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Related Economic Concepts

  • Flow- a quantity measured over a particular period of time.

Example: income- it flows from employers to employees, from buyers to sellers and producers

  • Stock- a quantity measured in a given point in time. Example: wealth and saving deposits.

    • Circular Flow- This is the movement of economic activities that is taking place in the economic system.

    • Market- a place where buyers and sellers interact together and are eventually engaged in exchange.

    • Economic Resources- these are known as factors of production or inputs to production.

    • Basic needs- needs of man required for his survival like food, shelter, clothing.

    • Goods- anything that yields satisfaction to someone. It may be either tangible like material goods or services. Classification of Goods

    • Consumer goods- goods that are ready for consumption.

    • Capital goods- goods that are used in furtherance of production.

    • Essential goods- goods to satisfy the basic needs of man.

    • Luxury goods- are goods that give something or add pleasure and comfort.

    • Economic goods- goods which have values or price attached to it.

    • Free goods- goods that are free and need no payment. Circular Flow

    • Outflow- is a flow of income that goes out of circular flow.

    • Inflow- is a flow of income that brings back funds into circular flow. Examples of Outflows

    • Savings- the individual consumer tends to save for future, it is an income not spent for consumption.

    • Taxes -it is a compulsory contribution to support the government.

  • Imports- are goods bought by the Philippines from other countries.

Examples of Inflows

  • Investment-it constitutes a spending decision that results in the use of output and productive resources.

  • Government expenditures- purchasing items needed by the government in its projects.

  • Exports- products purchased by other countries in the Philippines. Results of imbalance in circular flow

Outflows and Inflows of the Circular Flow Terms

 Imports - are goods bought by the Philippines from other countries. Examples of Inflows 

Types of economic policy

Almost any aspect of government has an economic aspect and so many terms are used. A few examples of types of economic policy include:

Policies related to development economics,

  • Technology-based Economic Development Policy [1]

[] Macroeconomic stabilization policy

Stabilization policy attempts to stimulate an economy out of recession or constrain the money supply to prevent excessive inflation.

Fiscal stance: The size of the deficit or surplus

Tax policy: The taxes used to collect government income.

Government spending on just about any area of government

  • Monetary policy controls the value of currency by lowering the supply of money to control inflation and raising it to stimulate economic growth. It is concerned with the amount of money in circulation and, consequently, interest rates and inflation.

Interest rates, if set by the Government

Incomes policies and price controls that aim at imposing non-monetary controls on inflation