Self-Instructional Packets

(SIPacks) in

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Utility & Economic Issues and
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Problems
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To get the most out of this module, here are some reminders that you need to consider:
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1. Read the lesson and the instructions carefully.

2. Answer all activities and assessments on a whole sheet of paper.
3. Write the following information on your paper before answering all the activities.
a. Complete Name (student) d. Name of Subject Teacher
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b. Grade and Section e. The Quarter No.

c. Learning Area/Subject: Applied Economics f. Week No.
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4. Fulfilling the tasks is divided to 5 days. You may refer to the table below to guide you.
5. Answers to all activities and exercises will serve as output and will be forwarded to the subject
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teacher for checking and recording.

6. Only the answer sheet/s (pad paper) will be forwarded back to the teacher. However, you may
keep this SIPacks (printed module) for future reference.
DAY ACTIVITIES / ASSESSMENTS POINTS
Day 1 Activity 1. III-A. Review 10 points
. III-B. Jumbled Words 10 points
Day 2 Activity 2. III-C. Analyze the Pics 20 points
Day 3 Activity 3. III-F. Identification 10 points
Activity 4. III-G. Essay 20 points
Day 4 Activity 5. III-I. Multiple Choice 10 points
III-J. Definition 10 points
Total Points 90 points

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
 I. OBJECTIVES
A. Content Standard
The learners demonstrate an understanding of economics as applied science and its utility in
addressing the economic problems of the country.

B. Performance Standard
The learners shall be able to analyze and propose solution/s to the economic problems using
the principles of applied economics.

C. Most Essential Learning Competencies

The learners examine the utility and application of applied economics to solve economic
issues and problems.

D. Objectives
✔ To learn the economic history of the Philippines
✔ To understand the basic macro and microeconomic issues and the solutions
✔ To know the present economic issues in the country

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II. CONTENT
Utility & Economic Issues and Problems
LEARNING RESOURCES

A. References
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Saluba, Dennis J. 2018. Applied Economics for Senior High School. C & E Publishing, Inc.
Dinio, Rosemary P. & Villasis, George A., 2017. Applied Economics. Rex Bookstore, Inc.
Carnaje, Gideon P. 2016. Applied Economics. Vibal Group, Inc.

B. Other Learning Materials

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https://www.educba.com/macroeconomics-problems/
https://www.linkedin.com/pulse/economic-recession-causes-effects-possible-solutions-oti-felix
http://econsilp2014.weebly.com/solutions.html
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https://www.youtube.com/watch?v=6rT5S-4bvKQ
https://www.investopedia.com/terms/b/businesscycle.asp
https://www.piie.com/blogs/trade-and-investment-policy-watch/three-ways-reduce-trade-deficit
https://gsdrc.org/topic-guides/poverty-and-inequality/measuring-and-analysing-poverty-and-inequality/defining-
poverty-extreme-poverty-and-inequality/
https://borgenproject.org/10-solutions-to-global-poverty/
https://www.economicshelp.org/microessays/markets/regulation-monopoly/
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https://byjus.com/biology/environmental-issues-solutions/
https://www.investopedia.com/terms/u/utility.asp
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https://tradingeconomics.com/philippines/unemployment-rate
https://www.rappler.com/business/231871-charts-regions-get-richer-poor-ones-barely-improve-philippines
https://www.worldbank.org/en/country/philippines/overview
https://tradingeconomics.com/philippines/inflation-cpi
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III. PROCEDURES
A. Reviewing the previous lesson or presenting the new lesson
Recall the following and enumerate them. (10 points) (Write your answers on a paper)
A) Three basic economic questions B) Four factors of production C)Three great economists.

B. Establishing a purpose for the lesson

Jumbled Words (10 points)
Decode and define these economic issues. (Write your answers on a paper.)
1. OPEVRYT
2. MNETUNPLOYME
3. YLPOONOM
4. FLAINIONT
5. ADERT FIDECIT

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
 C. Presenting examples/instances of the new lesson

ACTIVITY 1. ANALYZE THE PICS (20 points) (Write your answers on a paper.)
*The following pictures show four economic problems caused by the Covid19 pandemic.
Identify each problem analyze how these scenarios affect our economy. In your opinion, how
can the government solve these? (Minimum of 5 sentences for each) (20 points)

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D. Discussing new concepts and practicing new skills #1

Before discussing the present, recurring, and common economic problems faced by our country,
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let us look at the economic history of the Philippines as enumerated by D. Saluba in his book
Applied Economics for Senior High School sourced from the Philippines Business: The Portable
Encyclopedia for Doing Business with Philippines.

ECONOMIC HISTORY OF THE PHILIPPINES

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1300: Trade ties with China and India.

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1500: Islamic influences spread. First sultanate in Mindanao.

1521: Magellan claimed islands for Spain.
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1543: Villalobos claimed islands for Spain and named them Filipinas for King Philip II.
1575: Spain took over non-Islamic areas and monopolized trade.
1872: Cavite revolt against Spain; some trade restrictions were relaxed.
1896: Spain quelled armed revolt and executed nationalist Jose Rizal.
1898: The U.S. purchased the Philippines at the end of the Spanish-American War.
1900: The U.S. quelled nationalists’ resistance and instituted a colonial government.
1935: New Constitution was adopted; Manuel L. Quezon was elected president of the Philippine
Commonwealth
1941: Japan invaded the islands.
1945: The U.S. expelled Japan from the Philippines. The Philippines joined the UN as a charter
member.
1946: The Philippines gained full independence. Manuel A. Roxas was elected president.

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
 1958: The Filipino First Policy of President Carlos P. Garcia was introduced.
1965: President Ferdinand Marcos was elected.
1966: Asian Development Bank (ADB) was headquartered in Manila.
1967: The Philippines joined the Association of Southeast Asian Nations (ASEAN).
1969: Re-election of President Marcos.
1972: Marcos declared martial law.
1973: The Philippines became a provisional member of the General Agreement on Tariffs and
Trade (GATT).
1984: Opposition candidates gained strength in congressional elections, coalescing around
Corazon Aquino. People Power Revolt gained momentum.
1986: Corazon Aquino wins a disputed election with the support of the military. Marcos was
exiled. Aquino restructured the government.
1987: New constitution was ratified. First free election in two decades was held.

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1989: Limited autonomy granted to Muslim provinces. Dispute with China over the Spratly
Islands escalated.
1990: The Build-Operate-Transfer Law was signed.
1991: The Foreign Investment Act of 1991 was signed into law.
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1992: Fidel Ramos was elected president. Philippines 2000 plan was adopted. The U.S.
withdrew military bases.
1993: Philippines 2000 was introduced by President Fidel V. Ramos.
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1997: Asian Financial Crisis affected the Philippines.
2000: Angat Pinoy 2004 was introduced by President Joseph Estrada.
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2003: The Strong Republic Nautical Highway was inaugurated by President Gloria Macapagal-
Arroyo.
2010: President Benigno S. Aquino III was elected president and strengthened the Pantawid
Pamilyang Pilipino Program (4Ps program) through the DSWD.
2014: The Republic Act 10644 otherwise known as the “Go Negosyo Act” was implemented.
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2017: The Philippine Development Plan 2017-2022 of President Rodrigo Duterte was publicly
launched.
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E. Discussing new concepts and practicing new skills #2

❖ UTILITY
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In economics, utility refers to the total satisfaction received from consuming a good or service.
The word “utility” which was derived from the concept of usefulness was first coined by the Swiss
mathematician Daniel Bernoulli. It is important to understand that the economic utility of a good
or service directly influences the demand and the price of it.

Ordinal Theory of Utility - the idea that individuals could order or rank the usefulness of various
discrete units of economic goods

Cardinal Theory of Utility – the idea of giving utility value to different economic choices or the
ranking of the magnitude of preference (measurable)

Law of Diminishing Marginal Utility - states that as consumption increases, the marginal utility
derived from each additional unit declines. Marginal utility is the incremental increase in utility that
results from the consumption of one additional unit.

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 NOTE: Economic theories rationally assume that consumers will strive to maximize their utility.

APPLYING ECONOMICS IN SOLVING COUNTRY’S ECONOMIC ISSUES AND PROBLEMS

Deep knowledge and understanding of economic principles and the ability to apply them in real-
life situations can be used as powerful tools in addressing national economic issues and
problems. Although consumer’s utility is impossible to measure and quantify, some economists
believe they can indirectly estimate utility by employing various models.

MICROECONOMIC ISSUES

❖ Poverty. It is pronounced deprivation in well-being. Poverty is the lack of monetary resources

to meet one’s needs or the lack of specific goods like food, asset, shelter, health, or even time.

Solutions: Solving poverty issues is a long battle and the government plays a very important
role in addressing the problem. Common solutions to poverty are as follows; create jobs, raise
the minimum wage, promote pay equity, properly allocate time and resources, provide access
to healthcare, create micro-financing programs, provide an adequate social safety net, and

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increase access to education.

The World Bank had projected the poverty rate in the Philippines to fall below 20% starting 2020,
amid easing inflation and rising incomes. Previous estimation of poverty incidence were at 24.5%
for 2016, 23.1% for 2017, and 21.9% for 2018. This is a good indication that the Philippine
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economy is progressing. Unfortunately, economic activities have been hampered by the
pandemic Covid19 which may cause poverty to worsen.
❖ Social Inequality. It refers to disparities and discrepancies in areas such as income, wealth,
education, health, nutrition, space, politics, and social identity.

Solutions: The government may implement progressive income tax, spend more on
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public/social services and infrastructure, and increase government ownership of basic utilities.

According to the data from the Philippine Statistics Authority, as of May 2019, the gap between
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rich and poor widens even more. The inequality in the gross regional domestic product (GRDP)
per capita, or the average income of people in a region, has widened from 2009 to 2018. As of
2018, the National Capital Region (NCR) reached GRDP per capita of P253,893, a 40% leap
compared to P181,748 in 2009 while the Autonomous Region in Muslim Mindanao (ARMM)
peaked only at P14,657 compared to P14,052 of 2009. The regions with large agricultural bases
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are the regions with very low GRDP per capita.

❖ Monopoly. A market structure characterized by a sole seller in a particular market wherein

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the business entity may control the supply, compromise the quality of goods and services,
and manipulate the price.
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Solutions: Since a monopoly does not face competition, only the government may help solve
the problem. The government may implement price capping (limiting price increases), regulate
mergers, regulate the quality of service, and investigate and address abuses.

The Philippines has among the most restrictive markets in ASEAN, resulting in a lack of market
competition and high priced goods and services of low-average quality, especially in businesses
like telecommunications, retailing, shipping, airline, energy, transportation, construction, and even
schools. According to the World Bank (2019), the Philippine economy is hampered by
monopolies, duopolies, and oligopolies in key markets especially in the sectors that need more
competition like electricity, telecommunications, and transport.

❖ Environmental issues. These are harmful effects of human activities (usually economic
activities) on the environment.

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
 Solutions: Some of the solutions to environmental issues are the following; use reusable
items, conserve water and energy, proper waste disposal, recycle waste, find clean renewable
energy sources.

The Philippines is prone to natural disasters like earthquakes, volcanic eruptions, and typhoons
due to its location. These disasters surely cause so much damage to the country’s economy. But
other environmental issues we are facing are usually caused by economic motives. These
problems include pollution, illegal mining and logging, deforestation, dynamite fishing, landslides,
coastal erosion, wildlife extinction, global warming, and climate change.

MACROECONOMIC ISSUES

❖ Recession. It is a period of temporary economic decline during which industrial and trade
activities are reduced, marked by a fall in GDP in two consecutive quarters (6 to 18 months).

Solution: The government may implement expansionary fiscal policy to expand the money
supply in the economy by either reducing taxes or increasing government spending.

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● Tax cuts or reduced tax will increase people’s disposal income which later results in
increased consumption, increased production, employment, and so on.

● Increased government spending, done by investing or making projects like construction of

infrastructures like roads, railways, ports, and the like. These activities will create jobs as
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well as purchases of the government. Therefore, this will both stimulate production
(producers receive payment) and consumption (workers spend salary)

As stated on the website of the World Bank last April 2020, with the continued industrialization, a
growing middle class, and a big young population, the Philippine economy is considered one of
the most dynamic economies in the East Asia Pacific region. The economy is backed up by strong
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consumer demand, an active labor market, and robust remittances. As always, our country excels
in the service sector such as the real estate, business process outsourcing (BPO), and finance
and insurance industries. The country has sustained average annual growth of 6.4% between
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2010 and 2019. However, with the impact of the Covid19 pandemic, our economy this year will
be severely affected and most may experience negative economic growth leading to recession.

❖ Unemployment. This happens when a lot of people are jobless/cannot find work or are losing
jobs. It means less output or low production which leads to scarcity. Unemployment rate is
calculated by;
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Unemployment Rate = Number of Unemployed (job seekers) X 100

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Labor Force

Solutions: Jobs creation, with the help of the government, is the best solution. The
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government may create public projects/jobs, provide employment subsidies to businesses to

lower the costs of production or invite foreign investments. Another one is reducing
occupational mobility for people to easily find new different jobs.

From 5.1% in 2019, the unemployment rate of the Philippines has jumped to 17.7% by the second
quarter of 2020. This rate equivalent to 7.3 million jobless Filipinos was the highest on record due
to the Covid19 pandemic that forced the country to an economic shutdown. Among employed
persons, workers in the services sector made up 57.1% of the total, followed by those in the
agriculture sector (25.9%) and industry (17%)

❖ Inflation. It is the consistent increase in the average price level of goods and services. The
purchasing power of money declines and it lowers living standards According to experts, 2-
3% of inflation is good for the economy. There are different factors why inflation happens. It
can be caused by an increase in the cost of production (cost-push inflation), a high rise in
demand (demand-pull inflation), or too much money supply in the economy.

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
 Inflation Rate = Current Period CPI - Prior Period CPI
Prior Period CPI
where CPI is consumer price index

Solutions: Solutions to inflation vary depending on its nature/cause.

● Monetary measures (Contractionary Monetary Policy) – The central bank controls the
money supply in the economy. This can be done by raising bank rates/ interest rates,
expand open market operations (government selling securities like bonds), or increase the
reserve requirements of the banks.

● Fiscal measures (Contractionary Fiscal Policy) – government reduces its expenditure/

spending and raises tax rates to decrease the money supply in the economy
Both measures target to decrease the money supply in the economy.

The inflation rate in the Philippines seems to have settled after peaking at more than 5% in 2018.
The number edged down to 2.1% in May 2020 due to the coronavirus pandemic. Inflation rate
below 3% is an indication of a weaker economic activity. However, if slow economic activity is

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prolonged, slow production cannot meet up the demand and therefore increasing the prices
significantly.

❖ Trade deficit. This condition occurs when a country's imports exceed its exports during a
given time period. It is known as a negative balance of trade (BOT). A country may rely heavily
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on imports due to lacking the efficient capacity to produce its own products due to lack of
technology, resources, or skills.
Solutions:
● Discourage consumption and increase savings. If households and the government reduce
their consumption, then the need for imports decline and less foreign borrowing to pay.
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● Depreciate the exchange rate. Because we use the dollar for foreign trade, a weaker peso
makes imports more expensive and exports cheaper and improves the trade balance. The
central bank may control the supply of dollars or foreign currencies.
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● Raise the quotas and tariffs on imports. This will make imports more expensive so it will
discourage people and local businesses from buying foreign products.

In September 2019, Board of Investments (BOI) executive director Ma. Corazon Dichosa said
that the Philippines’ trade deficit has been growing at a quite alarming rate of 76.54% for the past
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5 years (2014-2018) amounting to $127.93 billion. The 90% of the overall deficit is accounted for
5 countries. The bulk of it which is 32.41% is China’s, followed by South Korea, Indonesia,
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Thailand, and Taipei. However, the Philippines marked its lowest trade deficit at $0.5 billion this
April 2020 which is significantly very low compared to $3.80 billion in the same month last year.
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F. Developing mastery
Identification: (Write your answers on a paper.)
Identify the following past events that affect the Philippine economy.
1. The year Spain took over non-Islamic areas and monopolized trade
2. The country that took over and bought the Philippines from Spain
3. The year Japan annexed the Philippines
4. The economic policy of President Garcia in 1958 that encouraged the Filipinos to
patronize their own products
5. The organization in which the Philippines became a provisional member in 1973
6. The president who launched the program The Philippine Development Plan 2017-2022
7. The economic program launched in 2014 known legally as Republic Act 10644
8. The year the Foreign Investment Act was signed into law
9. The president who had the national program named Philippines 2000
10. The assistance program of the government under the Aquino administration, through
the implementation of DSWD, which aims to help poor Filipinos

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga
 G. Finding practical applications of concepts and skills in daily living
ESSAY: (20 points) (Write your answers on a paper.)
Recently, the Philippine government released cash emergency subsidy through a financial
assistance program called “Social Amelioration Program” or SAP to help people
economically affected by the Covid19 pandemic.

Question: Why did the government launch “Social Amelioration Program”? Did your family
receive the SAP subsidy? Why or why not? Do you think the program is fair? Why didn’t
the DSWD just give all Filipino families SAP? (Maximum of 10 sentences)
Rubric
Correctness & Relevance 10 points
Presentation & Conciseness 10 points
Total 20 points

H. Making generalizations and abstractions about the lesson

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The usual recurring problems of every country are usually caused by economic motives.
Economics helps people understand and assess if public officials run the government and
formulate policies effectively. If people have a deeper understanding of economic principles,
they become wise decision makers and may help in addressing national economic problems.

I. Evaluating learning SA
Multiple Choice: Choose the solutions to each economic problem. There are 2 answers
for every number. (10 points) (Write your answers on a paper.)
1. Poverty
A. create jobs
B. solve crimes
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C. raise the minimum wage
D. change the government officials
2. Monopoly
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A. Impose higher taxes on businesses

B. Privatize government corporations
C. Implement price controls
D. Regulate mergers
3. Recession
A. Increase government spending
B. Reduced tax especially on income
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C. Raise the minimum wage

D. Decrease government spending
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4. Inflation
A. Expansionary monetary policy
B. Contractionary monetary policy
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C. Contractionary fiscal policy

D. Expansionary fiscal policy
5. Poverty
A. Discourage trade with other countries
B. Decrease the quotas and tariffs on imports
C. Discourage consumption of imported goods
D. Raise the quotas and tariffs on imports

J. Additional activities for application or remediation

DEFINE: (10points) (Write your answers on a paper.)

Briefly define the following words. (2 sentences for each)
1. Inflation
2. Contractionary monetary policy
3. Contractionary fiscal policy
4. Trade deficit
5. Recession

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Property of Pampanga High School - DepEd Division of City of San Fernando, Pampanga