Contemporary Economic Issues Affecting the Entrepreneur
Philippine UNY
Study guide, definitions and notes
A. Investment and Interest Rate
o In putting up business, it necessary to know the initial investment of the entrepreneur so that he
will be able to assess if he needs additional investment
Investment
o 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 borrowing 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
o 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.
B. Rentals
o 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 entrepreneurs
o 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 per
month, but in Pampanga with the same areas is only P25, 000 per month. So, the size and
location matters when planning to rent
C. Minimum Wage
o It refers to the lowest wage permitted by law below which if aid 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
