12 Questions
Which economic indicator is primarily used to measure the health of a country's economy?
Real GDP
What does an increase in nominal GDP indicate?
Prices have increased
What does GDP per capita measure?
Economic production per individual
Which economic indicator is used to calculate the inflation rate and purchasing power of the peso?
Consumer Price Index (CPI)
What does real GDP consider that nominal GDP does not?
Goods used to manufacture other goods
Which type of GDP measurement tracks the economy's growth on a quarterly basis?
GDP growth rate
What does the Balance of Payment (BOP) measure?
Difference between import and export values
How is a trade surplus defined?
Exports are higher than imports
What does the Stock Market Index reflect?
General market sentiments and price movements
How is the value of a currency affected according to the text?
When the supply of a currency decreases, its value depreciates
What does the Balance of Trade (BOT) specifically deal with?
'Trade deficit' or 'trade surplus'
What does the Interest Rate represent?
Cost of borrowing money or lender charges expressed as a percentage
Study Notes
Economic Indicators
- Economists use economic indicators to predict market performance and understand factors that cause market fluctuations.
- Many factors can influence the market, including political and business news, corporate earnings reports, general market sentiments, and stock market indices.
Gross Domestic Product (GDP)
- GDP measures the health of a country's economy by reflecting the total market value of finished goods and services produced.
- There are several types of GDP measurements:
- Nominal GDP: reflects current market prices.
- Real GDP: adjusts current market prices for inflation.
- GDP growth rate: tracks the economy's growth on a quarterly basis.
- GDP per capita: measures economic production per individual.
Consumer Price Index (CPI)
- CPI measures the change in average retail prices of goods and services purchased by households compared to a base year.
- CPI is used to calculate the inflation rate and purchasing power of a currency.
Foreign Exchange
- Foreign exchange is the conversion of one currency into another.
- Currency value is determined by the laws of supply and demand.
- When supply increases, currency value depreciates; when supply decreases, currency value appreciates.
Balance of Payments (BOP)
- BOP is an indicator that shows how businesses operate beyond borders.
- It is the difference between inflow and outflow of foreign exchange, with a net effect of zero.
- Transactions include goods, services, unilateral transfers, and capital account.
Balance of Trade (BOT)
- BOT is a component of the BOP.
- It is the difference between import and export values.
- Net effect of BOT can be positive (trade surplus), negative (trade deficit), or zero.
Interest Rate
- Interest rate represents the cost of borrowing money or the rate of return for lenders.
- In the Philippines, it is based on the rates of the Bangko Sentral ng Pilipinas (BSP).
Stock Market Index
- A stock market index reflects universal market sentiments and price movements in various sectors and industries.
- The Philippine Stock Exchange Composite Index (PSEi) is an example of a stock market index.
- PSEi consists of 30 common stocks of publicly-listed firms, representing the general movement of the stock market.
Explore the factors influencing the rise and fall of the market, including political and business news, corporate earnings reports, sentiments, and stock market indices. Learn how economic indicators help predict the future market performance.
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