Applied SENIOR

HIGH
Economics SCHOOL

Self-Learning
Module
Contemporary Economic Issues
Affecting the Filipino Entrepreneur: 17
Saving and Investment
666
Quarter 3
Applied Economics
Quarter 3 – Self-Learning Module 17: Contemporary Economic Issues Affecting the Filipino
Entrepreneur: Saving and Investment
First Edition, 2020

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Development Team of the Self-Learning Module

Writer: Emmanuel B. Penetrante
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Printed in the Philippines by Department of Education – Schools Division of

Pasig City
Applied SENIOR
HIGH
SCHOOL
Economics

Self-Learning
Module

17
Quarter 3

Contemporary Economic Issues

Affecting the Filipino Entrepreneur:
Saving and Investment
Introductory Message

For the facilitator:

Welcome to the Senior High School – Applied Economics Self Learning

Module on Contemporary Economic Issues Affecting the Filipino Entrepreneur:
Saving and Investment!

This Self-Learning Module was collaboratively designed, developed and

reviewed by educators from the Schools Division Office of Pasig City headed by its
Officer-in-Charge Schools Division Superintendent, Ma. Evalou Concepcion A.
Agustin, in partnership with the City Government of Pasig through its mayor,
Honorable Victor Ma. Regis N. Sotto. The writers utilized the standards set by the K
to 12 Curriculum using the Most Essential Learning Competencies (MELC) in
developing this instructional resource.

This learning material hopes to engage the learners in guided and

independent learning activities at their own pace and time. Further, this also aims
to help learners acquire the needed 21st century skills especially the 5 Cs, namely:
Communication, Collaboration, Creativity, Critical Thinking, and Character while
taking into consideration their needs and circumstances.

In addition to the material in the main text, you will also see this box in the
body of the module:

Notes to the Teacher

This contains helpful tips or strategies
that will help you in guiding the learners.

As a facilitator you are expected to orient the learners on how to use this
module. You also need to keep track of the learners' progress while allowing them
to manage their own learning. Moreover, you are expected to encourage and assist
the learners as they do the tasks included in the module.
 For the learner:

Welcome to the Applied Economics Self Learning Module on Contemporary

Economic Issues Affecting the Filipino Entrepreneur: Saving and Investment!

This module was designed to provide you with fun and meaningful
opportunities for guided and independent learning at your own pace and time. You
will be enabled to process the contents of the learning material while being an
active learner.

This module has the following parts and corresponding icons:

Expectations - This points to the set of knowledge and skills

that you will learn after completing the module.

Pretest - This measures your prior knowledge about the lesson

at hand.

Recap - This part of the module provides a review of concepts

and skills that you already know about a previous lesson.

Lesson - This section discusses the topic in the module.

Activities - This is a set of activities that you need to perform.

Wrap-Up - This section summarizes the concepts and

application of the lesson.

Valuing - This part integrates a desirable moral value in the

lesson.

Posttest - This measures how much you have learned from the
entire module.
 EXPECTATIONS

After going through this module, you are expected to:

1. define saving and investment;
2. understand the importance of saving and investment; and
3. discuss the effects of saving and investment on the economy.

PRETEST

Directions: Read each statement carefully. Choose the letter of the best answer and
write it on a separate sheet of paper.

1. It refers to setting aside the money you don’t spend now for emergencies
or a future purchase.
A. Investment
B. Saving
C. Insurance
D. All of the above
2. It refers to buying assets such as stocks, bonds, mutual funds or real
estate that is expected to grow in the future.
A. Investment
B. Saving
C. Insurance
D. All of the above
3. The levels of investment are affected by ____________.
A. Interest rates
B. Confidence
C. Economic growth
D. All of the above
 4. The levels of savings are influenced by ____________.

A. Interest rates
B. Confidence
C. All of the above
D. None of the above
5. In neoclassical economics, it is assumed that the level of saving is equal to
the level of investment.

A. The statement is correct.

B. The statement is incorrect.
C. The statement is sometimes correct.
D. None of the above

RECAP

Directions: Give at least three (3) effects of the exchange rate on the following
economic entities.
1. Importer of raw materials
_________________________________________
_________________________________________
_________________________________________
2. Exporter of goods
_________________________________________
_________________________________________
_________________________________________

3. Overseas Filipino Workers

_________________________________________
_________________________________________
_________________________________________
 LESSON

This module will discuss the effects of savings and investment in the
country.

Saving
Saving is setting aside the money you don’t spend now for emergencies or a
future purchase. It is the money you want to access quickly, with little or no risk,
and with the least amount of taxes. Financial institutions offer several different
savings options.

The Savings Ratio is the percentage of income that is saved. The Philippines’
Gross Savings Rate decreased to 11.6% in March 2020. People have been
discouraged to spend more due to the pandemic.

The levels of savings are influenced by the following indicators:

1. Interest rates – A high-interest rate will inspire households to save more.

2. Confidence – A low confidence can encourage households to save.

Investment
Investment, in economics, is defined as an addition to the capital stock
which is known as Gross Fixed Capital Formation. For example, the investment can
involve spending on factories or new capital. The Philippines’ Gross Fixed Capital
Formation decreased gradually to 22 USD Billion in March 2020.

For individuals, investment is buying assets such as stocks, bonds, mutual

funds, or real estate with the expectation that the investment will make money in
the future. Investment can also involve spending on human capital such as
investment in training and education.

The levels of investment are affected by the following indicators:

1. Interest rates – A high-interest rate makes investment more expensive

(cost of borrowing goes up).

2. Confidence – If the firms are confident, they are more willing to invest.

3. Economic growth – An increase in the rate of economic growth will

encourage firms to invest to meet future demand.
Saving and Investment

In neoclassical economics, it is assumed that the level of saving is equal to

the level of investment. This is because the investment is determined by available
savings in the economy.

If there is an increase in savings, then banks can lend more to firms to

finance investment projects. In a simple economic model, we can say the level of
saving is equal to the level of investment (S=I).

ACTIVITIES

Activity: Bounce Back

Directions: Explain the effects of saving and investment on the following economic
entity.

Economic Entity Saving Investment

1. Consumers

2. Businesses

3. Financial Institutions

4. Government
 WRAP-UP

To summarize what you have learned in the lesson, answer the following
questions:

1. What is saving? investment?

2. What are the effects of saving and investment on the economy?

VALUING

Reflect on this!

“Do not save what is left after spending; instead spend what is left after saving.”

– Warren Buffett

POSTTEST

Directions: Read each statement carefully. Write T if the statement is correct,

otherwise write F.

____________1. An increase in the rate of economic growth will discourage the firms
to invest to meet future demand.

____________2. A low confidence can discourage households to save more.

____________3. A low interest rate means it is more attractive to save.

____________4. Higher interest rates make investment more expensive.

____________5. The level of saving is equal to the level of investment.

 POSTTEST:
1. F
2. T
3. F
4. T
5. T

References

Dinio, R. and Villalis, G. Applied Economics. Rex Book Store, Inc. Sampaloc,
Manila, 2017.

Pettinger, Tejvan, Mutai, Long Nguyen, Asteria, and Dave Norris. "Difference
between Saving and Investment." Economics Help. January 10, 2018.
Accessed July 31, 2020.
https://www.economicshelp.org/blog/649/economics/difference-between-
saving-and-investment/.

"Philippines Gross Fixed Capital Formation [1981 - 2020] [Data & Charts]." [1981 -
2020] [Data & Charts]. March 01, 2020. Accessed July 31, 2020.
https://www.ceicdata.com/en/indicator/philippines/gross-fixed-capital-
formation.

"Philippines Gross Savings Rate [1981 - 2020] [Data & Charts]." [1981 - 2020]
[Data & Charts]. March 01, 2020. Accessed July 31, 2020.
https://www.ceicdata.com/en/indicator/philippines/gross-savings-
rate#:~:text=Philippines's Gross Savings Rate was,15.1 % in the previous
quarter.

"Saving and Investing." Econlib. Accessed July 31, 2020.

https://www.econlib.org/library/Topics/HighSchool/SavingandInvesting.ht
ml.

"Savings Quotes (24 Quotes)." Goodreads. Accessed July 31, 2020.

https://www.goodreads.com/quotes/tag/savings.