Acceleration principle - states that the level of investment is a function of desired changes in output Aggregate demand - is the total

amount of expenditure (in nominal terms) on domestic goods and services Budget deficit a fiscal position where total government spending exceeds total government revenue from all sources Business cycle - the upswings and downswings in the level of real output or economic fluctuations over a period of time Capital - man-made goods used in the production of other goods and services Capital intensive technology a type of technology that utilizes more capital resources than labor resources in the production process Ceiling price - is the legal maximum price imposed by the government Ceteris paribus an assumption used by economist to simplify the analysis of complex economic phenomenon which means all other things held constant or all else remaining equal Change in demand a shift of the entire demand curve, either upward or downward, due to factors other than price Change in supply a shift of the entire supply curve, either leftward or rightward, due to factors other than price Change in quantity demanded - a movement along the demand curve due to a change in price of the good itself. Change in quantity supplied a movement along the supply curve due to a change in price of the good sold. Circular flow model - illustrates the flow of resources and payments for their use as well as the flow of goods and services and payment for them Command economy - a type of economic system wherein the manner of production is dictated by the government Complementary goods - are goods whose consumption requires the consumption of another good Consumption - the direct utilization or usage of the available goods and services by the buyer or the consumer sector Consumer - one who demands goods and services Consumer goods - goods that yield satisfaction directly to any consumer Consumer price index - is the cost of purchasing a hypothetical market basket of consumption goods bought by a typical household consumer during a given period of time (generally a month), relative to the cost of purchasing the same market basket during the base year Consumer surplus - a measure of the welfare a consumer gains from the consumption of goods and services, or a measure of the benefits that a consumer derives from the exchange of goods and services Contractionary fiscal policy a type of fiscal policy wherein the government can do either decrease in government spending, increase taxes, or both Contractionary monetary policy - a monetary policy setting that intends to decrease the level of liquidity/money supply in the economy Core inflation - measures the change in average consumer price after excluding from the CPI certain items that are volatile to price movements Cost-push inflation - is a rise in the general level of prices resulting from an increase in the cost of production Cross price elasticity of demand - the responsiveness of demand for a certain good, in relation to changes in price of other related goods Cyclical unemployment - occurs when the economy experiences ups and downs, that is, a set of fluctuation due to the business cycle Demand - the quantity of a good or service that people are ready to buy at given prices within a given time period

Demand elasticity - is a measure of the degree of responsiveness of quantity demanded of a product to a given change in one of the independent variables which affects demand for that product Demand Curve - a graphical representation showing the relationship between price and quantities demanded per time period Demand function - shows the relationship between demand for a commodity and the factors that determine or influence this demand such as price, consumers tastes and preferences, income, population, etc. Demand-pull inflation - rise in the general price level resulting from an excess of aggregate demand (total spending) Demand schedule - a table that shows the relationship between price and the specific quantities demanded at each of these prices Distribution - the process of allocating or apportioning scarce resources to be utilized by the household, the business sector, and the rest of the world Discretionary fiscal policy a type of fiscal policy whereby there is deliberate use or change in government spending or taxes to alter aggregate demand and stabilize the economy Direct taxes there are taxes levied by government on the income and wealth received by households and businesses in order to raise government revenue and as an instrument of fiscal policy Economics - a science that deals with the management of scarce resources Economic good a good that has value attached to it and a price that has to be paid for its use Economic growth generally defined as an expansion of the national output measured by the annual percentage increase in the national real GDP Effectiveness - means attainment of goals and objectives Efficiency - refers to productivity and proper allocation of economic resources, that is, the production of goods at the least possible cost Elasticity - the ratio of the percent change in one variable to the percent change in another variable Elastic demand a type of demand elasticity wherein the change in quantity demanded is greater than the change in price Entrepreneur - a person who organizes, manages and assumes the risks of a firm, develops a new idea or a new product and turns it into a successful business Equilibrium - generally pertains to a state of balance Equilibrium market price - the price agreed by the seller to offer its good or service for sale and for the buyer to pay for it Exchange - the process of trading goods and/or services for money and/or its equivalent Expansionary fiscal policy a type of fiscal policy wherein the government can undertake any of the following ways: increase in government spending, decrease taxes, or both. Expansionary monetary policy - a monetary policy setting that intends to increase the level of liquidity/money supply in the economy Expenditure approach an approach to measure GDP by adding all the spending for final goods and services during a period of one year Exports (X) - expenditures by foreigners for Philippine goods produced domestically Final goods - goods and services that are ultimately consumed by the public Floor price - the legal minimum price imposed by the government Fiscal policy - the use of government spending and taxes to influence the nations spending, employment and price level For whom to produce - identifies the people or sectors who demand for the commodities being produced by society Free good good that is abundant to satisfy everyones needs without anybody paying for it Frictional unemployment occurs when a worker moves from one job to another Full-employment - means that all resources available in the economy are fully utilized in the production of goods and services

Goods - refer to anything that provide satisfaction to the needs, wants, and desires of consumers Gross Domestic Product - total market or money value of all final goods and services produced in an economy over a period of one year Gross investment - is the total amount of investment that is undertaken by an economy over a specified time period (usually one year) Gross National Product - is the total market or money value of all final goods and services produced by a nations residents (e.g. Filipinos), no matter where they are located Headline inflation - captures the changes in the cost of living based on the movements of the prices of items in the basket of commodities and services consumed by the typical household How to produce - tells us that there is a need to identify the different methods and techniques in order to produce goods and services How much to produce - identifies the quantity of goods and services needed to be produced in order to address the demand of man and society as a whole Income approach an approach used in measuring GDP by adding all the incomes earned by households in exchange for the factors of production during a period of time Income elasticity of demand - the responsiveness of consumers demand to a change in their income Indirect taxes - taxes levied by government on goods and services in order to raise revenue and as an instrument of fiscal policy Inelastic demand a type of demand elasticity wherein the change in quantity demanded is less than the change in price Inelastic supply a type of supply elasticity wherein a change in price produces a less than proportionate change in the quantity supplied Inflation the rise in the general price level Inflation rate - an annualized percentage change in the general price index (the CPI) Innovation - the introduction of an unfamiliar product and untested technology Input - commodities and services that are used to produce goods and services Interest rate - is the particular amount of interest which a household or business is required to pay to a lender for borrowing a particular sum of money to finance spending on consumption and investment Intermediate goods goods that are used to produce another final goods Investment - is the purchase of goods that will be used in the future to produce more goods and services Investment expenditure - is a capital spending mainly derived not from current income and consumption but from accumulated savings and other sources external to the circular flow. Imports (M) - the dollar amount of Philippines purchase of goods produced abroad Labor - the mental and physical ability used in the production of goods and services Labor intensive technology a type of technology that utilizes more labor resources than capital resources Land - refers to all natural resources, which are given by, and found in nature, and are, therefore, not man-made Law of Demand - indicates the inverse relationship between price and quantity demanded Law of Supply - shows the direct relationship between price and quantity supplied Labor force includes those who are either employed or unemployed Macroeconomics - the branch of economics that studies the relationship among broad economic aggregates like national income, national output, money supply, bank deposits, total volumes of savings, investment, consumption expenditure, general price level of commodities, government spending, inflation, recession, employment, and money supply Marginal propensity to consume - fraction of extra income that is spent on consumption Marginal propensity to save - fraction of extra income that is saved Market - place where buyers and sellers both trade or exchange goods or services Market economy - is an economic system wherein most economic decisions and means of

production are made by the private owners Market equilibrium - the meeting of supply and demand wherein supply equals demand at a particular price and quantity Microeconomics - the branch of economics which deals with the individual decisions of the different units in the economy Mixed Economy a type of economic system where there is a mixture of market system and the command system Monetary policy - a macroeconomic policy which involves the regulation of the money supply, credit and interest rates in order to control the level of spending in the economy Money supply - refers to the amount of money circulating in the economy Multiplier - the process of generating income through the circular flow exchange between the households and the firms National budget - is the primary tool of fiscal policy Net investment - is gross investment less replacement investment of capital consumption Nominal values - refer to the peso value of the prices, earnings, wages, or the absolute value of the interest rates Nominal GDP (or current GDP) - is the current market price of goods and services produced in a given time period Nomus means system or management Normative economics - economic analysis which judges economic conditions as it should be Necessity goods - goods that satisfy the basic needs of man Opportunity cost - the foregone value of the next best alternative Oikos meaning household. Oikonomia (or oikonomus) a Greek word that means management of household Permanent-income hypothesis - postulates that current consumption is not solely dependent on current disposable income but also on whether or not income is expected to be permanent or transitory Phillips curve - depicts an empirical observation of the relationship between the level of unemployment and the rate of change of money wages, and by inference, the rate of change of prices (inflation) Positive economics - an economic analysis that considers economic conditions as they are, or considers economics as it is Price ceiling - the legal maximum price imposed by the government Price control - the specification by the government of minimum and/or maximum prices for goods and services Price elasticity of demand - the responsiveness of consumers demand to a change in price of the good sold Production - is defined as the formation or creation by firms of an output (products or services) Production possibilities frontier - represents outcome or production combination that can be produced with a given amount of resources. Profit - the difference that arises when a firms total revenue is greater than its total cost Production - the formation by firms of an output (products or services) Production function - the functional relationship between quantities of input used in production and the level of output produced Product market - the place where goods and services produced by businesses are bought by and sold to the households Purchasing Power of Money - indicates how many market baskets of goods can be purchased with one unit of money Real GDP - the value of all final goods and services produced during a given time period based on the prices existing on a selected base year. Real values - values in comparison, or relative, to other related economic variables Recession - is the lowest point of the business cycle

Recovery - is an upturn in the business cycle during which real GDP (positive growth rate) starts to rise again Resource market - the place where resources or the services of resource suppliers are bought and sold Savings - refer to that part of a persons or economys income which is not spent on consumption Scarcity - a commodity or service being in short supply, relative to its demand Shortage - a condition in the market where demand is higher than supply Socialism - is an economic system wherein key enterprises are owned by the state Structural unemployment is the result of the mismatch between jobs offered by employers and skills offered potential workers Substitute goods - goods that can replace another good Supply - the quantity of goods or services that firms are ready and willing to sell at a given price within a period of time, other factors being held constant Supply Curve - a graphical representation showing the relationship between the price of the product or factor of production (e.g. labor) and the quantity supplied per time period Supply elasticity - refers to the reaction or response of the sellers or producers to price changes of goods sold Supply function - is a form of mathematical notation that links the dependent variable, quantity supplied (Qs), with various independent variables Supply schedule - is a listing of various prices of a product and specific quantities supplied at each of these prices Surplus - a condition in the market where the quantity supplied is greater than quantity demanded Tastes (or preferences) - pertain to the personal likes or dislikes of consumers for certain goods and services Taxation - an inherent power of the state to demand enforced contributions from the people for public purposes Technology - a production process employed by firms in creating goods and services Traditional economy - is basically a subsistence economy Transitory income - comprises short-term temporary overtime payments, bonuses , and windfall gains like winnings Trough - where the level of GDP bottom out Utility - refers to the satisfaction or pleasure that an individual or consumer gets from the consumption of a good or service that (s)he purchases Unemployment refers to the idle resources of the economy Unemployment rate - the percentage of people in the labor force who are without jobs and are actively seeking for jobs Wealth - anything that has a functional value (usually in money) which can be traded for goods and services What to produce - tells us that an economy must identify the goods and services that are needed to be produced for the society's utilization