APPLIED
ECONOMICS
LESSON 7:
ECONOMIC INDICATORS
Prepared by: Ms. Agatha Dela Paz
GDP GROSS DOMESTIC PRODUCT
The GDP is primarily used to
measure the health of a
country’s economy. It reflects
the total market value or
prices of all finished goods
and services produced by a
country at a certain period.
GDP GROSS DOMESTIC PRODUCT
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
CPI CONSUMER PRICE INDEX
The CPI is an indicator most widely
used in the calculation of the
inflation rate and purchasing
power of the peso. It reflects the
change in the average retail prices
of a group of goods and services
purchased by households
compared to a base year.
CPI
CPI
BASE LINE - P10,000.00
P12,000.00
CPI INFLATION
COST OF LIVING
CPI CONSUMER PRICE INDEX
How does Consumer price index (CPI) as an economic indicator
affects the economy's rise and fall?
Inflation Control Interest Rates
Purchasing Power Cost of Borrowing
Indexation
FE FOREIGN EXCHANGE
Foreign exchange is the
conversion of one
currency into another
currency. Some currencies
are valued according to
the laws of supply and
demand.
FE FOREIGN EXCHANGE
Trade Balance
Inflation
Investment
Consumer and Business
Confidence
Government
Policy Response
FE FOREIGN EXCHANGE
Trade Balance
Inflation
Investment
Consumer and Business
Confidence
Government
Policy Response
FE FOREIGN EXCHANGE
Trade Balance
Inflation
Investment
Consumer and Business
Confidence
Government
Policy Response
FE FOREIGN EXCHANGE
Trade Balance
Inflation
Investment
Consumer and Business
Confidence
Government
Policy Response
FE FOREIGN EXCHANGE
Trade Balance
Inflation
Investment
Consumer and Business
Confidence
Government
Policy Response
FE FOREIGN EXCHANGE
Trade Balance
Inflation
Investment
Consumer and Business
Confidence
Government
Policy Response
FE FOREIGN EXCHANGE
Trade Balance
Inflation
Investment
Consumer and Business
Confidence
Government
Policy Response
BOP BALANCE OF PAYMENT
The BOP is an indicator that
helps economists understand
how businesses happen
beyond borders. It is the
difference between inflow and
outflow of foreign exchange,
and the net effect is always
zero.
BOP BALANCE OF PAYMENT
Current Account
Tracks the import and export of
goods and services, earnings on
foreign investments minus
payments made to foreign
investors, and cash transfers. A
surplus means a country exports
more than it imports, while a
SURPLUS
deficit means imports exceed
exports.
BOP BALANCE OF PAYMENT
Capital Account
Records the buying and
selling of assets like real
estate, stocks, and bonds. It
reflects changes in
ownership of national assets.
BOP BALANCE OF PAYMENT
Financial Account
Captures investments
flowing in and out of the
country, including
investments in
businesses, real estate,
stocks, and bonds.
BOP BALANCE OF PAYMENT
Economic Rise Due to a Surplus
Economic Fall Due to a Deficit
Rapid Changes Due to Investment Flows
BOP BALANCE OF PAYMENT
Economic Rise Due to a Surplus
Economic Fall Due to a Deficit
Rapid Changes Due to Investment Flows
BOP BALANCE OF PAYMENT
Economic Rise Due to a Surplus
Economic Fall Due to a Deficit
Rapid Changes Due to Investment Flows
BOT BALANCE OF TRADE
The BOT is a large component
of the balance of payment. It
is simply deals with the
difference between import
and export values. It does not
include services and
unilateral and capital
transfers.
BOT BALANCE OF TRADE
UNDERSTANDING BOT
The balance of trade is a key
economic indicator that reflects
the difference between a
country's exports and imports
over a certain period. It's a
component of a country's
balance of payments,
specifically focusing on the
trade in goods and services.
BOT BALANCE OF TRADE
UNDERSTANDING BOT
TRADE SURPLUS
When a country's exports
exceed its imports. This is
often seen as a positive
indicator, suggesting that the
country is selling more
abroad than it is buying from
abroad.
BOT BALANCE OF TRADE
UNDERSTANDING BOT
TRADE DEFICIT
When a country's imports
exceed its exports. While often
viewed negatively, a trade
deficit can also indicate that a
country's residents are wealthy
enough to purchase more
foreign goods and services.
BOT BALANCE OF TRADE
UNDERSTANDING BOT
BALANCE OF TRADE
When a country's imports
exceed its exports. While often
viewed negatively, a trade
deficit can also indicate that a
country's residents are wealthy
enough to purchase more
foreign goods and services.
IR INTEREST RATE
An interest rate represents
the cost of borrowing
money or the amount a
lender charges for the use
of funds or assets
expressed as a percentage
of the initial amount.
IR INTEREST RATE
IR INTEREST RATE
IR INTEREST RATE
STIMULATE OR COOL
THE ECONOMY
Lowering interest rates makes
borrowing cheaper, encouraging
spending and investment, which
can stimulate the economy.
Raising interest rates makes
borrowing more expensive,
which can cool down an
overheated economy.
IR INTEREST RATE
INFLATION
CONTROL
Central banks may increase
interest rates to control inflation
(the rate at which prices rise) by
discouraging borrowing and
spending. Conversely, they might
lower rates to combat deflation
(falling prices), encouraging
spending and investment.
IR INTEREST RATE
EXCHANGE RATE
INFLUENCE
Higher interest rates can
attract foreign investors
looking for the best
return on their
investments, potentially
increasing the value of
the country's currency.
SMI STOCK MARKET INDEX
The stock market index
reflects universal market
sentiments and the general
direction of price
movements of goods and
services in various sectors
and industries.
SMI STOCK MARKET INDEX
REFLECTS BUSINESS
HEALTH
SMI STOCK MARKET INDEX
INVESTOR
CONFIDENCE
SMI STOCK MARKET INDEX
LEADING INDICATOR
