LESSON 2.

SUPPLY – DEMAND AND

PHILIPPINE ECONOMIC
PROBLEMS
THE PHILIPPINE PESO AND FOREIGN CURRENCIES

The rate of conversion of the Philippine peso to

a foreign currency is reflected in the exchange rate. If
we have peso that we need to convert into dollars, we
need to know the current exchange rate. These rates
dependent on the workings of demand for and supply of
the currency in the market. For example, if the US
dollar is in demand, the price of the dollar will increase
and will be reflected in a higher exchange rate in favor
of the dollar, which means one will need more pesos to
buy dollars.
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TABLE 2.9. PESO – DOLLAR/EURO EXCHANGE RATES

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 HOUSING SHORTAGE AND THE REAL ESTATE
BOOM IN THE PHILIPPINES
• In the late 1990’s, construction hit low levels in the Philippines.
Effect of decreased demand for construction workers:
1. Some high profile construction project were abandoned and demand for housing was at a
low level.
2. Some real estate companies even had to close.
• The Asian countries recovered from the crisis, the construction sector started to recover.
Effect of increased demand of construction workers:
1. High rise condominium building and townhouse started bloomin metropolis.
2. In Metro Manila, new buildings rising.
3. Booming of Business Process Outsourcing (BPO).
4. Residential market in the country continues to grow.
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5. Promotion of housing developed. S u i t e s
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TABLE 2.10. TOTAL NUMBER OF OCCUPIED HOUSING UNITS
IN THE PHILIPPINES BY CENSUS YEAR, 1960 TO 2010

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RENT AND PRICE STRUCTURE

The layman’s concept of rent is payment for the use of land or

buildings belonging to others. From the point of view of economics,
rent refers to a payment made to or factor of production over and
above the amount expected by its owner.

Henry George (2014) describes the concept of rent in

economic: Economic rent is any unearned income.

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 SAVINGS AND INVESTMENT
.

Savings and investment are necessary

to build the future. Savings is to
investment as food is to the body
nourishment process. As food and the
nourishment process sustain body growth,
so do savings and investment to the
growth of the economy’s productive
capacity. Investment is defined as
building up the capital stock for more
future production and consumption.

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FIGURE 2.11. SAVINGS AND INVESTMENT AS
% OF GROSS DOMESTICS PRODUCT (2013) Contoso
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 RENT

The problem of unaffordable

decent housing is the problem not
so much of the middle class as the
poor due to poverty. Typical
middle-class household members
pitch in to afford decent housing
rental and eventual ownership. But
the poor cannot afford decent
housing at all, let alone they are
not convincing enough for housing
loans without formal employment
and paying capacity.
FIGURE 2.12. FAMILY INCOME EXPENDITURE Contoso
(2012)
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 FIGURE 2.12.
FAMILY
EXPENDITURE
DISTRIBUTION (2009)
(Bottom 30% of
Family Income Groups)

FIGURE
2.13. FAMILY
EXPENDITURE
DISTRIBUTION
(2009)
All Family
Income Groups Contoso
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MINIMUM WAGE

The problem of inadequate wage is

intertwined with the problem of
unemployment. Both problems stem
from the lack of jobs for our large labor
force.
FIGURE 2.14. LABOR SUPPLY - DEMAND Contoso
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FIGURE 2.15. DAILY AVERAGE – MINIMUM
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WAGE COMPARISON (2013) S u i t e s
TAXES

We pay taxes for

government to provide public
goods and services that
empower and enable
individuals and institutions to
pursue their dreams.
FIGURE 2.16. TAX REVENUES AS % OF GDPContoso
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FIGURE 2.17. GOVERNMENT BUDGET
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PERFORMANCE (% OF GDP) S u i t e s
 ECONOMIC ICON
Alfred Marshall

• one of the most influential economist

• he demonstrated aptitude in mathematics but experience a mental crisis
that lead him to abandon physics and switch to philosophy
• his specialty was “microeconomics”
• he create book named “ Principles of Economics “(emphasized that the
price and output of good are determined by both supply and demand )
• he saw that the duty of economics was to improve materials conditions
and believed only in connections with social and political forces
Large Image Slide

THANK
YOU

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