Review of Related Literature

Local Literature

Financial concerns are only one aspect of poverty; other aspects include issued with access to
services like health care, education, marginalization, and exclusion (worldvision.ca.,2021). According to
Britannica, someone is considered to be in poverty when they lack a standard or socially acceptable level
of wealth or material things, such as a farm worker in the northern Filipino province of Isabela Periodic
Lockdowns brought on by the coronavirus left farmers trapped away from their crops. There were fewer
jobs due to a contentious law that liberalized rice imports but devastated domestic rice production. In
March food inflation rate hit 6.2 percent, and by 2020, more than one in five Filipinos will not have
enough to eat (the humanitarian.org.,2021). Since the first definition discusses poverty as more than just
a material condition, the second one talks about poverty and not having any money whereas the first one
talks about money. These two stories share commonalities around money and people’s ability to buy
things or not.

The fundamental sectors with the highest poverty incidences in 2018 were farmers, fisherfolk,
people living in rural areas, and kids from households with incomes below the official poverty levels,
with rates of 31.6, 26.2, 24.5, and 23.9 percent, respectively. In 2015, these industries also had the highest
rates of poverty, with 40.8, 36.9, 34.0, and 33.5 percent. Indeed, among the basic sectors, those living in
metropolitan areas, senior persons, migrant workers, and those employed in the formal sector had the
lowest rates of poverty in 2018 9.3, 9.1 and 8.8 percent. These industries saw poverty occurrences of 13.2,
14.4 and 14.4% in 2015. Meanwhile, 14.7 percent of people with disabilities reported living in poverty in
(2018 psa.gov.ph). According to statistics, farmers are the workers who are most affected by poverty,
with the highest poverty occurrences among the basic sectors in 2021 specifically affecting employees
who are farmers, fishermen, and people who live in rural areas.

According to Oxford Languages, “Purchasing Power'' is the capacity to pay for goods and
services. Buying power is defined by Investopedia as “the value of currency expressed in terms of the
quantity of goods or services that one unit of money can buy” (Hayes, A., 2021). It was made clear in
Oxford English that consumers' financial capacity to purchase goods and services is known as their
purchasing power. In contrast, Investopedia refers to the quantity or exchange rate of money that might be
used to buy a good. According to these definitions, a consumer's purchasing power measures the amount
of items they can afford in relation to the value of the cash they own.
 [The Philippine statistics Authority cited April 6,2021], that “the inflation rate decreased to 4.5
percent in March 2021 from 4.7 percent in March 2021 from 4.7 percent in February 2021. From
September 2020, the inflation rate hasn’t decreased before (NEDA.,2021). The government promises to
protect consumer purchasing power in the midst of the COVID-19 Epidemic. A laughable number of
workers in the Philippines were at risk when COVID-19 struck. According to ABS-CBN News, the
COVID-19 Epidemic cost 10.9 million Filipinos their employment and reduced their incomes (ILO.,
2020). Due to fewer or no working hours during the outbreak, worker’s salaries and purchasing power
were reduced. “Incomes also fell by up to 10% in the first three months. According to a research released
by the Philippine Statistical Authority on April 6, quarters of 2020 could result in 25-25 million
employees living in poverty (ILO.,2020. ABS-CBN News). The government guarantees that any
inflationary worries would not affect the purchasing power of Filipino consumers. As the COVID-19
pandemic continues to have an impact on Filipino’s daily lives, the government of the philippines has
stated that it will “closely monitor all potential upside risks to inflation to ensure that commodity prices
remain low and stable to preserve the purchasing power of Filipino consumers, especially those in the
bottom 30 percent of income households” (Chua K.,2020. NDEA).

According to Investopedia, economic growth is the gradual increase in the quantity of goods and
services generated per person. On the other hand, according to the definition given by Thesaurus,
economic growth is the return of an economy’s boom, prosperity, and affluence in a nation. Either
nominal or real measurements are acceptable. Although other metrics are also employed, gross national
product (GNP) or gross national product (GDP) are the most common ways to quantify overall economic
growth. Year or month are two possibilities (Charles, P., 2021). Consumers and Employees can grasp the
availability of goods and how they vary over time thanks to economic growth, which may also be
measured in nominal terms or real terms.

The productive impacts of depletion are the decreased inflation rate and significance. For
instance, when the rate is 20%, lowering inflation by 1% may result in a 0.5% boost in growth. Output
increases may reach 1% or more for a 5-percent inflation rate. The researchers (NBER) conclude that
although there are significant advantages to reducing inflation, these advantages also depend on the pace
of inflation. A popular broad measure of inflation is the general increase in prices and high cost of living
in a nation. But, it can also be computed more precisely for some products, like food, and services, like
haircuts. In any case, the context inflation indicates a group of goods and services that become
significantly more expensive and applicable as a result over a set time, most often a year. Ceyda Oner
claims that the inflation rate is a gauge for rising living expenses, including the cost of foods, services and
necessities. Moreover, inflation shows annual increases in prices for commodities and living expenses.
Foreign Literature

[According to the Central Bureau of Statistics 2000] Poverty is a state in which a person or
group of people is unable to achieve their fundamental needs, which are regarded as a minimal necessity
and have a specific standard and include things like food, clothing, shelter, education, and health. In order
to live a healthy life and better in accordance with the quality of living, dignity, and appreciation by
others. An individual or group must have access to an improved standard of living, according to the World
Bank. Rank [2004] asserts that there are three primary categories into which the causes of poverty can be
divided: individual, cultural, and environmental, and structural. Individual failure brought on by a lack of
motivation results in poverty. [According rank 2004], Human capital can have a significant impact on an
individual’s poverty or success. Moreover, research indicates that because of the lack of human capital,
Yolanda 47 has a substantial impact on public finances and increases a person’s chance of living in
poverty.

[According to the findings of Easterly and Fischer 2001], who examined the relationship between
inflation and household poverty using data from inflation than the rich. However, [Min Bahadur
Shrestha and Shashi Kant Chaudhary’s 2012] study found that a 20 percent increase in food prices is
likely to result in a 4 percentage point increase in overall poverty in Nepal. It means that a 1% increase in
food prices will result in 100,00 more people falling into overall poverty and 180,000 more into food
poverty.

An economy’s health rate is gauged using inflation as a barometer. Social wellbeing will decline
as a result of excessive inflation. In contrast, too little inflation shows that the economy is not operating at
its full potential which has an effect on sluggish economic growth, sluggish job creation, and rising
poverty. On the basis of this, inflation is a macroeconomic issue that is crucial. In addition to making
company planning more difficult, Section 43 discourages individuals from saving and has a number of
other detrimental effects that are not good for the economy as a whole. Al magrizi [Adiwarman 2001]
asserts that there are two types of inflation: first, inflation brought on by a shortage of products (natural
inflation), and second, inflation brought on by factors such as Human mistake brought on by bad
administration, corruption, and a tax regime that burdens farmers with too much money. According to
[Hamilton., 2001], inflation is a condition in which the growth of the money supply is “faster” than the
addition of new products and services to the economy.
 “Interest as determined by the rate of return that may be attained by utilizing capital or the price
to be paid for using capital, price set as balance between global demand for capital and capital stock
provided in the market”, was a classic idea popularized by David Ricardo and Alfred Marshall. However,
According to [Paul Samuelson and William D. Nordhaus., 1993], interest is the cost paid for borrowing
money for a specific period, typically expressed as a percentage of the principal loan per year, and
[according to Marzuki., 1997], interest is the amount of money that must be paid by the borrower/debtor
to the borrower/creditor for the use of the borrowed money. [Devereux and Yetman., 2002], define
interest rate as the cost a borrower pays for the use of money he does not own and must repay to the
lender, who receives money in exchange for delaying his own consumption by lending to the borrower.
The amount borrowed over the course of a year represented as a percentage is another way to express
interest.

Reading the issue of creating more money, there are two opposing viewpoints. Initially, the
monetary authority or the central bank controls the money supply in its entirety. The quantity in Indonesia
is expressed by the basic money amount. The Monetary Authority’s policy in determining the “Bank
Indonesia Rate/BI Rate” instruments, which would be a signal of the interest rate of Bank Indonesia
Certificates (SBI), and the amount of the reserve requirement set by Bank Indonesia, had an impact on the
base money amount. Both the conduct of the general people and other institutions like commercial banks
affect the amount of money in circulation. The volume of demand deposits in Indonesia demonstrates
how the commercial banks’ influence on the country’s money supply. The interest rate had an impact on
the total amount of demand deposits. The actions of those who shop or borrow money on the money
market have an impact on how the market's interest rate behaves.[According to Winarni., 1995] inflation
may happen when there is a disparity between the amount of money in circulation and the number of
goods and services available or when there is a decline in confidence in the national currency.

There is a finite amount of gold in the planet, making it one of the few natural resources that
cannot be updated. In addition, political changes or a nation’s security do not have a significant impact on
gold prices. Also, gold is seen as one of the commodities that could be advantageous as an investment
given that prices are expected to continue rising and result in profits from the difference between the buy
price and selling price. Gold is one the investment options that tends to be risk-free, per [Sunariyah.,
2007]. Gold is thought to be a stronger inflation hedge. [According to Anggarwal., 2010], reality might
be different because gold might, over the long term, constitute an inflation hedge and short term price
volatility may occur.
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