THE PHILIPPINE WOMEN’S UNIVERSITY

ECONOMICS

BY

ROY M. CASTILLO

BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION

EXPANDED TERTIARY EDUCATION EQUIVALENCY AND
ACCREDITATION PROGRAM (ETEEAP)
CONRADO BENITEZ INSTITUTE FOR BUSINESS EDUCATION
PHILIPPINE WOMEN’S UNIVERSITY
MAIN CAMPUS
First Output: As soon as you buy something (give a specific object), trace where
your money goes until you finally realize your money ends up in a big
institution or corporation. Then, the cycles resume.

ANSWER:

I was on my second year in my current employment when I decided to look for

something to help secure my earnings. And because one of my hobbies is to travel
whenever I have saved enough money, I decided to get an insurance plan for my own
security. I got the VUL or Variable Universal Life insurance which is a permanent life
insurance and investment rolled into one product. I have access to an online portal where
I can view my updated earnings every time I want to. I noticed it help yield higher returns
than other types of life insurance and even regular savings accounts and time deposits in
banks. I found out that the premium payments are invested in a variety of assets such as
bonds, stocks and money market instruments. I was curious to know where my
investment funds are allocated. The customer service representative I have spoken with
has given me the latest update about my policy and it made me flabbergasted to find out
that the funds are not allocated to only one company but the units in the investment funds
was subdivided to various big institutions like: SM Investment Corporation, Ayala Land
Incorporated, Ayala Corporation, BDO Unibank Incorporated and SM Prime Holdings
Incorporated.

Second Output: Submit the Circular Financial Flow

Direct
Material Cost

RAW
MATERIALS

*Stocks ordered from Utility

supplier Expense
s

DISTRIBUTION
CENTERS FACTORY

Freight *Products sold to

customer
Cost

POST-
PROCESSING PROCESSING
Direct
Labor Cost
Inventory *Stocks held until a *Production turns
customer is found stock into product
Cost

ECONOMICS ROY M. CASTILLO, BS BUSINESS ADMINISTRATION-E

Third Output: Illustrate the relationship of the following:

INVESTMENT BANK GOVERNMENT TRADE

Relationship:

Bank is a financial institution regulated by the national government

or central bank that provide financial services like loan or investment which
is essential in performing trade transactions.

Fourth Output: Summarize and integrate the following (scattered) terms:

Economics Production Distribution Consumption Import

Inflation Deflation Bankruptcy Insolvency Solvency
Export In-the-Red In-the-Black Bank Run Bank Holiday
Economic Depression Goods Services Bouillon Funds
Money Bills Money Gold Reserve
Gross National Gross Domestic
Product (GNP) Product (GDP)

ECONOMICS ROY M. CASTILLO, BS BUSINESS ADMINISTRATION-E

ANSWER:

Economics is the study of how individuals, business firms, governments and

societies as a whole make choices under conditions of scarcity. Economics is the social
science that studies the production, distribution, and consumption of goods and
services.

Economics is divided into two different categories: microeconomics and

macroeconomics. Microeconomics studies individual and business decision, while
macroeconomics analyzes the decisions made by countries and governments and
examines economy-wide phenomena such as Gross Domestic Product (GDP) and how
it is affected by changes in unemployment, national income, rate of growth, and price
levels. GDP is a broad measurement of a nation’s overall economic activity. Imports and
exports are important components of the expenditures method of calculating GDP.
Gross National Product (GNP) starts with GDP, adds residents’ investment income from
overseas investment, and subtracts foreign residents’ investment income earned within a
country. GDP measures economic depression which is a state of the economy resulting
from an extended period of negative economic activity and is often described as a more
severe form of a recession that leads to extended unemployment, a spike in credit
defaults, broad declines in income and production, currency devaluation and deflation or
the general decline in prices for goods and services occurring when the inflation rate
falls below 0%. Deflation happens naturally when the money supply of an economy is
fixed. Economic depression may be resulted to bankruptcy of individual or different
corporations or institutions. As a result of this, the people will choose to bank run wherein
a large number of people will withdraw their money from a bank because they believe
that the bank may cease to function in the near future. This situation may result to a bank
holiday or a day of an emergency bank closure to avert a bank run. As more people
withdraw their funds, the probability of default increases, prompting more people to
withdraw their deposits. In extreme cases, the bank’s reserves may not be sufficient to
cover the withdraws. Many developed countries maintain at least some gold reserve or
the gold held by a national central bank, intended mainly as a guarantee to redeem
promises to pay depositors, note holders, or trading peers, during the eras of the gold
standard, and also as a store of value, or to support the value of the national currency.
Business and organization that could no longer repay their outstanding debts will possibly
declare bankruptcy or experience financial destress if they are unable to pay their bills
and commitments will proceed with insolvency to come up with an alternative payment to
their creditors. Inflation and deflation may also be the cause of either solvency or
insolvency of an individual or institution. Solvency may cause the institution in-the-black
while insolvency may cause it in-the-red. Private individuals use bullion primarily as an
investment or potential store of value. Gold bullion and silver bullion are the most
important forms of physical precious metals investment which can be considered as
insurance against inflation or economic turmoil and may not entail direct counterparty risk.

ECONOMICS ROY M. CASTILLO, BS BUSINESS ADMINISTRATION-E