Manon's Econ Blog

Good Job

Philippines Current Account Balance The current account of the Philippines is currently in surplus. The surplus of the country in terms of GDP is 3.5%. It is expected to reach 0 by 2013. Right now, the country is in good condition since it's better off in surplus rather than in deficit. … Read More

via Abby's Economic Blog

I think I understand it quite well because I understand the diagrams and so on. Nevertheless, I get confused sometimes about increase and decrease of GDP. I mix up between aggregate demand and international demand. I need to make sure I remember that when GDP increases, demand for imports also increases.

Overall I think this is not my best topic since I have to think a lot about it to make sure I do not get mixed up.

Historical trends

It has been in deficit since 2004.

Current account deficit 2.67% of GDP

Current account -56.13 billion $

GDP 2.097 trillion $

I am pretty happy about my data response. I nevertheless think I need to keep writing a lot for evaluation and include as points as possible. I usually do not write about enough points because I am not concise enough. I therefore need to also work on time management to make sure I keep enough time to develop all points and not just a few.

Also, I thought the analysis for the increase in demand was not enough; I need to make sure I know all the determinants of demand so I don’t spend too much time loooking for explanations in the article. I need to refer back to the article more directly so I am sure I am not off-topic.

There are different arguments for both free trade and protectionism. Different people argue different things, depending on their interests. I agree with both to some extent.

Protectionism is good in the sense that it helps people to have a job and be able to live in normal conditions. It saves individual companies and we cannot forget about them. It is not so much an economic point of view, but more of a personal and political point of view.

Cheap imports and free trade will benefit the world as a whole and other economies, but I am not sure how great it the benefit compared to how badly the poor people will suffer with free trade. If the money and growth from free trade was spread equally between people I will agree with free trade, but in the real world it does not so the distinction between how great free trade is is not as clear.

I agree with free trade because it helps the whole economy, and in some ways it will help even the bottom part of the society. The economy will be able to grow and that is important because a better standard of living for the country is always good. Nevertheless, not all people will benefit from the growth so I am not convince with the greatness of free trade that economics agree upon.

2. With the use of examples explain the difference between direct and indirect taxes.  (200-300)

There are two different ways government can collect taxes from people: with direct and indirect taxes.

Direct taxes depend on income; it is a fraction of income directly taken from the income someone receives. For example, if the tax rate is 10%, someone earning 1 million dollars a year will pay 100 000 dollars as taxes. Direct taxes could also be progressive, which means the fraction increases as income increases, but in any case it is taken directly from income.

Indirect taxes are depending on purchases; for each purchase some portion of the money paid goes to government. For example, the sales tax could be 7% for each computer, so everyone buying a computer would have to give 7% of the price paid to the government. Indirect taxes could also be fixed; for example for each pound of rice bought 1 dollar goes to the government.

Direct taxes cannot be escaped since they are directly taken from the income earned, but indirect taxes can somehow be escaped if the person does not buy the product. Nevertheless, government tries not to charge too much from people or they will find ways to not pay it anyway.