Applied Economics PDF - Labor Market, Taxation, and Global Trade

APPLIED ECONOMICS APPLICATIONS OF DEMAND AND SUPPLY: MARKET LABOR MARKET Semi-liquid: Stocks Illiquid: Real Estate Properties LABOR MARKET...

APPLIED ECONOMICS APPLICATIONS OF DEMAND AND SUPPLY: MARKET LABOR MARKET Semi-liquid: Stocks Illiquid: Real Estate Properties LABOR MARKET MONETARY POLICY TOOLS: - Supply and demand for employment. BANK RATE Labor Force - Interest rate - The total number of people identified as employed and unemployed. OPEN MARKET OPERATIONS Formula: - Purchases and sales of government securities Labor Force = Employed + Unemployed and sometimes commercial paper by central Labor Force Participation Rate (idk if may continuation, incomplete notes k) - The approximate percentage of the STOCKS AND BONDS population that is actually part of the labor STOCKS pool. - Philippine working age: 15-54 years old - Ownership in a company (stockholders), you Formula: really own a share 𝐿𝑎𝑏𝑜𝑟 𝐹𝑜𝑟𝑐𝑒 LFPR = 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐴𝑔𝑒 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑥 100 - “dividend” - Part of stockholder’s ownership: P Unemployment Formula: 𝑂𝑤𝑛𝑒𝑟 ′ 𝑠 𝑆ℎ𝑎𝑟𝑒𝑠 - A situation where a person actively searches P = 𝑇𝑜𝑡𝑎𝑙 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑆ℎ𝑎𝑟𝑒𝑠 𝑥 100 for employment but is unable to find work. - Amount of dividend per share: DPS Types of Unemployment: Formula: Frictional – moving from one job to another DPS = 𝑇𝑜𝑡𝑎𝑙 𝐴𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 Structural – many people are unemployed 𝑇𝑜𝑡𝑎𝑙 𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑆ℎ𝑎𝑟𝑒𝑠 due to structure, resulting from industrial BONDS reorganization, typically due to technological change - Debts that are largely traded (bondholders) Cyclical – related to the regular ups and - “interest” downs that occur within the business cycle - Fixed income investments that represent a Seasonal – occurs when people are loan made by an investor to a borrower, unemployed at certain time of the year usually or governmental. Formula: Unemployment Rate Interest = par value x rate x time (periodic) - Yield: the return an investor expects to - Measure the percentage of individuals in the receive each year over its term to maturity. labor force who do not have a job. Formula: Formula: 𝑝𝑎𝑟 𝑣𝑎𝑙𝑢𝑒 𝑥 𝑟𝑎𝑡𝑒 Unemployed Rate = 𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑 𝑥 100 Yield = 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝑝𝑟𝑖𝑐𝑒 (𝑦𝑒𝑎𝑟) 𝐿𝑎𝑏𝑜𝑟 𝐹𝑜𝑟𝑐𝑒 FINANCIAL MARKET Interest on Bond FINANCIAL MAKRET - I = par value x rate x time - Rate = given rate / 100 - A marketplace for the exchange of financial - Time = given months / 12 months (periodic securities, like stocks and bonds. interest) Money REAL ESTATE MARKET - Functions of money (exchange, stores value) REAL ESTATE MAKRET - Liquidity: refers to the ease of the use of an asset to pay for transactions - The buying and selling of land and buildings Most-liquid: Cash - Law of Demand and Law of Supply KOMALPREET KAUR 1  Usual Variables: FREE RIDER PROBLEM Price and Income - Everyone can use this good, including those COMPUTATIONS who do not pay. 1. Labor Force = Employed + Unemployed EXTERNALITIES Labor Force 2. LFPR = Working Age Population x 100 EXTERNALITIES Unemployed 3. Unemployed Rate = Labor Force x 100 - The consumption of a good affects another Owner′s Shares 4. P = Total Number of Shares x 100 party. Total Amount of Dividend 5. DPS = Total Number of Shares Positive Externalities 6. Interest = par value x rate x time (periodic) par value x rate - The benefit to society is greater than personal 7. Yield = purchased price (year) benefit (merit goods) Ex. Education, Volunteerism (NGOs/Social GOODS Workers), & Paper straws GOODS Negative Externalities - Includes services and commodities, in - The social cost exceeds the personal cost general (demerit goods) WHY INNOVATE? Ex. Alcohol & Cigars Innovation TYPES OF INDUSTRIES AGRIBUSINESS Society Change - A term used to describe all the enterprises involved in producing good and cultivated RIVALRY products for use. - Means that a good consumed by an individual Subsectors: cannot be consumed by another individual. Crop production Animal production (includes EXCLUDABILITY livestock and poultry) - Means that paying for a good service prevents Forestry and logging access by others who have not paid for it. Fishery (includes aquaculture) Agrisupport services and TYPES OF GOODS manufacturing PRIVATE GOODS MANUFACTURING - Rival and Exclusive - The creation of new products, either from raw Ex. Cellphone materials or components. PUBLIC GOODS - In the Philippines, it is a sleeping giant, minimal lang development - Non-rival and Non-exclusive - San Miguel – leading manufacturer / employer Ex. Transportation SERVICES CLUB GOODS - Provide people with intangible products or - Non-rival and Exclusive services and completes tasks that are useful Ex. Streaming Platforms, Concert Tickets, & to customers, clients, business or the general Restaurants public COMMON GOODS Leading services sectors in the Philippines: 1. Transportation - Rival and Non-exclusive 2. Communication and Storage Ex. Fishes in the ocean & Fresh air 3. Trade Finance KOMALPREET KAUR 2  4. Real Estate - Changes in the tangible parts of a 5. Private Services product or service 6. Government service sectors 2. TIME UTILITY INTERNATIONAL TRADE - Making the product or service - The purchase and sale of goods and services available when the consumer needs it by companies in different countries - Most imported products are from China and 3. PLACE UTILITY Japan - Making product or service available - Export is from U.S. then China where the consumer wants it INDUSTRY ANALYSIS 4. POSSESSION UTILITY SWOT ANALYSIS - Affordability of the product or service - Is a framework for identifying and analyzing TAX VS. TAXATION on organization’s strengths, weaknesses, TAX opportunities, and threats. - Money PESTEL - A fee imposed upon individuals, properties, - External forces that influence organizations transactions, and business entities to support - Political: Tax laws. Fiscal policy the necessary expenses and services of the - Economic: GDP, Interest rate government - Social: Demography, Lifestyle TAXATION - Technological: Technology advances, Research and New Development - Process - Environmental: Environmental Regulations, - The process by which the government Climate Change collects tax and generates revenues - Legal: Business Requirements TAX PRINCIPLES COMPETITIVE ADVANTAGE BENEFITS – RECEIVED TAX PRINCIPLES COST LEADERSHIP - The more benefits one receives, the more tax - Same quality product but at a lower price s/he has to pay - Ex. Expressway, Quality Education DIFFERENTIATION ABILITIY-TO-PAY TAX PRINCIPLE - Developing a niche market - Those with a greater ability to pay, such as DEFENSIVE STRATEGIES those with a higher income, should pay more - Distant from competitors tax. - Ex. Higher the position the more tax one pays ALLIANCES ESSENTIAL CHARACTERISTICS OF TAX - Alliances with other related businesses It is an obligatory or a forced contribution to UTILITY MEANS SATISFACTION… the government ECONOMIC UTILITY It is usually monetary in form It is proportionate in character - The amount of satisfaction a consumer It is imposed on person and properties receives from the consumption of a particular It is levied by the state that has jurisdiction product (4ps). over the person or property 4 TYPES OF ECONOMIC UTILITY It is levied by the legislative body of the state It is levied for public purposes 1. FORM UTILITY BUSINESS AND TAX KOMALPREET KAUR 3  TYPES OF TAXES MANUFACTURING VALUE ADDED TAX - Processing of raw materials into finish EXCISE TAX products IMPORT TAX (TARIFF) - E.g. San Miguel – billions of pesos in the INCOME TAX Philippines economy Where do taxes go? They come back to you in the THE INDUSTRIAL REVOLUTION form of economic benefits and other important - Introduction of machineries (big) services ON THE DIVISION OF LABOR (ADAM SMITH) INCOME TAX - Leads to universal wealth (more job - A tax that governments impose an income opportunities – more income) generated by businesses and individuals - Allow development of humans (improvement within their jurisdiction of skills) Effects of high tax imposition? Lower take home of - Helps the improvement of the society the employee (employment for the people and for the economy to boost) TAX COMPUTATION INTERNATIONAL TRADE - Determine the gross pay - Subtract all deductions to get the taxable - Trading with other countries income - In the Philippines, the highest trade is - Refer to the tax table (the nearest amount to electronic equipment because of cheap labor the taxable income, but should not exceed cost the taxable income) - We trade because not all resources are - Do the math available in the Philippines REASONS: 1. Comparative Advantage – advantage as a country to product a particular product / good. Cost of production (should be less to have advantage) 2. Economies of Scale – we lessen the cost of production by producing more products. E.g. series (shoot 2 episodes, to lessen the cost of production) 3. Differences in tastes (over time) LAW OF DIMINISHING MARGINAL RETURN - Computation to renew how much the return is based on how many produced COMPARATIVE ADVANTAGE - Business / country with the lowest opportunity cost of producing a particular good should specialize in the good - If it has (more than) … superior resources ~capital ~labor ECONOMIES OF SCALE KOMALPREET KAUR 4  - The average cost of output declines as a firm *coerced the signs to make their own expands its scale of production DIFFERENCES IN TASTE PHILIPPINE AGENDA 21 - Countries can again from trade as long as - Fidel V. Ramos tastes differ across countries OBJECTIVES: TRADE RESTRICTIONS VS. NO RESTRICTIONS - A scale of intervention that is primarily area- - (Because the value of international trade to based grow) kawawa raw mga local producers kaya - Integrated island development approaches no to smuggles where applicable - People and integrity of nature at the center of TRADE RESTRICTIONS development 1. Quota – legal entity on the quantity of a PRINCIPLIES OF SUSTAINABLE DEVELOPMENT particular product that can be imported 2. Tariff – a tax on import (tax sa goods na Primacy of Developing Full Human Potential pumapasok) Gender Sensitivity *tariff impositions harms consumers Peace, Order, and National Unity and benefits producers Social Justice, Inter- and Intra- Generational SOME TRADE AGREEMENTS Equity and Social Equity Holistic Science & Appropriate Technology 1. World Trade Organizations – the legal and Cultural, Moral, & Spirituality institutional foundation of the multilateral trading National Sovereignty system that succeeded General Agreement on tariffs Participatory Democracy and trade (GATT) in 1995. Institutional Viability 2. ASEAN Trade in good agreement – aims to Viable, Sound, and Broad-Based achieve the free flow of goods in the region resulting Development to less trade barriers and deeper economic lineages Sustainable Population among member states. Ecological Soundness Biogeographical Equity and Community- SOCIOECONOMIC IMPACT STUDY AGENDA 21 Based Resource Management SUSTAINABLE DEVELOPMENT Global Cooperation - Meeting the needs of the present without VISIONS: compromising the ability of future ✓ Poverty Reduction generations to meet their own needs ✓ Social Equity 7 DIMENSIONS OF DEVELOPMENT ✓ Empowerment & Good Governance ✓ Peace & Solidarity 1. Spiritual ✓ Ecological Integrity 2. Human 3. Social and Cultural 4. Political 5. Economic 6. Ecological 7. Sustainable AGENDA 21 - By the United Nations, action plan related to sustainable development - 1992 in Rio Janeiro, Brazil - Signatories: 160 Countries including Fidel Ramos KOMALPREET KAUR 5