of scarce resources. It is the study of the problem of using the available economic resources as efficiently as possible to attain the maximum fulfillment of societys unlimited demands for goods and services Scarcity pertains to limited resources of society related to unlimited demand for goods and services.

Principles of economics1. People face trade-offs Efficiency - the property of society getting the most it can from its scarce resources Equality - the property of distributing economic prosperity uniformly among the members of society2. The cost of something is what you give up to get it 3. Rational people think at the margin Rational people - people who systematically and purposefully do the best they can to achieve their objectives Comparing marginal benefits and marginal costs4. People respond to incentives An incentive is something that induces a person to act5. Trade can make everyone better off 6. Markets are usually a good way to organize economic activity Market economy - the decisions of a central planner are replaced by the decisions of millions of firms and households7. Governments can sometimes improve market outcomes (enforces the rule and policy) Property rights the ability of an individual to own and exercise control over scarce resources Market failure to refer to a situation in which the market on its own fails to produce an efficient allocation of resourcesFactors of market failureA. Externality. Example. pollutionB. Market power - ability of a single person or group to unduly influence market prices8. Countrys standard of living depends on its ability to produce goods and services Economic factors related on standard of livingA. ProductivityB. Government policyC. Best available technology9. Prices rise when the government prints too much money Inflation - an increase in the overall level of prices in the economy.10. Society faces a short-run trade-off between inflation and unemployment Business cycle - the irregular and unpredictable fluctuations in economic activity, as measured by the production of goods and services or the number of people employed.

History of Economics (Classical, Keynesian, and Modern)Classical Economics Adam Smith father of economics, responsible for recognition of economics as separate body of knowledge. Author of Wealth of the Nation known as the bible of economics. He analysed the relationship between consumers and producers through demand and supply which explained how the market works through the invisible hand. John Stuart Mill developed the basic analysis of political economy and the importance of the states role in national economy. Karl Marz influenced by the conditions brought about by the industrial revolution upon working clsses Alfred Marshall Author of Principles of economics. He developed the analysis of equilibrium of particular market and concept of marginalism

Keynes General theory John Maynard Keynes who offered an explanation of mass unemployment and suggestion for government policy to cure unemployment in his book The General Theory of Unemployment, interest and Money. He argued that there is no assurance that saving would accumulate during depression and depress interest rate, since saving depends on income and with high unemployment incomes are low.

Non-Walrasian Era (1939) John Hicks recognized for his analysis of The IS LM model. IS refers to goods market for given interest rate or investment saving while LM refers to money market for given value of aggregate output or income

Post-Keynesian Economics (after WWII) Development of rules and regulations of different private and public institutions or the mainstream economics

New Classical Economics Highlighted the importance of adherence to national expectation hypothesis and analysis. Formulating different kind of studies and new theories in economics

Economics to other sciences Business management employment opportunities, balance of economic activity History provide information about present and future economic issues Finance money, credits, banking and investment Physics speed up economic activity through invention and technological advancement Sociology deals with the behaviour of economic subject Psychology useful in the study of microeconomics

Important Economic Terms Wealth refers to anything that has a functionally value which can be traded for goods and services. Consumption refers to the direct utilization or usage of available goods and services by the buyer or consumers Production It defined as the formation by firms of an output. It is the combination of land, labor and capital in order to produce outputs of goods and services Exchange the process of trading goods/services for money or equivalent. It also includes buying goods and services by barter or market. Distribution the process of allocating scare resources. It is a the process of storing and moving products to customers often through intermediaries such wholesalers and retailers Microeconomics deals with individual decision of units of the economy like firm and households and how their choices determine relative price of goods and factor of production Macroeconomics the relationship among broad economic aggregates like national income, national output, money supply, bank deposits, total volumes of saving, investment, government spending. Economic good a good which both useful and scarce Essential good good to satisfy the basic needs of man Luxury good goods which man can do without Normative economics analysis of economics which deals with what should be. Positive economics analysis of economics which deals with what actually is. Economic resources input used in production of goods and services

The four basic types of economics resources: Land refers to all natural resources which found in nature such as iron ore, gold, diamonds, oil, air, sunshine, etc Labor human resources or any form of human effort exerted in production of goods and services such as wage-earning workers or skills , abilities and characteristic Capital plants and equipment used in the production of final goods, such as assembly lines, trucks, heavy duty machinery, factories, etc. Entrepreneurship the marshaller of resources, the person or group that marshals resources in the production of final goods (Bill Gates, Steve Jobbs, Henry Ford, etc.)Enterpreneurs possess managerial skills needed in building, operating business. He/she decided what combination of land, labor and capital are to be used in the production process

Types of Economic System Traditional Economy Basic subsistence economy, family produces goods for its own consumption. The decisions on what, how, how much, and for whom to produce are made by the head of the family. Command Economy production is dictated by the government. Economic system characterized by collective ownership of most resources and existence of a central planning agency of the state. Market economy the resources are privately own and the people themselves make the decisions. Socialism the key enterprises are owned by the state, the private ownership is recognized. However, the state has a control over a large portion of capital assets and generally responsible for production and distributions Mixed Economy is a mixture of market and command system.

Basic Analysis of Demand and Supply

Market where buyers and seller meet or where their transaction takes place such as market place, stock market, real estate market, or labor market.

A market is a group of buyers and sellers of a particular good or service. The buyers as a group determine the demand for the product, and the sellers as a group determine the supply of the product.

Competitive market to describe a market in which there are so many buyers and so many sellers that each has a negligible impact on the market price.Characteristics of perfect competitive market:1. The goods offered for sale are all exactly the same2. The buyers and sellers are numerous that no single buyer or seller has any influence over the market price.Monopoly - markets have only one seller, and this seller sets the price.

The DemandDemand pertains to the quantity of goods and services that people are ready to buy given at price at particular time. Demand implies three things:1. Desire to possess a thing2. The ability to pay for it3. Willingness to utilizing it.

Law of demand - the Law of Demand states that if price go up, the quantity demanded will go down. If price go down, the quantity demanded will go up (Consumers always tend to maximize satisfaction)

Demand schedule - a table that shows the relationship between the price of a good and the quantity demandedExample: Demand schedule for pandesal for the month of JuneSituationPrice () Quantity A 0.5010 B 1.008 C 1.506 D 2.004 E 2.502 F 3.001

The demand curve - which graphs the demand schedule, illustrates how the quantity demanded of the good changes as its price varies, because a lower price increases the quantity demanded, the demand curve slopes downward

Shifts/Change in demand there is a change in demand if the entire demands curve shifts to the right side resulting to increase in demand

Market demand - the sum of all the individual demands for a particular good or services at any price

Factors that can shift/change the demand curve1. Income2. Taste or preference3. Occasional or seasonal products4. Population and numbers of buyer5. Substitute or related goods6. Expectation of future price

SupplySupply is the quantity of goods or services that firm are ready and willing to sell at the given price within the period of time.

Law of supplyThe Law of Supply state if the price of a good or services goes up, the quantity supplied for good and service will also goes up, if the price goes down the quantity supply also goes down.Supply Schedule is the listing of various prices of products and specific quantities supplied at each of these prices.Example: Demand schedule for pandesal for the month of JuneSituationPrice () Quantity A 0.501 B 1.002 C 1.504 D 2.006 E 2.508 F 3.0010

Supply curve - which graphs the supply schedule, illustrates how the quantity supplied of the good changes as its price varies. Because a higher price increases the quantity supplied, the supply curve slopes upward.

Market supply - is the sum of the supplies of all sellers at any price at the given time

Shifts/Change in supply There is change in supply when the entire demand supply curve shifts rightward or leftward at the same price, shifts the supply curve to the right and is called an increase in supply. Similarly, any change that reduces the quantity supplied at every price shifts the supply curve to the left and is called a decrease in supply.

Factors that can shift/change the supply curve1. Factors of production, input price2. Technology3. Expectation4. Number of seller5. Weather condition6. Government policy

Equilibrium Pertains to a balance that exist when quantity demanded equals to quantity supplied The equilibrium price - the quantity of the good that buyers are willing and able to buy exactly balances the quantity that sellers are willing and able to sell. Market disequilibriumA. Surplus (excess supply) - is a condition in the market where the quantity supplied is greater than quantity demanded will cause downward pressure to price.B. Shortage (excess demand) - a situation in which quantity demanded is greater than quantity supplied Price controlA. Floor price legal minimum price imposed by the government (agricultural product when there is a bumper harvest)B. Price celling is the legal maximum price by the government if there is persistent shortage of goods

Concept of Elasticity

Elasticity Elasticity is a measure of how much buyers and sellers respond to changes in market conditions. It is a tool used in economists for measuring the reaction of a function to changes in a relative way.

Demand elasticity measure the degree of responsiveness of quantity demanded of a product to a given change in one independent variable (factor) which affect for that demand product. Price elasticity of demand responsiveness of consumers demand to change in price of the sold goods Income elasticity of demand responsiveness of consumers to change in their income Cross elasticity of demand responsiveness of demand for a certain good, in relation to change in price of other related gooods.

The price elasticity of demand measures how much the quantity demanded responds to a change in price. Demand for a good is said to be elastic if the quantity demanded responds substantially to changes in the price. Demand is said to be inelastic if the quantity demanded responds only slightly to changes in the price.

Factors that influences the price elasticity of demand.A. Availability of close substitute (elastic)B. Necessities (inelastic) versus Luxuries (elastic)C. Market boundaries ( narrow market boundaries = elastic) Broad category = inelasticD. Time Horizon (Longer time horizon = elastic)`

Computing the Price Elasticity of DemandPrice elasticity of demand = Percentage change in quantity demanded. Percentage change in price

For example, A 10 percent increase in the price of an ice-cream cone causes the amount of ice cream you buy to fall by 20 percent. We calculate your elasticity of demand as:

Price elasticity of demand = 20 percent = 2. 10 percentIn this example, the elasticity is 2, reflecting that the change in the quantity demanded is proportionately twice as large as the change in the price.

The Midpoint MethodThe elasticity from point A to point BExamplePoint A:Price = 4 Quantity = 120Point B: Price = 6 Quantity = 80The price rises by 50 percent, and the quantity falls by 33 percentMidpoint:Price = 5 Quantity = 100

Percentage change in price = (6-4)/5 X 100 = 40%Percentage change in quantity = (120-80)/100 X 100 =40%

The elasticity is 1, reflecting that the change in the quantity demanded is proportionately as equal to 1 in terms of price.

Price elasticity of demand = (Q2 - Q1) P2 P1 =(80 120) 6 -4 (Q2 + Q1)/2 [(P2 + P1) / 2] (80 + 120)/2 (6 + 4)/2_-40 2 = -40 2 = -200 = -1200/2 10/2 100 5 200

Ignore the negative sign, It is always negative due to nature of demand. If price increase less quantity of goods is demanded, therefore quantity change is negative. If the computed elasticity is less than 1 it is inelastic and more than 1 is elastic.

The Income Elasticity of DemandIncome elasticity of demand = Percentage change in quantity demanded. Percentage change in income

Higher income raises the quantity demanded. Because quantity demanded and income move in the same direction, normal goods have positive income elasticities. A few goods, such as bus rides, are inferior goods: Higher income lowers the quantity demanded. Because quantity demanded and income move in opposite directions, inferior goods have negative income elasticities.

The Cross-Price Elasticity of DemandCross-price elasticity of demand = Percentage change in quantity demanded of good 1Percentage change in the price of good 2

Whether the cross-price elasticity is a positive or negative number depends on whether the two goods are substitutes or complements. Substitutes are goods that are typically used in place of one another, such as hamburgers and hot dogs. An increase in hot dog prices induces people to grill hamburgers instead. Because the price of hot dogs and the quantity of hamburgers demanded move in the same direction, the cross-price elasticity is positive. Conversely, complements are goods that are typically used together, such as computers and software. In this case, the cross-price elasticity is negative, indicating that an increase in the price of computers reduces the quantity of software demanded.

Elasticity of SupplyElasticity of supply measures how much the quantity supplied responds to changes in the price. Supply of a good is said to be elastic if the quantity supplied responds substantially to changes in the price. Supply is said to be inelastic if the quantity supplied responds only slightly to changes in the price.

Computing the Price Elasticity of SupplyPrice elasticity of supply = Percentage change in quantity supplied. Percentage change in price

For example, suppose that an increase in the price of milk from $2.85 to $3.15 a gallon raises the amount that dairy farmers produce from 9,000 to 11,000 gallons per month. Using the midpoint method, we calculate the percentage change in price as

Percentage change in price = (3.15 2.85) / 3.00 100 = 10 percent.

Percentage change in quantity supplied = (11,000 9,000) / 10,000 100 = 20 percent.

In this case, the price elasticity of supply isPrice elasticity of supply = 20 percent = 2.0. 10 percent

In this example, the elasticity of 2 indicates that the quantity supplied changes proportionately twice as much as the price.

The Business Organization

Business organizations are the major component in the economy, their main goal is to attract costumer and earn profit. Business provide for the needs, wants and demands of the economy. Business serves as provider of goods and services to the consumers, provides investments, employment and social responsibility.

Forms of business enterprises1. Sole proprietorship business owned by single person. (informal, self-employed, unorganized)Organizing a sole proprietorship Register the business name Licences to local government Apply for VAT or non-VAT Register with the BIR the book of account (bookkeeping record) and business form sales invoice, cash sale invoice, official receipts)

Advantages Easy to organize Few business requirement Freedom in decision making Financial operation is not complicated The owner acquire all the profit

Disadvantage Limited ability to raise capital/funds Unlimited liability Limited ability to expand Business is entirely responsible of the owner

2. Partnership business organization that an association of at least two or more person who agree to place money, property or industry in common funds and sharing the profit. Partnership requires written agreement when real property is involve or limited partnership is being established.Organizing a partnership Registered the business name Notarized partnership agreement (Article of Co-partnership) and registered (SEC) Obtain tax identification number for partnership Municipal licenses Obtain VAT and non-VAT Register with the BIR the book of account(bookkeeping record) and business form sales invoice, cash sale invoice, official receipts)

Article of Co-partnership Name of partnership Name of partners Place of business Effective date of partnership Nature of business Investment of each partnership and capital credits Duration of contract Right, power and duties of partners Accounting periods Manner of dividing profit and losses Liabilities of the partners Compensation for services offered by partners Treatment of partners additional investment and withdrawals Provision for settlement of dispute

Type of partnersA. Based on their contribution Capitalist partner provide assets such as money and property Industrial partner give services or labor to the operation of the business (hands-on partner)B. Based on their liability for partnership debts General partner liable for partnership problems, his liability for business extends to the personal property Limited partner liability for partnership problem is limited

Advantages Easy to form Flexible operation Efficiency in operation Partners are expected to have great interest in the operation of partnership Possibility of bigger resources

Disadvantages Partners have unlimited liability for partnership debts Partnership is unstable Limited ability to raise capital Conflict and quarrels between partners

3. Corporation business organization in which owners (stockholders) have undivided ownership share in the assets of the corporation upon its dissolution. The share profit corresponds to the amount of shares of stock which they own.

Organizing a corporation Verification of corporate name Drafting and execution of the Article of incorporation Deposit of cash received for subscribed shares of stocks in banking institution Filling of Article of incorporation with the followinga. Treasurers affidavitb. Statement of assets and liabilities of proposed corporationc. Authority to verify bank depositsd. Certificate of deposit of cash paid for subscriptione. Personal information sheet of the incorporationsf. Commitment to change corporate name Payment of filling and publication Issuance by SEC of the certificate of incorporation Registration of the corporate name with the DTI Obtaining business license Obtaining The VAT and non-VAT account Register with the BIR the book of account(bookkeeping record) and business form sales invoice, cash sale invoice, official receipts)

Article of incorporation Name of the incorporation Purposes for which the corporation is being incorporated The place of principal office of the corporation The names, nationality and residence of the incorporators The number of directors or trustees The names, nationality and residence of the directors or trustees

By-laws Conducting regular or special meeting of the directors or trustees Conducting regular or special meeting of the stockholder Require quorum in meeting of stockholder and the manner of voting The form of proxies of stockholders and the manner of voting The qualification, duties and compensation of directors or trustees Holding annual election of directors or trustees Penalties for violation of the by-laws

Right of stockholder Right to attend and vote in person or by proxy Right to receive dividend when declared Right to inspect corporate books and record or receive financial report Right to elect and remove director Right to approved certain corporate acts Right to issuance of corporate stocks Right to transfer stock Right to participate the distribution of assets upon dissolution Right to recover stock unlawfully sold Right to demand payment on the value of shares and withdraw from corporation

Advantage It has a legal capacity More or less permanent existence Management is centralized Efficient management Shareholder have limited liability Shareholders freedom Raise more capital

Disadvantage Complicated to maintain and not easy to organized Government intervention Subject to higher tax It has a limited powers Abuses of corporate officials Impersonal or formal relationship between officers and employee

Classification of corporationsa. Stock corporation - the capital is in the form of stockb. Non-stock corporation open to all interestedc. Public corporation owned and organized by the governmentd. Private corporation owned and organized by private owner or businessese. Parent corporation controlling interest on another corporation (more than 50% share on the corporation)f. Foreign corporation form and organized or under the law of another countryg. Close corporation limited to selected person or member of the familyh. Open corporation open to any person who may wish to become stockholder or member Categories of sharesa. Common stocks basic issue of share or the basic ownership In a corporationb. Preferred stocks preferences over common stock upon dissolution of the corporation.c. Class A share stock offered to Filipino share holdersd. Class B share stock offered to foreign investorse. Par value shares share capital stock is definite or fixed valuef. Founders share given to incorporators-the formators of the corporation

Dividends - also called as the distributed profits of the corporation which are distributed according to proportionate interest of heir shareholding. Kinds of dividends Cash Property Stocks Scrip Bond Liquidating

CooperativesOrganization composed of small producers and consumers who voluntarily join together to form business enterprises which they control and patronize. Republic Act No. 6838 known as the Cooperative code of the Philippines.

Principles of cooperatives1. Open and voluntary membership2. Democratic control3. Limited interest on capital4. Cooperative education5. Cooperation among cooperative

Objectives of the cooperatives1. Provide goods and services to its member2. Provide income, saving, investment, productivity and purchasing power3. Propagate cooperative practices and new ideas in business and management

The Market Structures

Market structure is a classification system for the traits of market including the numbers of firms, similarity of products they sell, and entry and exit from the market structure.Types of market structureA. Perfect competition - Perfect or pure competition is characterized by a (1) large number of small firms, (2) homogeneous products, (3) very easy entry or exit from the market.

B. Monopoly is characterized by (1) a single seller or producer, (2) unique produce or no close substitute , (3) impossible entry of other into the market or barrier in the market.Barrier to entryA. Monopoly resourcesB. Government regulationC. The production process

C. Monopolistic competition - is characterized by a (many small firm, (2) differentiated products. And (3) easy market entry and exit

D. Oligopoly is characterized by (1) few seller, (2) either a homogeneous or differentiated, (3) difficult market entry

E. Special type of market structurea. Bilateral monopoly situation comprising one seller and only one buyerb. Bilateral oligopoly market condition with significant degree of seller concentration and significant degree of buyer concentrationc. Monopsony single buyer confront many supplierd. Duopsony there are only two buyer but many sellere. Duopoly few seller(oligopoly) and there are only two supplier

Branches of EconomicsA. Microeconomics is the study of how individual households and firms make decisions and how they interact with one another in markets.Three important topics of discipline in microeconomics1. Asymmetric information - A difference in access to relevant knowledge Two kinds of asymmetric information Hidden action/moral hazard Moral hazard is a problem that arises when one person, called the agent, is performing some task on behalf of another person, called the principal. If the principal cannot perfectly monitor the agents behaviour, the agent tends to undertake less effort than the principal considers desirable. Moral hazard refers to the risk, or hazard, of inappropriate or otherwise immoral behaviour by the agent.

Better response to hidden actiona. Better monitoringb. High wagec. Delayed payment/compensation/bonus Hidden characteristic/Adverse selection Adverse selection is a problem that arises in markets in which the seller knows more about the attributes of the good being sold than the buyer does. (the buyer runs the risk of being sold a good of low quality).

Response to Asymmetric information Signalling - which refers to actions taken by an informed party for the sole purpose of credibility revealing his private information. Example. Products advertisement to signal to potential customers that they have high-quality products.

Screening - an action taken by an uninformed party to induce an informed party to reveal information. Example: A person buying a used car may ask to checked by an auto mechanic before the sale. A seller who refuses this request reveals his private information that the car is a lemon.

Asymmetric Information and Public Policy 1. Government action.2. Private market can deal with information asymmetries using a combination of signaling and screening.3. Government has more information than the private parties, policymakers may find to improve the market.

2. Political economy (public choice) - the study of government using the analytic methods of economics The Condorcet paradox is that democratic outcomes do not always obey this property. Pairwise voting might produce transitive preferences for society in some cases Arrows impossibility theorem (using borda count method) a mathematical result showing that, under certain assumed conditions, there is no scheme for aggregating individual preferences into a valid set of social preferencesSeveral properties Unanimity: If everyone prefers A to B, then A should beat B. Transitivity: If A beats B, and B beats C, then A should beat C. Independence of irrelevant alternatives: The ranking between any two outcomes A and B should not depend on whether some third outcome C is also available. No dictators: There is no person who always gets his way, regardless of everyone elses preferences Median voter theorem a mathematical result showing that if voters are choosing a point along a line and each voter wants the point closest to his most preferred point, then majority rule will pick the most preferred point of the median voter

3. Behavioral economics - the subfield of economics that integrates the insights of psychology People Arent Always Rational -( not rational maximizers but as satisfiers or near rational) Human decision making have tried to detect systematic mistakes that people make People are overconfident People give too much weight to a small number of vivid observations People are reluctant to change their minds People Care about Fairness People Are Inconsistent over Time

Macroeconomics the study of economy wide phenomena, including inflation, unemployment, and economic growth. The study of how we can best increase our countrys wealth given available resources we have (land, labor and capital) and how these resources are transformed by entrepreneurs into good. The goal of macroeconomics is to explain the economic changes that affect many households, firms, and markets simultaneously.

The government took control on monetary system, labor unions, influence on legislations, social program (social security and health insurance), public borrowing (domestic and foreign)

The circular flow model

Wages and salaries, rent, interest and profitRESOURCES MARKETLabor, land capital, entrepreneurial ability

BUSINESSHOUSEHOLDS Buy resources Sell resources Sell products Buy products

Goods and servicesPRODUCT MARKETConsumption and expenditure

Resource market the place where resources or the services of resource suppliers are bought and sold. The household sell resources and businesses/firms buy and used for production of goods and services. Product market the place where goods and services produced by the business/firms are bought by and sold to the household.

Important concepts and definitions Positive economics are facts or relationships which can be proven or disprovenExample:a. The national deficit this year breached the 280 billion marks. Normative economics statement is someones opinion or value judgment about an economic issues or statement is one which people commonly argue about.Example:a. The government should raise taxes and lower government spending to reduce budget deficitsb. Our government should legalize the use of drugs in this country. Real values are always value in comparison or related to economics variablesExample: a. A person earning a nominal wage of 385 may only be earning a real wage of 192.50 relatives to todays doubled price, since 1998 Nominal values we refers to value of prices, earning, wages or the absolute value of the interest rate. Example:a. A persons earning 385 a day is said to be earning a nominal wage of 385

Gross Domestic Product Gross domestic product (GDP) is the total market or money value of all final goods and services produced in an economy over a period of one year Gross national product (GNP) - is the total market or money value of all final goods and services produced by the nations residence no matter where they all located. Three important points about GDPa. Measured in market or money valueb. Counts new domestic productionExclude: Secondhand transaction, non-productive transaction, purely private and public financial transaction.c. Only include final goods and servicesExclude : intermediate goods

Statistics GDP = $257 billion nominal(2012) = $287 billion nominal (2013) GDP growth = 6.6% (2012) = 7.16% (2013) GDP per capita = $2,611 nominal (2012) =$2,904 nominal (2013) GDP by sector = Agriculture 12.9%, industry 35.3%, services 51.9% (1990) = Agriculture 12.3%, industry 33.3%, services 54.4% (2011) = Agriculture 11.8 %, industry 31.1%, services 57.1% (2012) Inflation rate = 2.6% (April 2012), 2.1% (August 2013 Labor force = 59.81 million (Services 52%, Agriculture 33%, Industry 15% 2011)

Unemployment = 6.8% (Oct 2012), 7%(August 2013), 7.5% (January 2014) Export = $54.17 billion (2011 est.), $52 billion (2012), $53.98 billion (2013) Import = $68.84 billion (2011), $61.71 billion (2013 Debt external = $62.41 billion (December 2011), $58.5 billion (December 2013) Foreign Reserves = US$81.90 billion (September 2012), $85.761 billion (January 2013)

Measuring GDP Three ways to measure GDPa. Expenditure approachb. Income approachc. Industrial approach

Expenditure approach measures GDP by adding all spending for final goods during a period of one year.GDP = C + I + G + (X M)a. Personal Consumption Expenditure (C) comprised total spending made by household for durable goods, nondurable goods and services.Durable goods such as automobiles, appliances, furniture which can be used for a long period of time and nondurable are food items, soap, gasoline, cellphone load. Services include recreation, legal advice, hairdressing, catering, banking.b. Gross Private Investment (I) This includes gross private domestic spending of business for investment in assets that are expected to earn profits in the future. Two components are:1. Fixed capital which include construction, durable equipment and breeding stock2. Changes in stock which is the net change in spending for unsold finished goodsc. Government Consumption Expenditure and Gross Investment (G) includes the value of goods and services government of all levels purchases measured by their costsd. New Export (X M) The expenditure account is net exports, expressed as X M. Export (X) are expenditures by foreigners for Philippine goods produced domestically. Import (M) are the dollar amount of Philippine purchase from other countries like automobile, oil products and other goods produced abroad.

Income approach measures GDP by adding all income earned by household in exchange for the factors of production during the period of time. GDP = Compensation of employee + rents + profits + net interest + indirect taxes + depreciation.a. Compensation of employee the largest national income account which mainly earned from wages, salaries, and supplement paidb. Rental income of persons sources of income from rent and royalties received by property owner who permit other to use their assets during the period of time.c. Profit those earned by self-employed proprietorship and partnership who run their business and at the same times pay themselves for labor services.Corporate profits are: (1) dividends, (2) undistributed corporate profits, and (3) corporate income tax.d. Net interest persons who make loans to business earned interest income. Household receive income from saving and time deposit account.e. Indirect business Taxes are levied as percentage of the price goods and services sold and therefore become part of revenue received by the firm. These are VAT, excise taxes on certain goods and customs dutiesf. Depreciation Depreciation is an allowance for the portion of capital worm out in producing GDP. Over time capital goods, such as building, machines, and equipment wear out and become less valuable or obsolete.

Industrial origin or Gross value added approach - Industrial origin is divided into three sectors composed of:a. Agriculture, fishery and forestry sector b. Industry sector mining and quarrying, manufacturing, construction, electricity, gas, and water sub sectorc. Service sector transportation, communication, storage, trade, finance, office, dwelling, private service and government services.

GDP Shortcomings Nonmarket transactions Unpaid activities in economicsa. Difficult to collect data and assign peso value to service peoples to provide for themselvesb. Difficult to determine which nonmarket transaction to exclude or include in GDP Distribution, kind and quality of products Blindfolded with respect to quality and kinds of goods and services Neglect of leisure time GDP understates well-being Underground economy Unreported illegal activities (gambling, loan-sharking, small time trading Economic Bads Air, water and noise pollution is economic bads that impose costs on society.

Nominal GDP versus Real GDP Nominal GDP is the value of all final goods and services based on the price existing during the time period (current market price) of production.Nominal GDP grow in 3 waysa. Output rises and price remain unchanged.b. Price rise and output is constantc. Both output and prices rise. Real GDP is the value of all final goods and services produced during a given time based on the price existing in a selected base year. (Philippines uses 1985 as the base year) Convert nominal GDP to real GDP

Nominal GDPReal GDP=---------------------- X 100 GDP Deflator Example: GDP rises from 20 trillion in 2000 to 35 trillion in 2009, the current year. The deflator is 125 in 2009, the real GDP 28 trillion

GDP deflator measures the current level of prices relative to the level of prices in the base year. (ratio of nominal GDP to real GDP times 100)GDP deflator is calculated as follows:

Nominal GDPGDP deflator = -------------------- X 100. Real GDP

Example: For year 2010, nominal GDP is $200, and real GDP is $200, so the GDP deflator is 100. (The deflator is always 100 in the base year.) For the year 2011, nominal GDP is $600, and real GDP is $350, so the GDP deflator is 171.

Economic Fluctuation, Unemployment and inflation

Business cycle the upswings and downswing in the level of real output or economic fluctuation or economic activity between period of depression and boom condition

Four phases of business cyclea. Peak or boom pull production, full employment, GDP at the highest levelb. Recession downturn in the business cycle, Real GDP is decline, business profit fall, unemployment rise, decrease production capacity (duration between peak and trough)c. Trough level of GDP bottom out, unemployment and idle productive capacity are at the highest leveld. Recovery profit generally improved, investment rise, real GDP increases and unemployment moves toward full employment (duration between trough and peak)

UnemploymentThis refers to the unemployed labor resource. Unemployment rate is the percentage of people in the labor force who are without jobs and are seeking jobs. Labor force comprise of 15 years old or older actively seeking for employment during a given period of time.Housewives, students, disable or retired person are not included in the labor force. Unemployment rate is computed using the following formula:

Number of unemployedUnemployment rate= ----------------------------------Labor force

Type of unemploymenta. Frictional unemployment occurs when a worker moves from one job to another. Frictional unemployment are people who are between jobs or just entering or reenrering the labor marketb. Structural unemployment is a mismatch between jobs offered by employees and potential worker due to geographical location, skill variationc. Cyclical unemployment occurs when there is not enough aggregate demand in the economy. The numbers of unemployed worker exceed to the numbers of jobs vacancies.d. Seasonal unemployment Farming and harvest time, tourist season during summer.

Inflation

Inflation is define as a broadly base rise in price and usually measured by the consumer price index. The consumer price index (CPI) is a measure of the overall cost of the goods and services bought by a typical consumer.

How the consumer price index is calculated1. Fix the basket. Determine which prices are most important to the typical consumer2. Find the prices. Find the prices of each of the goods and services in the basket at each point in time.3. Compute the baskets cost. Use the data on prices to calculate the cost of the basket of goods and services at different times.4. Choose a base year and compute the index. Designate one year as the base year, the benchmark against which other years are compared.

Price of basket of goods and services in current yearConsumer price index =--------------------------------------------------------------------- X 100.Price of basket in base year

Example: 2010 is the base year. In this year, the basket of costs $8. Therefore, the price of the basket in all years is divided by $8 and multiplied by 100. The consumer price index is 100 in 2010. (The index is always 100 in the base year.) The consumer price index is 175 in 2011. This means that the price of the basket in 2011 is 175% of its price in the base year. Put differently, a basket of goods that costs $100 in the base year costs $175 in 2011. Similarly, the consumer price index is 250 in 2012, indicating that the price level in 2012 is 250% of the price level in the base year.

Compute the inflation rateUse the consumer price index to calculate the inflation rate, which is the percentage change in the price index from the preceding period. That is, the inflation rate between two consecutive years is computed as follows:CPI in year 2 CPI in year 1Inflation rate in year 2 = ------------------------------------- X 100. CPI in year 1

The inflation rate in our example is 75% in 2011 and 43% in 2012.

Theories of inflation1. Demand-pull inflation which the rise of general price level resulting from an excess of aggregate demand (total spending) or often expressed as too much money chasing too few goods The general price level is pulled-up by the pressure from buyers total expenditure A shortage of supply so that the seller raise price (profit)2. Cost-push inflation is a rise in the general level of prices resulting from increase in the cost of production Upward pressure in price can be caused by increase in the minimum wage, price of raw materials, construction, equipment, rise of cost of borrowing interest, increase in price of electricity Raising price to increase profit ( computer, software, cigarettes, detergents, cars, oil)

Principles of TaxationTaxation the act of levying a tax that is the process or means by which sovereign through its law making body, raises income to defray the necessary expenses of the government. Taxation is an inherent power of the state to demand enforce contribution from the people for public purposes

Taxes is a levy imposed by government on the income, wealth and capital gains of persons or businesses, on spending on goods and services and on properties.

Purposes of taxes1. To cover government expenditure on the provision of social services such education, infrastructure, etc. and salaries and benefits of public servants.2. An instrument of fiscal policy in regulating the level of total spending in economy so as stabilize the economy.3. To alter the distribution of income and wealth4. To control volume of imports into the country

Types of Taxes1. Direct taxes taxes levied by government on the income and wealth received by household (individual income tax ) and business (corporate income tax) in order to raise government revenue and as instrument of fiscal policy.2. Indirect taxes taxes levied by the government on goods and services include value added tax and excise taxes on certain goods (these are not taxes on people but on goods and services that we purchase and consume)

Progressive, proportional, and regressive taxes1. Progressive taxes taxes that place a greater burden on those best able to pay and little burden on the poor.2. Proportional taxes taxes that place an equal burden on rich, the middle class and the poor (Constant rate as income rises)3. Regressive taxes taxes that heavily on the poor than rich. Taxation in which taxes levied at a decreasing rate as income rises.

Basic principles of taxation1. Adequacy taxes should be just enough to generate revenue require for provision of essential public services2. Broad basing taxes should be spread over a wide as possible to all sector of the populationor economy3. Compatibility taxes should be coordinated to ensure tax neutrality and overall objectives of good governance4. Convenience taxes should be enforce in the manners that facilitate voluntary compliance to maximum extent possible5. Efficiency tax collection effort of the government should not cost an inordinate high percentage of tax revenue.6. Earn marking tax revenue from specific source should be dedicated to specific purpose only when there is a direct cost and benefit link between the tax sources.7. Equity taxes should be equally burden all individuals and entities in similar economic circumstances8. Neutrality taxes should not favor any one group or sector over one another, should interfere with or influence individual decision making9. Predictability the collection of taxes should reinforce their inevitability and regularity10. Restricted exemption tax exemptions must only be for specific purposes or for limited period11. Simplicity tax assessment and determination should be easy to understand by an average taxpayer.

Approach to taxation1. Ability to pay taxation should be levied according to an individuals ability to pay2. Benefit approach taxation should be levied broadly in relation to benefit that people receive in public service

3. Tax incident approach the major duty of tax system is to analyze the effect of a particular tax on the distribution of tax welfare

Income tax Income tax is a tax on persons income, profits arising from property, practice of profession, conduct of trade business or on pertinent items of gross income specified in Tax Code of 1997 Required to pay individual income tax1. Resident citizens receiving income from sources within or outside the Philippines2. Non-resident citizen receiving income from sources within the Philippines3. Citizens working abroad receiving income from sources within the Philippines4. Aliens, whether resident or not, receiving income from sources within the Philippines Procedure1. Fill-up form 1700 in triplicate2. Payment at Authorized bank of BIR, Revenue district office where you are registered3. Deadline of payment: On or before the 15th day of April of each year Tax RateOverBut not overRate

10.0005%

10,00030,000500 + 10% of the excess over 10,000

30,00070,0002,500 + 15% of the excess over 30,000

70,000140.0008,500 + 20% of the excess over 70,000

140.000250,00022,500 + 25% of the excess over 140,000

250,000500,00050,000 + 30% of the excess over 250,000

500.000125,000 + 32% of the excess over 500,000

Tax exemption1. Personal exemption (2008) Single35,000 Head of the family37,000 Married41,000 Dependent Children16,500/child (not exceeding four)2. Personal exemption (2009 and onwards) Single/Married50,000 Dependent children25,000/child (not exceeding four)

Individual exempts from filing ITRs:1. Those who are minimum wage earners 2. Those whose gross income do not exceed the personal and additional exemptions dictated by BIR3. Those whose annual salary from just one employer will not exceed P60,0004. Those whose income has been subjected to final withholding tax filed by the employer5. Those who are qualified under "substituted filing." Substituted filing is when the employer's annual tax return may be considered as the "substitute" ITR as they contain the same information.

Business tax exemptionSelf-employed individuals who are categorized as marginal income earners (MIEs) are still subject to income tax, but they are exempted from paying business taxes, such as value added tax (VAT) and percentage tax.The MIEs, according to BIR's description, are:1. individuals whose businesses do not exceed P100,000 in annual gross sales or receipts2. individuals who are not deriving income from an employer3. individuals whose activities should be principally for subsistence or livelihood, such as: farmers/fishermen selling directly to consumers small sari-sari stores small carinderias or "turo-turos" drivers/operators of a single-unit tricycle

Fiscal and Monetary PoliciesFiscal PolicyFiscal policy is the use of government spending and taxes to influence the nations spending, employment and price level. Fiscal policy is also defined as the manipulation of national government budget to attain price stability, relatively full employment and satisfactory rate of economic growthFiscal policy is an instrument to influence the level of economic activity in an economy through the control of taxation and government spending.

Discretionary Fiscal PolicyDiscretionary fiscal policy defines as the deliberate use of change in government spending or taxes to alter aggregate demand and stabilize the economy.Two basic types of discretionary fiscal policy1. Expansionary fiscal policy government can undertake any of the following ways:a. Increase government spending and decrease taxes orb. Increase government spending and taxes equally2. Contractionary fiscal policy government can do either of the following:a. Decrease government spending and increase taxes orb. Decrease government spending and taxes equally

Department of Finance the fiscal authorities that can employ a number of taxation measures to control aggregate demand or public spending. The direct taxes can be increased (decrease) if household spending needs to be reduced (increase) so as to reduce inflation or reduce unemployment. Lower disposable income due to high tax rates lower the capacity of households to spend thus limiting the inflationary pressure.

Taxation and government spending are linked together in terms of governments overall fiscal or budget position, increasing taxation and cut the expenditures the government will run a budget surplus and the government operates a budget deficit by reducing taxes and increasing its expenditure.

Budget surplus reduce aggregate demand and through the multiplier process serves to reduce inflationary pressures when the economy is overheating. Budget deficits stimulate aggregate demand and create additional jobs to counteract unemployment during recession periods. Budget deficit was used to counteract the mass unemployment of the 1920s and 1930s brought about by the Great Depression in United State. Western government used the fiscal policy as the main means of fine-tuning the economy to achieve full employment.

Taxation rate changes, Alteration to direct and indirect taxes are administratively cumbersome to initiate and take time to implement as it requires congressional approval. Government expenditure for schools, hospital, public infrastructure and defense reflects longer term economic and social commitment and cannot easily be reversed without lengthy political lobbying.

Monetary PolicyMonetary policy is a macroeconomic policy which involves the regulation of the money supply, credit and interest rates in order to control the level of spending in the economy where it is measure or action taken by the central bank (Bangko Sentral ng Pilipinas) to influence the general price level and the level of liquidity in economy.

Money supply refers to the amount of money in circulation in the economyM1 currency in circulation and peso demandM2 (broad money) M1 plus peso saving and time depositM3 (broad money liabilities) M2 plus peso deposit substitutesM4 M3 plus transferable and other deposit in foreign currency

BSPs monetary policy instruments BSPs primary monetary policy instruments are overnight borrowing and overnight lending1. Raising (reducing) the BSPs policy interest rate2. Increasing (decreasing) the reserve requirements3. Encouraging (discouraging) deposits in the special deposit account facility by banks and trust entities of BSPs supervised financial institution4. Increasing (decreasing) its rediscount rates on loans extended banking institutions on a short-term basis against eligible collateral of banks borrowers5. Outright sales of BSPs holdings of government securities

The objective of BSP monetary policy Promote a low and stable inflation conducive to balanced and sustainable economic growth BSP aimed at influencing the timing, cost and availability of money and credit, and stabilizing the price level

Two basic type of monetary policy1. Expansionary monetary policy refers to a monetary setting that intends to increase level of liquidity/money supply in the economy which could also result in higher inflation path in the economy. Expansionary monetary policy tend to encourage economic activity as more funds are made available for lending by banks to business investor which turn increases aggregate demand that cause inflationary pressure. Expansionary monetary policy is undertaken in order to counteract a slowdown in the economy.

2. Contractionary monetary policy refers to monetary setting that intends to decrease the level of liquidity/money supply in the economy which could also result in lower inflation path for economy. Contractionary monetary policy tend to limit economic activities are less fund are available for lending by banking to business investors. Contractionary monetary policy is usually employed to limit the tendency of the economy to overheat because of increase in aggregate spending.

Land Reform/Agrarian ReformLand reform refers to a measure that may improve the defect in the relation among men with respect to the rights in the use of land or agrarian structures.

Agrarian reform is defined as the rectification of whole system of agriculture where it redistributes the agricultural lands among the farmers of the country. Agrarian reform is concerned with the relation between production and distribution of land, development of complementary institutional framework, rural education and social welfare institutions.

HistoryThe Spanish colonial period was the high concentration of land ownership, and the consequent widespread poverty and agrarian unrest. United States administrators and several Philippine presidential administrations launched land reform programs to maintain social stability in the countryside. Lack of sustained political will, however, as well as landlord resistance, severely limited the impact of the various initiatives.

Spanish Period - The concept of Royal Land Grants or the encomienda system - the encomenderos must depends their encomienda from external attack, maintain peace and order, and support the missionaries. The encomienderos acquired the right to collect tribute from the natives.

The First Republic - American ally Emilio Aguinaldo presses for independence, presumably leading to nationalization of large estates (especially the friar lands), possible anti-clerical emphasis but Aguinaldos plans never implemented.

American periods Philippine Bill of 1902, which set a ceiling on the hectarage of private individual (16 hectares) and corporations (1,024 hectares). Land Registration Act of 1902 which provide for a comprehensive registration of land titles under Torrens system. The Rice Share Tenancy Act of 1933 and Sugar Cane Tenancy Contract Act which regulated the relationships between landowners and tenants of rice (50-50 sharing) and sugar cane lands

Commonwealth period Manuel Quezon espoused the social justice program to arrest the increasing social unrest in Central Luzon. Commonwealth Act No. 178 an amendment to Rice Tenancy Act which provides certain control in landlord-tenant relationship. National Rice and Corn corporation 1936, which established the price of rice and corn thereby helping the poor tenants as well as the consumers. Commonwealth Act No. 461 of 1937, which specified the reason for the dismissal of tenants and only with the approval of the tenancy division of the Department of Justice.

Japanese period Hukbalahap (Hukbo ng Bayan Laban sa Hapon) peasants and worker organization identified as anti-Japanese group during World War 2 control the whole area of Central Luzon and Landlords who supported the Japanese lost their lands to peasants while those who supported the Huks earned fixed rentals in favor of the tenants.

The Philippine Republic Manuel Roxas Rice and Corn Tenancy Act of 1946 established the 70-30/60-40 sharing arrangement and regulating share-tenancy contract. Republic Act No 55, provide effective safeguard against arbitrary ejectment of tenants Elpidio Quirino Executive order No. 335 on Oct. 23, 1950 creation of Land Settlement Development Corporation (LASEDECO) which took over the responsibilities of the agricultural machinery equipment corporation and rice and corn production administration. Ramon Magsaysay R. A. Act No. 1160 established the National Resettlement and Rehabilitation Administration (NARRA) to resettle dissidents and landless farmers (particular the revel returnees in Palawan and Mindanao)

R. A. Act No. 1199 (Agricultural Tenancy Act of 1954) which govern the relationship between land owners and farmers by organizing share-tenancy and leasehold systemR. A. Act No. 1400 (Land Reform Act of 1955) which created the Land Tenure Administration which responsible for the acquisition and distribution of large tenanted rice and corn lands over 200 hectares for individuals and 600 hectares for corporations.R. A. Act No. 821 the creation of Agricultural Credit Cooperative Financing Administration. (Loans with low interest rates of 6-8% per annum). Diosdado Macapagal R. A. Act No. 3844 ( Agricultural Land Reform Code) which abolish share tenancy, institutionalized leasehold, se retention limit at 75 hectares, supervised credit system of service of farmers beneficiaries Ferdinand Marcos - In September 1972, the second presidential decree that Marcos issued under martial law declared the entire Philippines a land reform area. The program was the most comprehensive ever attempted in the Philippines, notwithstanding the fact that only rice and corn land were included. Holdings of more than seven hectares were to be purchased and parceled out to individual tenants (up to three hectares of irrigated, or five hectares of unirrigated, land). R.A. Act No. 6389, otherwise known as the Code of Agrarian Reform of the Philippines, into law. Section 49 of this act mandated the establishment of a new self-contained the Department of Agrarian Reform, Major program of Marcos administration 1. Lease-hold operation, 2. Operation land transfer, 3. Land consolidation and settlement.

In the country as a whole, however, the program was generally considered a failure. Only 20 percent of rice and corn land, or 10 percent of total farm land, was covered by the program. By 1988 less than 6 percent of all agricultural households had received a certificate of land transfer, indicating that the land they were cultivating had been registered as a land transfer holding

In July 1987, Corazon Aquino proclaimed the Republic Act No. 6657 Comprehensive Agrarian Reform Program. More than 80 percent of cultivated land and almost 65 percent of agricultural households were to be included in a phased process that would consider the type of land and size of holding. In conformity with the country's new Constitution, provisions for "voluntary land sharing" and just compensation were included. The important details of timing, priorities, and minimum legal holdings, however, were left to be determined by the new Congress, the majority of whose members were connected to landed interests. (landlord-dominated Congress, the program was doomed to failure)

Between July 1987 and March 1990 - 430,730 hectares were distributed, Distribution of privately owned lands other than land growing rice and corn, 3,470 hectares, was insignificant not only in absolute terms, but it was also only 2 percent of what had been targeted

Fidel Ramos R. A. Act No. 7881 exempted fishponds and prawn farm from coverage of CARP. Executive order 363 which limited the type of lands that may be converted by settling conditions under specific categories of agricultural and are either absolute non-negotiable for conversion or highly restricted for conversion. R. A. Act No. 8435 Agriculture and Fisheries Modernization Act which plugged the legal loopholes in in land use conversion

On September 27, 2004, Gloria Macapagal Arroyo signed Executive Order No. 364, and the Department of Agrarian Reform was renamed to Department of Land Reform. This EO also broadened the scope of the department, making it responsible for all land reform in the country.

On August 23, 2005, President Macapagal Arroyo signed Executive Order No. 456 and renamed the Department of Land Reform back to Department of Agrarian Reform, since "the Comprehensive Agrarian Reform Law goes beyond just land reform but includes the totality of all factors and support services designed to lift the economic status of the beneficiaries.

The Comprehensive Agrarian Reform ProgramRepublic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL) was signed into law and became the legal basis for the implementation of the Comprehensive Agrarian Reform Program (CARP). It is an act instituting a CARP with the aim of promoting social justice and industrialization. Major Feature of CARP It provide the coverage of all agricultural lands regardless of crops produced or tenurial status of the tiller It recognized as beneficiaries of the program all workers in land given that they are landless and willing to till the land It provide for the delivery of support services to program beneficiaries It provides for arrangements that ensure the tenurial security of farmers and farmworkers such as the leasehold arrangement, stock distribution option and production and profit sharing It creates an adjudication body that will resolve agrarian disputes

Components of CARP1. Land tenure improvement Land distribution Leasehold operation a non-land transfer program that protect the tenurial status of tenant-farmers in tenanted land Production and profit-sharing temporary arrangement wherein corporate farms (operating under a lease or management contract with more than 5 Million gross sales per annum) are to execute production and profit sharing plans with their farm workers Stock Distribution option qualified beneficiaries are given the right to purchase from landowning corporation capital stocks that are equivalent to the value of land devoted by the company to agricultural activities. They are also entitled to dividends other financial benefits and representation in the companys board of directors, management or executive committee Commercial farms Deferment under this arrangement, several lands are listed for future acquisition and distribution2. Program beneficiaries development Credit facilities Technology Infrastructure3. Agrarian justice delivery Agrarian legal assistance Adjudication of cases the DAR is vested with quasi-judicial power to determine and adjudicate disputes, cases, controversies and matters involving the implementation of CARL and other related issuance.

Health Economics

Health WHO defined health as a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity Webster defined health as the condition of being sound in body, mind and spirit and especially free from physical disease or pain.

Government objectives and goals for health Increase life expectancy Provide ideal number of health facilities Avail free medication and affordable prices of medicines Increase government funds for DOH

Factors that affect health Environment (general factor) Poverty Education Custom and tradition Technological advancement Manpower Availability of health facilities Genetics

Health economics Is a scientific study of mans activity I pursuit of achieving better quality of life by proper allocation of limited and unlimited resources.

Economics health principles Health is priceless Money still determines health Health risk are more public than private Individual choices: Lifestyle is more than medicine

Economic evaluation of health program

DefinitionThe practice of evaluation involves the systematic collection of information about the activities, characteristics and outcomes programs. An economic evaluation is one that can reasonably be implemented within the context and constraints of a particular situation.

Evaluation focus on the activities, characteristic and outcomes of the program being evaluated which have the following purposes 1. Reduce uncertainties, 2. Improve effectiveness, and 3. Make decision about the program

The collaborative approach means forming a team of people who make shared decisions about the purpose of evaluation, how to be conducted, how the results be interpreted and used. Team member should be chosen based on skill and knowledge needed to conduct the evaluation.

Advantages of collaborative approach Reduces suspicion and fear Increase awareness and commitment Increase possibility of achievement on objectives Broadens knowledge Teaches evaluation skills

Program descriptions should include Need What problem/opportunity does the program address (Poor nutrition, diabetes, food and water, dental health) Expectations What are the anticipated outcome or objective of program (Reduction in the cases of malnutrition, prevention of complication of diabetes) Activities What are the tasks involved in operating the program (direct service, education, feeding program) Context What is the operating environment of the program (time, skills, resources, climate)

Barrier to evaluation Lack of management support Lack of resources Lack of skills Lack of relevant data Fear of consequences

Type of objective in evaluating health program

1. Outcomes objective An outcome objective is a statement of the amount of changes expected for a given health problem/condition for specified population within a given time frame. Outcome objective are long term, realistic, and measurableObjective outcomes are usually measured by 1, Level of mortality/morbidity, 2. Level of health conditions, and 3. Behavioral measure such as rates of smoking

2. Process objectiveA process objective is a statement that measures the amount of change expected in the performance and utilization of intervention that impact of the outcome. Intervention can include 1. Health services, 2. Health education, 3. Counseling, 4. Regulatory action, 5. Legislative and policy change. Process objectives are short term, realistic and measurable

Step in evaluation practice1. Engage stakeholders2. Describe the program needs, expectation, activities, stages and context3. Focus the evaluation: designs, questions, methods, protocols4. Gather evidence (quality, quantity ad logistic)5. Justify conclusions standards, techniques6. Preparation, feedback, follow up and dissemination

Standard for good evaluation1. Utility serve the information2. Feasibility be realistic3. Properly legally, ethically and regard for the welfare4. Accuracy reveal accurate information

Type of economic evaluation according to cost1. Cost minimization analysis (CMA) is a tool used to compare two cost of program that achieves the same objective. CMA compares alternative program where all relevant outcomes measures are equal2. Cost effectiveness analysis (CEA) compares alternatives and measures the primary objectives of the programs. It is also a technique for comparing relative value of various clinical strategies (A new strategy is compared with the current practice in calculation of the cost effectiveness ratio)3. Cost utility analysis (CUA) compares alternative similar as in CEA but used more generic outcome measure directly on patients (example: quality adjusted life years : healthy years equivalent). This type of analysis is preferred when there are multiple objectives of the program and helpful when comparing a relative merit of many different type of health care program.4. Cost benefit analysis (CBA) compares alternative by using a monetary outcomes. The indication for using the CBA are similar as for CUA, the main difference being that the subjective judgment regarding the value of health outcomes are made by techniques like willingness to pay rather than by utilities

Types of measuring costA. Medical care and administration1. Adjusted charges are usually estimated by multiplying billed charges by medicare cost to charge ratio (Example: 60% hospital, 15% laboratory and drugs, 15% ER and OB services.)2. Cost accounting (for CBA) uses the same principle as job costing. CBA studies for the most expensive element of care often combined with the more readily available adjusted charges for other type3. Resources are estimated from direct observation and cost using privileged wages, price and so on. And then an overhead charges is applied for administration, utilities and other central services Nursing hours Technician time Space SuppliesB. Follow-up and treatment (secondary treatment) More costly than the first treatment cost Most medical care involves many secondary effects that must be included for comprehensive accounting.

The Healthcare financing and health maintenance organizations

Healthcare benefits versus social protection benefitsHealthcare benefits are provided in kind to maintain the wellness of a person while social protection benefits are provided in cash or in terms of financial assistance to people who are sick and require medical treatment

Required health insurance in the Philippines 1. SSSPrivate employees2. GSISGovernment employees3. Phil. healthPrivate and government employees

Social Security System Republic Act No. 1161, otherwise known as the "Social Security Law BenefitsA. Sickness benefits - Sickness benefits is a daily cash allowance paid for the number of days a member is unable to work due to sickness or injury.A member is qualified to avail this benefit if:1. Unable to work due to sickness or injury and thus confined either in hospital or at home for at least 4 days.2. He has paid at least three monthly contributions within the 12-month period immediately before the semester of sickness3. He has used up all current company sick leaves with pay for the current year4. He has notified his employer or the SSS, if he is separated, voluntary or self-employed member.

The amount of sickness benefitThe daily sickness allowance (90% of average daily salary credits) times the approved number of days1. Exclude the semester of sickness2. Identify the six highest monthly salary credits within 12 months3. Add the six highest monthly salary credits to get the total monthly salary credits4. Divide the total monthly salary credits by 180 days to get the average daily salary credits5. Multiply the average daily salary credit by 90 percent to get the daily sickness allowance6. Multiply the daily average sickness allowance by the approved number of days.

How many days in a year can a member avail of sickness benefitsMaximum of in one calendar year is 120 days, Unused portion of the allowable 120 days cannot be carried forward and added to the subsequent year. The sickness benefit shall not be paid for more than 240 days on the account of same illness. If sickness or injury persist for more than 240 days the claim will be considered a disability claim.

Rule on notificationA member should notify the employer within five calendar days after the start of sickness or injury. The employer has another five days to notify the SSS. The unemployed, self-employed and voluntary member should directly notify the SSS within five calendar days after of confinement unless such confinement is in hospital in which case notification is not necessary.

The effects of failure or delay in notification1. If the employer notifies the SSS beyond the prescribed calendar days after receipt of notification from employee, the employer shall reimbursed only for each day of confinement from 10th calendar days immediately preceding the date of notification to the SSS2. If the employee has given required notification to his employer but he employer fails to notify within the prescribed period resulting in the reduction or denial by SSS of the claim, the employer shall have no right o recover the daily sickness allowance he paid to his employee.

B. Maternity benefits - Maternity benefit is a daily cash allowance granted to female member who was unable to work due to child birth or miscarriage.Qualification for entitlement to maternity benefit1. She has paid at least 3 monthly contributions within 12 month period immediately proceeding the semester of her childbirth or miscarriage.2. She has given required notification of her pregnancy through her employer if employed or to the SSS if separated, voluntary and self-employed member.3. The maternity benefit may be given to a separated female employee provided that the female member was pregnant and has given the require notification prior to the date of separation from her employer.4. Voluntary or self-employed member is entitled for to maternity benefit provided that she meets the qualifying contributionsHow much the maternity benefit?Maternity allowance is equivalent to 100 percent of the members average daily salary credit multiplied by 60 for normal delivery or miscarriage, and 78 for cesarean cases.1. Exclude the semester of contingency2. Count 12 months backwards starting from the months immediately before he semester of contingency3. Identify the six highest monthly salary credits within 12 months4. Add the six highest monthly salary credits to get the total monthly salary credits5. Divide the total monthly salary credits by 180 days to get the average daily salary credits6. Multiply the daily maternity allowance by 60 for normal delivery or miscarriage, and 78 for cesarean cases to get the total maternity allowance

C. Retirement benefit - It is a cash benefit paid to a member who can no longer work due to old age.Who may qualify for retirement benefit?1. A member who is 60 years old and unemployed and has paid at least 120 monthly contributions prior to the semester of retirement.2. A member who is 65 years old, whether employed or not, If employed he should have paid 120 monthly contribution prior to the semester of retirement whether employed or not.

Type of retirement benefits1. Monthly pension a lifetime cash benefit paid to a retiree 2. Lump sum amount is granted to a retiree who has not paid the require 120 monthly contribution

Monthly pension will receive1. The sum of 300 plus 20 percent of average monthly salary credit, plus 2 percent of average monthly salary credit for each credited year of service in excess of 10 years2. 40 percent of the average monthly salary credit3. 1,200 provided that the monthly pension is paid for not less than 60 months.The lowest monthly pension is 1,200 for 120 monthly contributions, 2,400 for 20 credited years of service4. A retiree has the option to receive his first 18th monthly pension in lump sum discounted at a preferential rate of interest to be determined by SSS. (13th month pension is excluded from 18 month lump sum pension) The member will receive his monthly pension on 19th month.

D. Death benefit - Death benefit is a cash paid to the beneficiaries of a deceased member. The primary beneficiaries are the legitimate dependent spouse until she/he remarries and legitimate, legitimated, legally adopted or illegitimate dependent children. Secondary beneficiaries are the dependent parent are the dependent parents and in the absence the person designated by the member beneficiaries in his members record

Type of death benefits1. Monthly pension granted only to the primary beneficiaries of the deceased member who had paid 36 monthly contributions before semester death.2. Lump sum is the amount granted to the primary beneficiaries of a deceased member who had paid less than 36 monthly contributions before semester death

Amount of monthly pension1. 1,000 if member had less than 10 CYS2. 1,200 with at least 10 CYS3. 2,400 with at least 20 CYSIf death pensioners is survived by less than 5 minor legitimate, legitimated, legally adopted and illegitimate minor children, 50% of share for illegitimate and 100% for dependents pension. In cases where there no legitimate, legitimated or legally adopted the illegitimate minor children shall be entitled to 100% of the share of the former in the basic pension.

How monthly pension is paid?Monthly pension is paid through the members designated bank. Or choose the bank nearest his/her residence through which she/he wishes to receive his pension benefits.

Lump sum death benefitsIf the deceased members contribution is less than 36 months the primary beneficiaries will entitle to a lump sum equivalent to the monthly pension times to the number of monthly contribution paid or 12 times the monthly pension which is higher.

In the absence of primary beneficiaries, the secondary beneficiaries will receive a lump sum equivalent to 36 times of monthly pension, if the member had paid at least 36 monthly contributions

GSISGovernment Service Insurance Systemis government owned and controlled corporation(GOCC) of thePhilippines. Created by Commonwealth Act No. 186 passed on November 14, 1936, the GSIS is mandated to provide and administer the following social security benefits for government employees: compulsory life insurance, optionallife insurance, retirement benefits, disability benefits for work-related contingencies and death benefits.

CoverageThe GSIS covers all government workers irrespective of their employment status, except employees who have separate retirement schemes under special laws,1. Members of the Judiciary and Constitutional Commissions2. Contractual employees 3. Uniformed members of the Armed Forces of the Philippines, and the Philippine National Police, including the Bureau of Jail Management and Penology, and the Bureau of Fire Protection.

Benefits1. Employee compensation benefits or disability benefits is a compensation package for public and private sector employees and their dependents in the event of work-related injury, sickness, disability or death.a. Cash income benefits for disability or deathb. Medical and related services for injury or sicknessc. Rehabilitation services for permanent disability

Form of benefits given to the employee or his/her beneficiaries1. Daily cash income benefit for temporary total disability (TTD)2. Monthly cash income benefit for permanent total disability (PTD) on a lifetime basis3. Monthly cash income benefit for permanent partial disability (PPD)4. Monthly cash income benefit for death, also on a lifetime basis, which is a monthly pension not to exceed 60 months but not less than fifteen thousand pesos5. Medical services, appliances and supplies for injury or sickness6. Rehabilitation services for permanent disability7. Career's allowance for permanent disability.

Compensability Conditions1. Injury must be the result of accident arising out of and in the course of employment.2. Sickness must be listed /considered an "occupational disease3. Disability/Death is caused by work-connected injury or sickness

Exceptions to Compensability 1. Intoxication or drunkenness2. Willful intention to injure or kill himself or another3. Notorious negligence4. Not work-related

a. A disability may either be:Permanent total,Permanent partial, and Temporary total disability 1. Injuries resulting in any of the following are deemed Permanent Total Disability (PTD)1. Complete loss of sight of both eyes2. Loss of two limbs at one or above the ankle or wrist3. Permanent complete paralysis of two limbs4. Brain injury resulting in incurable imbecility, insanity or other irreversible conditions

2. Injuries resulting in any of the following are deemed Permanent Partial Disability (PPD)1. Complete and permanent loss of the use of: any one finger, any toe, one arm, one hand, one foot, one leg, one or both ears, sight of one eye or such other cases as may be determined by the System

The benefits for Permanent Total Disability are as follows. If the member is in the service with less than 15 years of service, benefit can be:a. Basic Monthly Pension

If the member is in the service with at least 15 years of service, benefit can be either:a. Basic Monthly Pensionb. Cash payment of 18 times the Basic Monthly Pension

If the member is separated from service with 36 monthly contributions within the 5-year period immediately preceding PTD, benefit can be either:a. Basic Monthly Pension

If the member is separated from service with 180 monthly contributions prior to PTD, benefit can be either:a. Basic Monthly Pension

If the member has at least 3 year service with contributions, but PTD occurs 5 years after separation from the service, benefit is: a. Cash payment equal to 100% of AMC X Service (but not less than P12,000) payable immediately. No more separation benefit shall be paid in the future.

The benefits for Permanent Partial Disability are as follows: 1. If member is in the service, benefit is:Cash payment CP = BMP X nos. of PTD months as recommended by the GSIS medical evaluator

2. If the member is separated from the service but has paid 36 monthly contributions within the last 5 years immediately preceding the disability or has paid at least 180 monthly contributions, benefit is: Cash payment CP = BMP X nos. of PTD months as recommended by the GSIS medical evaluator

Retirement BenefitsWhen availing of the retirement program under RA 8291, only two things should be considered: age and the length of service.To qualify for this retirement mode: 1. The retiree must have rendered at least 15 years of service and must be at least 60 years of age upon retirement. 2. He /she must not be a permanent total disability pensioner.

Retiring members who will opt to retire under RA 8291 are entitled to either of the following:Option 1: 5-Year Lump Sum and Old Age PensionUnder this option, the retiree can get his/her five-year worth of pension in advance. The lump sum is equivalent to 60 months of the Basic Monthly Pension (BMP) payable at the time of retirement. After five years, the retiree will start receiving his/her monthly pension.

Option 2: Cash payment and Basic MonthlyIn option 2, the retiree will receive a Cash Payment equivalent to 18 times the Basic Monthly Pension (BMP) payable upon retirement and then a monthly pension for life payable immediately after his retirement date.

The BMP is computed as follows:a) If period with premium payments is less than 15 years: BMP = .375 x RAMC (Revalued Average Monthly Compensation)b) If period with premium payments is 15 years and more: BMP = .25 x RAMC x period with premium paymentsThe BMP, however, shall NOT exceed 90% of the Average Monthly Compensation (AMC).RAMC stands for Revalued Average Monthly Compensation and is computed as follows: RAMC = P700 + AMC (Average Monthly Compensation)

SeparationThe Separation benefit is given to employees who have not reached the retirement age (60) but have been separated from the service. It is provided under RA 8291, which took effect on June 24, 1997. The benefit can be in the form of cash payment or cash payment and pension.

Here are the conditions under which a member may be qualified for cash payment and pension, and the corresponding benefits:1. If the member has been in the service for at least 3 years but less than 15 years, and he is below 60 years of age, benefit is:Cash payment equivalent to 100% of the Average Monthly Compensation (AMC) for every year of service payable upon reaching age 60.2. If the member has been in the service for at least 15 years and is below 60 years of age, benefit is:Cash payment equivalent to 18 times the Basic Monthly Pension, payable upon separation and Monthly pension for life starting at age 60.

Survivorship - When a member or pensioner dies, his or her beneficiaries are entitled to cash and/or pension benefits

Coverage1. All primary and secondary beneficiaries residing in the Philippines or abroad2. Those who were receiving survivorship benefits but were suspended when the policy on the same was amended and implemented 3. Those who applied for survivorship benefits but were disapproved due to the issuance/approval of Management Implementing Guidelines

Eligibility Requirements1. The primary beneficiaries (surviving legal spouse and dependent children) or secondary beneficiaries, as the case may be2. The primary beneficiaries shall be the following: The legitimate spouse, until s/he re-marries, or co-habits/engages in common-law relationship The dependent legitimate, legally adopted or legitimated children, including illegitimate children, who have not reached the age of majority, or, have reached the age of majority but incapacitated and incapable of self-support due to a mental or physical defect 3. The secondary beneficiaries shall be the dependent parents The secondary beneficiaries shall only be entitled to survivorship benefits if there are no primary beneficiaries

Maximum Amount of Survivorship Pension 1. The surviving spouse shall be entitled to basic survivorship pension which is fifty percent (50%) of the Basic Monthly Pension (BMP) but not to exceed fifty percent (50%) of the current salary. For example, if the salary of an Undersecretary is equal to P63,380.00 and the BMP of the deceased member/pensioner is equal to P70,000.00, the maximum amount of survivorship pension is P31,690.00 (50% of P63,380.00) for the surviving spouse, not P35,000.00 (50% of P70,000.00)..

2. The dependent children shall be entitled to dependent childrens pension for a maximum of five (5) children, equivalent to 10% of the BMP for each child but not to exceed fifty percent (50%) of the BMP, counted from the youngest and without substitution.

Disqualification / Discontinuance to Survivorship Pension1. The surviving spouse re-marries, cohabits/engages in common-law relationship.2. The dependent children is reaching the age of majority.3. The dependent spouse and dependent children are dead, emancipation or disqualification of any one of them shall not result in the accrual of that portion of benefits to the other beneficiaries.

The amount of basic survivorship pension

RA 8291 mandates the periodic review of its rules and regulations to ensure their responsiveness to its members as well as to safeguard the financial viability of the System. The pension is derived from the basic monthly pension (BMP) of a member. The BMP is based on the average monthly compensation (AMC) which is determined from the aggregate compensation received by the member during his/her last 36 months. The survivorship pension of the dependent children shall be computed at 10% of the BMP.

When the old age pensioner dies within the 5-year period after receiving the five-year lump sum, the survivorship pension shall be paid only after the end of the said five-year period. However, the claim for survivorship benefits should be filed together with the claim for funeral benefit, and this should be done within four (4) years from the date of death of the retiree.

Burial BenefitsDeath, although inevitable, is always an unpleasant incident in every one's life. It can also be costly to those who we leave behind. But with GSIS's funeral benefit the survivors will have less to worry about.

Eligible to Avail of the Service1. Surviving Spouse2. Any of the following persons who can present receipt/s of expenses, provid