Applied Economics

Quarter 1 – Module 6:
Effects of Contemporary Economic
Issues Affecting the Filipino
Entrepreneur
(Week 6)
 What I Need to Know

This module was designed and written with you in mind. It is here to help you
analyze the effects of contemporary economic issues affecting the Filipino
entrepreneur. The scope of this module permits it to be used in many different
learning situations. The language used recognizes the diverse vocabulary level of
students. The lessons are arranged to follow the standard sequence of the course.
But the order in which you read them can be changed to correspond with the
textbook you are now using.

The module has one lesson only, namely:

Lesson 1: Analyze the effects of contemporary economic issues affecting the

Filipino entrepreneur

After going through this module, you are expected to:

1. enumerate the contemporary economic issues; and
2. analyze its effects to the Filipino entrepreneurs

What I Know

In this part of the module, the teacher would like to know the idea of the
learner about the lesson. If your score is 15 points, you can skip the lesson but if
you got 14 points and below, continue answering the module.

MULTIPLE CHOICE. Read each statement very carefully. Write the correct answer
in your answer sheet.

1. What do you call to the payment for the use of land?

A. rent B. spending C. income D. capital
2. It refers to income less spending.
A. taxes B. capital C. savings D. investments
3. It is building up the capital stock for more future production and consumption
A. interest rate B. investments C. income D. capital
4. It can be classified as machineries, equipment, buildings and construction.
A. spending B. savings C. capital D. assets
5. It refers to the lowest wage permitted by law below which if paid by employer
will subject him to penalty from the government.
A. minimum wage C. maximum wage
B. maximum salary D. minimum salary
6. Payment for public goods and services by citizens.
A. savings B. debt C. tax D. capital
7. It is consumed to fuel day to day expenditures
A. debt B. spending C. capital D. investments

8. It is the rate of conversion of the Philippine peso to a foreign currency such as

the US dollar.
A. foreign dollar exchange rate C. domestic peso exchange rate
B. foreign exchange rate D. domestic exchange rate
9. It is the amount of interest due per period, as a proportion of the amount lent,
deposited or borrowed.
A. investment rate C. interest rate
B. accrued interest D. compound interest
10. A person who takes the risks that is necessary to seek new business
opportunities and develop new ways of doing things.
A. inventor B. scientist C. entrepreneur D. government
11. It is the lifeblood of the economy.
A. borrowings C. investments C. savings D. tax
12. Are Filipino entrepreneurs affected by the widespread of COVID-19?
A. yes B. no C. I’m not sure D. none of the above
13. As a Filipino entrepreneur, why is it important to consider the tax rate of the
country?
A. Because every single centavo given to tax means additional burden on the
part of the entrepreneur.
B. Because it is an obligation of the entrepreneur to pay tax.
C. Because the tax rate in the Philippines is low compared to other
countries.
D. Because the products in the Philippines is tax-free.
14. What agency of the government is authorized to check if the employer follows
the rules and regulations in setting up minimum wage in his company?
A. DOLE B. BIR C. DTI D. DENR

15. What will happen if there are influxes of investment in the country?
A. It will create jobs.
B. It will result to colonial mentality.
C. More foreigners in the country.
D. Foreigners will invade the country.
 Lesson Analyze the Effects of Contemporary

6 Economic Issues Affecting the

Filipino Entrepreneur

Being an entrepreneur is not an easy task. It entails uncertainty and risk,

especially in this time of pandemic or the so called COVID-19. How are entrepreneurs
affected by these economic issues happening in the Philippines, and how do they
cope up?

What’s In

Before we start the next lesson, let us recall the types of market
structures and give their characteristics.

Types of Market
Structures

Characteristics Characteristics Characteristics Characteristics

Notes to the Teacher

The teacher may use other ways of reviewing the learners. It may be
in the form of essay or objective type of drill.
 What’s New

In this part, the teacher presents the new lesson to the learner.

From the previous lesson, the importance of knowing the characteristics of

market structure is very important. As a newbie in business, you were looking for
profitable market, where you will invest your resources. Having resources cannot
guarantee an entrepreneur that it will be a big success. In this activity, answer the
following questions about the picture presented.

1. What can you say about the picture?

Answer:__________________________________________________________________________
__________________________________________________________________________________
2. Define each word from the above picture.

Answer:__________________________________________________________________________
__________________________________________________________________________________
3. How can you relate the words to the picture?

Answer:__________________________________________________________________________
_________________________________________________________________________________.

What is It
 In this part, the teacher provides brief discussion about the
lesson. It aims to discover and develop new skills to learner.

Business, as they say, is like a gamble. It takes a brave heart to invest their
resources with no guarantee that there will be a return of investments. In this
module, let us discuss the contemporary issues affecting the Filipino entrepreneurs.
INVESTMENT AND INTEREST RATE

In putting up business, it is necessary to know the initial investment of the

entrepreneur so that he able to assess if he needs additional investment. What is
investment? It is defined as building up the capital stock for more future production
and consumption. When the entrepreneur has no enough investment, he will resort
to borrowings or borrow from financial institutions like banks. The borrowings bear
interest rates. This is the amount of interest due per period, as a proportion of the
amount lent, deposited or borrowed.

Effects to entrepreneur:
Low interest rate attracts more entrepreneurs to invest, while high interest
rates lessen the opportunity of the entrepreneurs to start their business in the
country.

RENTALS

As an investor, what will you do if you don’t own land or space to be used for your
business? The answer is rent or lease a land or space. But, how does rental affect
your business operations?

Effects to entrepreneur:
In Income Statement, rental fee is in expense account which means the
bigger the place/space, the higher the cost. Also consider the location; it is more
costly to rent in urban areas than in rural areas. For example, the rental fee of
100 square meter of land in Pasig City is P50,000.00 per month, but in Pampanga
with the same area is only P25,000 per month. So, the size and location matters
when planning to rent.

MINIMUM WAGE

What is minimum wage and how it is determined? It refers to the lowest wage
permitted by law below which if paid by employer will subject him to penalty from
the government. In the Philippines, the Department of Labor and Employment
(DOLE)issued wage order for minimum wage earners effective January 1. 2020.But
how was minimum wage determined? Minimum wage rates are determined by factors
such as poverty threshold, prevailing wage rates as determined by the Labor Force
Survey, and socio-economic indicators (i.e. inflation, employment figures, Gross
Regional Domestic Product, among others), which insure better workers protection.
The National Wages and Productivity Board (NWPC) Wage Order NO. RBIII-22, the
prevailing minimum wage for non-agricultural establishments employing 10 or more
workers in the region 3 except Aurora shall pay their employees at P420.00 per day
while in the Province of Aurora, workers in the non-agricultural sector will receive
minimum salary of P413.00 daily.

Effects to entrepreneur:

Over and above minimum wage is the voluntary productivity-based pay,

which encourages workers and enterprises to become more competitive and
productive by rewarding employees supplementary pay based on the quality of their
performance.

TAXES

Tax is the lifeblood of the economy. It fuels the social services provided by the
government to its citizen. But how does tax affect the entrepreneur?

Effects to entrepreneur:

High taxes tend to lessen investment because this is considered an additional

cost on the part of the entrepreneur. Low taxes mean fewer government projects
such as school buildings, roads, bridges and providing social services to people.
How can entrepreneurs gain from tax? Government gives considerations to new
entrepreneurs with tax holiday up to 6 years and vat exemption for purchase of
supplies of the firm that is going to export 100% of its product.

What’s More

The teacher would like to solidify your understanding about the topic being
discussed.
Activity 1: Thumbs Up! Thumbs Down!

Read each statement very carefully. Write the word Thumbs Up if you agree with
the statement, and Thumbs Down if you disagree with the statement. Write your
answer on the space provided before the number.

__________1. Low rental fees mean more businesses will be created.

__________2. High interest in external borrowings attracts potential investors.

__________3. Increase in minimum wage will increase the buying power of workers.

__________4. High tax rates mean less investors.

__________5. Entrepreneurs always consider the following when making business
decisions: rental fees, tax rates, minimum wage rate, amount of investment and the
interest rate.

Activity 2.Matching Type

Match column A with column B. Write the letter of your choice before the number.

Column A Column B

_____1. Rent A.
_____2. Minimum wage

_____3. Tax

_____4. Investments
_____5. Interest rate

B.

C.

D.
 E.

Activity3: Yes or No
Check the box of the correct answer.
Yes No

1. Wage refers to income received by professionals

like teachers, doctors, lawyers and nurses.

2. Loans and borrowings bear interest.

3. DOLE is a government agency authorized

to review and regulate minimum wage in the country.

4. Lease is the other term used for capital.

5. Capital and fixed assets are examples of investment.

What I Have Learned

Write all your learnings about the lesson. (Minimum of 3 and maximum of 5
sentences)

What I Can Do

In this part of the module, the teacher would like to know how you can apply
the lesson in real life situation.

On one whole sheet of paper, discuss how you can help the newly set-up
businesses in your community in coping up with the pandemic (COVID-19).
(Essay. 5 PT. RUBRIC 5 points Comprehensive and analytical 4 points Well written
and some includes analysis 3 points Well written but lacks analysis 2 points Weak
essay 1 point Poorly written and lack strength).

Assessment

True or False. Write the word True is the statement is correct and False if the
statement is incorrect. Write you answer in the space provided before the number.
__________1.Low interest rates on borrowings tend to attract more investors.
__________2.It is advisable to rent a big space for a new business with limited capital.
__________3.Setting up minimum wage is solely regulated by the company/employer.
__________4. Good infrastructures attract investors.
__________5.Electricity facility is an example of investment.
__________6.High interest rates mean more investors.
__________7. Tax is the lifeblood of the economy.
__________8.Social services provided by the government to its citizens come from
investments.
__________9.High taxes tend to lessen investment.
__________10.Tax holiday is given to new investors to attract more investments.
__________11.If the interest rate is low,the value of dollar tends to increase.
__________12. If the interest rate is high, the value of Peso tends to decrease.
__________13. High tax rates lead to less job creation.
__________14. Minimum wage results in the increase of unemployment.
__________15. Interest rate – investments; tax evasion – tax

Additional Activities

In this part, the teacher provides another activity to enrich the knowledge or skill of
the learner about the lesson.

How has COVID-19 affected the Filipino entrepreneurs especially the newbies
in the business?