GRADE 10

ECONOMICS

PAPER 1

MACROECONOMICS

ECONOMIC PURSUITS

CORE NOTES

Adapted by Economic Subject Advisors 2022

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Table of Contents
GUIDELINES IN ANSWERING THE ECONOMICS EXAMINATIONS 3
STRUCTURE OF THE FINAL EXAM PAPERS: 8
TOPIC 1: ECONOMICS: BASIC CONCEPTS 10
TOPIC 2: BASIC ECONOMIC PROBLEMS 17
TOPIC 3: CIRCULAR FLOW AND QUANTITATIVE ELEMENTS 29
TOPIC 4: BUSINESS CYCLES: 36
TOPIC 8: GROWTH DEVELOPMENT AND GLOBALISATION 44
TOPIC 9: POPULATION AND LABOUR FORCE 55
TOPIC 10: UNEMPLOYMENT AND EMPLOYMENT 62

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GUIDELINES IN ANSWERING THE ECONOMICS EXAMINATIONS
The Economics examination question papers are structured in a specific manner.
Before attempting any examination questions (inclusive of test questions during the year), it is always
important to read the instructions carefully.

The instructions tell you what is required and if you deviate from them, it can count against you and thereby
causing you to miss out on marks.

In addition to the above, please note the following:

Use the 10 minutes reading time (as provided to you) at the beginning of the examination / test to decide which
questions you will answer in Section B and C – remember, these are ‘choice questions’.

Write only with a blue and / or black pen.

Do not write in pencil. Any answers in pencil will be regarded as an examination irregularity.
Use a pencil only to draw graphs, sketches, illustrations, curves, etc. (labels must be in pen)

Always write neatly and legibly. Marks will be forfeited if handwriting is illegible. If the marker cannot decipher
(and make sense of) your handwriting, the answers will be marked as incorrect.

SECTION A COMPULSORY

QUESTION 1
This question is compulsory and must be completed by all candidates.
To answer this question, it is essential that the candidates know the economic concepts / terminology and
the definitions and/or descriptions.
Attempt an answer for all the questions, even if you do not know the answer.
If you are uncertain about the answer, continue writing the examination and return to the question at the end
of the examination. It may be that you can find clues for the unanswered question as you proceed with the
test/examination. (Remember to leave lines open for this – this also makes it easy to see where you need to
complete answers if you need to return.
If you do not know the answer, take an educated guess.

It is important to note the following: If you leave questions unanswered, you will get no marks. However, if
you write an answer which makes economic sense and answers the question, you can be awarded marks.

1.3 Multiple choice questions

Read the question / statement thoroughly before attempting to answer.
FOUR options are provided as possible answers to a question or statement.
It is expected of learners to choose only ONE option / possible answer and write down only the letter next to
the question number.

Only ONE option / possible answer per question will be accepted. If more than one option/answer is
written, both will be marked as incorrect.

Hints on how to answer the multiple-choice questions:

Read the entire question / statement.
First cover the possible answers to the question.
Formulate / anticipate the correct possible answer in your mind.
Open the possible answers / options given.
See if your choice to the answer is one of the options / answers.

If your answer is not available, then you must use a method of elimination.
Eliminate the answers which you know are totally wrong / nonsensical.
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Select the best answer from the remaining possible answers.
If you are uncertain, go ahead with writing the examination and return to the multiple-choice questions at
the end of the examination. It may be that you can find clues to the answers as you proceed with the
examination.
It is sometimes good to make an educated guess if you do not know the answer – but never leave the question
unanswered.

1.2 Matching-type Questions

Read the question carefully.
The TERM is provided in COLUMN A and the DESCRIPTION is provided in COLUMN B.

Learners are expected to provide the description in COLUMN B next to the TERM in COLUMN A.
Only ONE choice / option / possible answer is accepted per term. E.g. Q1.2.1 A and not Q1.2.1 A or G – Only
ONE choice from COLUMN B is accepted for the match against the term in COLUMN A.
If two answers are chosen, both will be marked as incorrect.

The information that can be linked to each other includes:

Economic concepts with the definition / descriptions
Dates with events
Theory with the theorist
Problem with a solution, etc.

An example of how to answer the matching question.

Read all options in each column before answering.
Use logic – look for logical clues in the statement / description.
Use your knowledge and first answer the terms which you know.
Cross out the terms in both columns once you have made your choice – This is a form of elimination and
makes it easier to answer the rest.
Tackle the tougher choices now
See if you can find a match for the remaining terms.
If you are not sure, continue writing the test or examination and return to the matching question at the end of
the test or examination. It may be that you can find clues to the answers as you proceed with the test.
If you do not know the answer, it is always good to make an educated guess, but never leave the answer open.

1.3 Give ONE term for each of the following descriptions.

A description is given, and it is expected of the learners to give only ONE term for the description.
The learners may not provide answers in the form of abbreviations, acronyms and examples.
If learners use abbreviations, acronyms and examples for this question in the test or examination, they will
forfeit the marks.

SUMMARY

Tips to the educator to guide learners in answering Section A:

You must be able to explain the Economics concepts to the learners in a practical way.
Candidates must use the folio page in the answer book to answer Section A.
Give only ONE answer per question number.
No marks will be awarded for two or more options given in the response to the answer.
No abbreviations, acronyms and examples may be given as an answer to Question 1.3 (see instruction).
On completion of a topic, candidates must have in their possession a glossary (concepts) of the topic covered
in class.
Terminology must be tested throughout the year. Use previous question papers to build up a terminology bank.
Mind the Gap study guide has a lot of concepts per topic described.

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 SECTION B - APPLICATION QUESTIONS
(INCLUSIVE OF AND NOT LIMITED TO DATA-RESPONSE QUESTIONS)

Candidates are given THREE questions of which they must only answer TWO.

If learners answer ALL THREE questions in this section, then only the first TWO questions will be marked even
if it appears that the learner did better in the third question. Learners must be told to follow to the instruction
When candidates answer more than the expected number of questions, a red line is drawn through the excess
answer and the words “TOO MANY QUESTIONS” will be written at the excess question.

QUESTION: 2.1 / 3.1 / 4.1 - Answer the following questions

QUESTION: 2.1.1 / 3.1.1 / 4.1.1 - Give TWO examples / Name TWO institutions

These are lower order questions.

If the candidate answers three questions, only the first two responses will be marked. The rest will be
disregarded and not marked, even if they are correct and the first two answers were wrong.
If the question expects candidates to give ONE answer, and they have given more than one answer, only the
first answer will be marked, even if the second or third answer may be correct.

QUESTION: 2.1.2 / 3.1.2 / 4.1.2: Explain / How / Why / What

These are middle to higher order questions.

It is expected that candidates answer these questions in full sentences.

2.2 Data Response

It is important to note that the questions may sometimes have very little to do with the extract, especially the
first question.
The extract / picture / cartoon / table / diagram, etc. is merely a means to give the context of the content
covered to candidates. It merely serves as an introduction to the topic or a stimulus.

QUESTION: 2.2.1 & 2.2.2 / 3.2.1 & 3.2.2 / 4.2.1 & 4.2.2

These are lower order and may or may not come from the extract.
The answers to the questions may or may not come from the extract / graph / cartoon, etc.
Candidates must write their answers in full sentences.

QUESTION: 2.2.3 / 3.2.3 / 4.2.3

These questions are normally description-types of questions – terminology.

Candidates are normally expected to briefly describe a term / concept.
Candidates must write their answers in full sentences.

QUESTION: 2.2.4 / 3.2.4 / 4.2.4

These are How / Why / What questions.

They are normally middle order cognitive questions.
These questions can include but are not limited to the drawing of graphs, drawings, fact base, etc.
Candidates must write their answers in full sentences.

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QUESTION 2.2.5 / 3.2.5 / 4.2.5

These are How / Why / What questions.

These are higher order questions.
These questions require learners to evaluate / analyse / examine, etc.
Candidates must write their answers in full sentences and give their own opinion / understanding of the
question.
Many marks are lost because of the misinterpretation of the question or not responding at all.
Candidates must avoid the following when answering this question:
Candidates must not list their answer – will only be awarded 1 mark
Giving examples only – will only be awarded 1 mark
If the example is explained in a full sentence = 2 marks will be allocated

When marking these higher order questions:

The marker must read the question and then read the full answer of the candidate.
The answer may be wrong but there may be relevant / and correct answers within the wrong answer. E.g. The
beginning statement is wrong, but the example is correct and in context.
Candidates need to make sure they write in full sentences and give their opinion / understanding of the
question.
Many marks are lost because of misinterpretation of the question or not responding at all.
In many cases learners will be credited for explaining the term being examined

SECTION C: FINAL YEAR END EXAMINATION

These are the Essay-type questions

TWO questions are given to learners and they must only answer ONE.

If the candidate does both essays, then only the first essay will be marked even if the candidate scores more
marks in the second essay.
Candidates will score no marks for writing an incorrect essay, even if that essay is substantial.
When candidates answer more than the expected number of questions, a red line is drawn through the answer
and the words “TOO MANY QUESTIONS” will be written at the excess question.
Check and practice all the possible essay- type questions that may appear from every topic as indicated in the
examination guideline.

Take Note:
Answer the question as stated, e.g. with graphs, without graphs, with diagrams, without diagrams.
Candidates who answer essays have a higher probability of passing the paper than those who do not answer
an essay.
Candidates who do not attempt the essays tend to perform poorly in the examination.
Candidates must structure their essays properly and write the following words as part of their answer:
o Introduction
o Body: Main Part
o Additional Part
o Conclusion

INTRODUCTION
A description or the definition of the topic examined is an example of a good introduction.
The description / definition must be a full sentence to obtain 2 marks.

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BODY: MAIN PART
Candidates are required to write in full sentences.
Candidates need to use headings and subheadings where necessary / applicable.
8 marks are allocated for headings, merely listing of facts and examples in the Main Part of the essay.
Only content relevant to the question will be accepted.

ADDITIONAL PART (HIGHER ORDER)

These are mainly higher order but limited to evaluate / examine / analyse type questions.
Candidates who write something may be credited, however, many learners do not attempt this part of the
essay.
Evaluate – give positive or negative or a combination.
In this section, the candidates may express an opinion, give examples, make suggestions or give advice,
however, they must substantiate their facts with economically sound and relevant explanations.

CONCLUSION
The conclusion is a summary related to the main part of the essay
The conclusion is a higher-order aspect of the answer and must be treated as such.

What is expected when learners are asked to “Evaluate” or “Analyse”

Evaluate
When you evaluate something, you're making a judgment, one that most likely results from some degree of
analysis.

In this regard, both positives and negatives are to be highlighted

For example: Evaluate South Africa’s use of Standard National Accounts

Positives
GDP is the most commonly used statistics to measure the economy.
As a member country, South Africa is adhering to the call by the United Nations to keep a record of its national
accounts.
South Africa is successful in using three methods to calculate its economic activity, the income method, the
expenditure method and the production method.
Measuring the economic activity, South African successfully determine whether there is economic growth
occurring or whether there is a negative economic growth rate.
The country has been successful thus far in determining whether South Africa is entering a recession,
depression, recovery of prosperity phase.
These national account figures together with indicators are used by the South African Reserve Banks’
Monetary Policy Committee to determine the repurchase rate (repo rate) to control inflation.

Negatives
GDP is the most commonly used statistics to measure the economy.
National income figures are NOT 100% accurate.
All the sectors are not fully included in the calculation of National accounts – e.g. the informal sector.
National accounts focus on production of goods and services and how the economy performed but the values
do not include the contribution of production towards environmental degradation.

Analyse
Analysis requires candidates to assess how successful or unsuccessful a specific policy, e.g. industrial
development zones, were.
It requires candidates to bring in research findings (including current statistics) and the impact of such
policies on economic growth and development.
It requires candidates to include such statistics and additional information in their answers.

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STRUCTURE OF THE FINAL EXAM PAPERS:

ECONOMICS GRADE 11
Paper 1 Paper 2
150 Marks – 2 hours 150 Marks – 2 hours
MAIN TOPIC MAIN TOPIC
MACROECONOMICS MICROECONOMICS
TOPICS TOPICS
● Factors of production, economic ● Markets – utility of goods and services
importance and its remuneration
● Relationships between markets
● Circular flow of goods/services
● Effects of cost & revenue
● Economic goods & services – main
● Market structures
aggregates
● Economic systems ● Price elasticity

● South Africa’s economic structures

MAIN TOPIC MAIN TOPIC

ECONOMIC PURSUITS CONTEMPORARY ECONOMIC ISSUES
TOPICS TOPICS
● Economic growth ● Globalisation

● Economic development ● Environmental deterioration

● Money & banking

NOTE:

Section A question 1 is compulsory and you must answer all questions.

Section B & C
If your preferred topic is Macroeconomics, choose questions: 2, 4 and 5 for Paper 1
If your preferred topic is Economic Pursuits, choose questions: 3, 4 and 6 for Paper 1

If your preferred topic is Microeconomics, choose questions: 2, 4 and 5 for Paper 2

If your preferred topic is Contemporary Economic Issues: 3, 4 and 6 for Paper 2

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 GRADE 10 ECONOMICS

PAPER 1

MACROECONOMICS – TERM 1

MAIN TOPIC 1: MACROECONOMICS

TOPIC CONTENT SCOPE AND DEPTH OF EXAMINABLE

CONTENT
1. Basic concepts Economics, its methods and Define /explain economics as a subject.
setting within the field and its Explain the term economic system.
relationship with other sciences. Analyse the FOUR elements of economics.
Differentiate between microeconomics and
Unpacking of Economics: macroeconomics.
Description Economics List any FOUR branches of economics.
Elements of Economics Briefly explain the main TWO approaches to
scarcity economics.
choices
efficiency HOT QUESTION: Unpack the what? how?
equity and to who? questions as part of the
Branches of Economics ‘economic problem’.
Approaches of Economics
HOT QUESTION: Examine the definition of
The methods of Economics: economics
Positive and normative
statements Distinguish between: A positive and a
The Scientific Method normative statement in economics
Difficulties faced by the
social sciences HOT QUESTION: Explain the necessity of
The use of models using models in economics

The setting of Economics within HOT QUESTION: Explain the meaning of

the field: the rule of ceteris paribus (cet par)
Accounting
Business studies Give a broad overview of the link between
Commercial law economics and other fields of study e.g.
Mathematics of finance Business studies, Accounting and
Mathematics
Relationships with other
sciences and career This section is more appropriate for SBA
opportunities: tasks e.g. assignments, case studies and
Statistics projects
Mathematics
Information Technology Give a broad overview of the relationships
Law, Geography, and between economics and other sciences
Sociology Give a broad overview of the possible career
Politics opportunities in the field of economics

This section is more appropriate for SBA

tasks e.g. assignments, case studies and
projects

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TOPIC 1: ECONOMICS: BASIC CONCEPTS
Economics, its methods and setting within the field and its relationship with other sciences.

Description of Economics:
Economics is a social science that studies how individuals, governments, firms and nations make choices on
allocating scarce resources to satisfy their unlimited wants.

Concepts:
Needs: Needs are necessities and are essential for our survival.
E.g. food, water, shelter, clothing
Wants: Wants are desires for goods and services they are plentiful and unlimited.
Resource Land, Capital, Labour and Entrepreneurship which are needed as inputs to produce goods and
services.

Branches of Economics:
Macroeconomics:
Macroeconomics studies the whole economy.
OR
Macroeconomics studies how the aggregate economy behaves.

It examines for example:

Influence of business cycles
Economic growth
The consumer price index.
Gross Domestic product
Inflation
The total supply of labour.
Changes in unemployment
The total market for all the goods and services etc.

Microeconomics:
Microeconomics studies the individual parts of the economy.
OR
Microeconomics studies market behaviour of consumers and firms and how they attempt to understand the
decision-making process of firms and households.

For Example:
The price of a single product.
The interaction between buyers and sellers.
How the price of a product is determined.
Determine how much is going to be produced by the firm etc.

Other Branches of Economics:

Business economics:
Involves the different management functions within a business and how to run a business enterprise efficiently.

Development economics:
A branch of economics which deals with economic aspects of the development process in low-income
countries.

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Monetary economics:
Is concerned with the policies of central banks and other financial institutions such as general (commercial)
and investment banks.

Environmental economics:
How the health of the natural environment influences the development of the economy and is especially
concerned with major environmental problems such as climate change.

Labour economics:
A study of the demand and supply of labour in the labour markets. It also looks at the training of workers and
their employment conditions.

Public sector economics:

Involves the role that the state plays in the economy in providing the infrastructure, running businesses and
passing laws to influence the development of the economy.

International economics:
The study of world trade and includes the international agreements that control trade.

Economic history:
How economies were managed in the past.

Approaches of economics:
Two of the major approaches in economics:

Classical approaches:
Believe that markets function very well and will react quickly to any changes in equilibrium.
It is a "laissez faire" economy – zero to limited government policy and intervention works best.

Keynesian approaches:
Believe that markets react very slowly to changes in equilibrium (especial to changes in prices).
Active government intervention is sometimes the best method to get the economy back into equilibrium.

Methods of economics:
Positive statement:

A positive statement is an objective statement of fact.

They do not have to be correct, but they must be able to prove or disprove.
Statements:
The payment of social grants to people increases government expenditure.
The national budget is tabled in February each year.
The Springboks won New Zealand in 2014.
The inflation rate was 6.3% in March 2016.
The gold price is traded internationally in terms of the Dollar.

Normative Statements:
A normative statement involves an opinion or value judgement.
It cannot be proved or disproved.
Statements:
The government should give social grants to people.
The Monetary policy committee should decrease the interest rates by 1%.
The price of red meat should increase because it will give farmers a better standard of living.

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Scientific Method:
A question is formulated: Why do learners prefer to take Economics as a subject?

Do some background research on your question: Research the problem using quality sources using
questionnaires, library, and reading of articles, internet or other sources. Ask question and read everything you
can about the problem you have chosen.

Formulate a Hypothesis: Example of a hypothesis: There is no significant difference in male and female
learners taking economics as a subject.

Test your hypothesis by doing experiment fieldwork: Collection of information by observation, interviews, ask
people to complete a questionnaire. Data collection should include a wide variety of people with different
backgrounds.

Analyse your data and draw a conclusion: We want to find out if the hypothesis was true or not true. Collected
data must be arranged to make sense to people who are engaging with the research product. E.g. data can be
expressed with tables, graphs, pictures, text, etc.

Conclusion should state the following: Do your results agree with the hypothesis? A summary of what your
investigation showed. Is your hypothesis accepted or rejected?

Communicate your results and make recommendations: The most important step of your scientific
investigation is to communicate your results with your peers. You may report your results by written report, oral
report, or display to inform what you have learned throughout your investigation. Also make recommendations.

The difficulties faced by the social sciences:

Although it uses scientific methods, economics is a social science that looks at people's behaviour.
Other social sciences include social psychology, sociology and political sciences.
It is often difficult to predict what people will do or how they will respond to different situations.
Because of this, it is impossible to make hard and fast laws that always apply to how people will act.

The use of models in economics:

The following are examples of models.

Circular flow model Production Possibility Curve Demand and Supply

Economists use models to simplify reality to improve our understanding of the world.
Economists use models to:
Describe how the economy works and the market functions.
Show what has happened in the past and to predict what is likely to happen in the future.
Simplify economic issues in a way that everyone can understand them.
Explain an economic process such as the circular flow of income, expenditure and output in the
economy, and to describe how data relate to each other such as in the production possibilities curve.

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The setting of Economics within the field of:

Accountancy:
The recording and reporting of the financial transactions of a business in the financial statements.
It is an essential part of running all businesses as these records are used to make decisions about the future of
the business.
Computer software is used to perform many of the accounting functions.

Business studies:
The study of how businesses are managed which affects all aspects of how goods and services are produced.
Management functions include administration and human resources as well as financial management and
marketing.

Commercial law:
The body of law which governs business and commerce such as the drawing up of contracts, labour practices,
and the regulations that govern the manufacture and sale of goods.

Mathematics of finance: Part of financial economics which are concerned with the working of the financial
markets such as stock exchanges (markets for the shares of companies), banks, insurance companies,
retirement funds and Investment companies.

The relationship with other science and career opportunities:

Statistics:
Statistics is the science of collecting, classifying and analysing data information.
Statistics help to organise this numerical information and to draw conclusions from it.
Data is presented through tables, graphs, charts, calculating percentages, etc. and it is reduced into
meaningful sizes.
It is through these statistical methods that economists draw conclusions on their theories.

Mathematics:
Mathematics investigates numbers, shapes and structures.
Mathematics is important in Economics because mathematics is used to do different types of calculations.

Information Technology:
Information is concerned with the development, implementation and support of computer base information
systems.
Economists use different kinds of computer software for sorting, analysing and distributing information

Law:
Law consists of the making of rules and regulations to control and manage the behaviour of society.
Law has different branches e.g. Private law, commercial law, criminal law, etc.

Politics:
Politics studies governments (national, provincial and local) and the various political parties.
A study field of Economics deals with public sector economics which look at the role of the government in the
economy.
Politics deals with the practical application of rules, attendance and adherence to conventions and national
agreements

Sociology:
Sociology is a social science, and it studies the nature and development, institutions, structures and functions
of human society.
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Geography:
Geography deals with the study of the earth's physical environment and human habitat.
Geography overlaps with Economics when dealing with population, environmental issues, the use of natural
resources, Growth and development issues, etc.

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Careers in the field of economics:
Government organisations employing Economists:

The National Treasury:

Macroeconomic analysis and forecasting, microeconomic analysis of specific industries or sectors of the
economy, public finance, monetary and fiscal policy

The South African Reserve Bank:

Mainly monetary policy, macroeconomic analysis and forecasting

The Department of Trade and Industry:

Microeconomic analysis of specific industries and sectors of the economy, growth and industrialisation
strategy, international trade strategy and policy

The Industrial Development Corporation:

Microeconomics, entrepreneurship and small/medium size business development

The Competition Commission:

Microeconomics, competition law and economics

The Department of Transport:

transport economics, operations research

The Development Bank of South Africa:

Development economics, covering most of the branches of economics as applied to the South African
economy
The Human Sciences Research Council
economic research on issues of concern to the South African economy, especially growth and employment

Eskom:
Macroeconomic analysis and forecasting, analysis of the supply of and demand for electricity

Demand for people with a background in economics as teachers, both at the secondary and tertiary education
levels.

Private Sector employing Economists:

Commercial and merchant banks:

Macroeconomic analysis and forecasting, money and banking, investment analysis and real estate/property
economists

The life insurance industry

Macroeconomic analysis and forecasting, investment analysis and real estate

Stockbrokers on the Johannesburg Stock Exchange

Macroeconomic analysis and forecasting, microeconomic analysis of specific industries and companies,
investment analysis

Various private consultancies and advisory services

Chamber of Mines
Some of the trade unions
Journalism in the print media newspapers and financial magazines),
The internet, radio and television.

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 GRADE 10 ECONOMICS
PAPER 1
MACROECONOMICS – TERM 1
TOPIC CONTENT
2. Basic Economic Problem Problems that all economies
try to solve regarding the basic
processes of production,
consumption and exchange,
highlighting the promotion or
violation of human rights and
the environment.
The scarcity problem
absolute and relative
scarcity
economic and free goods
alternatives and choices
opportunity cost
The basic processes:
production
exchange
consumption
Promotion or violation of
human rights and the
environment:
human rights
environment
SCOPE AND DEPTH OF
EXAMINABLE CONTENT
Distinguish between absolute and
relative scarcity
Tabulate the differences between
economic and free goods
Briefly explain the concepts
alternatives and choices. (Use the
production possibility curve)
Define opportunity cost
HOT QUESTION: Use the
national budget (pie graph) as
example to explain choices and
opportunity cost
Define and explain the relevant
concepts
Use a diagram and explain the link
between production, exchange
and consumption
HOT QUESTION: Compare
direct and indirect production in
terms of: Output, productivity,
innovation, division of labour,
labour specialisation and
capital needs
Define and explain relevant
concepts
Emphasise the importance of our
environment
Suggest FOUR possible solutions
for environmental problems.
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TOPIC 2: BASIC ECONOMIC PROBLEMS
Problems that all economies try to solve regarding the basic processes of production, consumption and
exchange, highlighting the promotion or violation of human rights and the environment.

Basic economic problem:

Limited
Unlimited

Needs of people are unlimited Means to satisfy needs are limited

(Insatiable)

It creates a big problem

It is the problem of SCARCITY
SCARCITY is the CENTRAL economic problem.
Economics try to solve the problem of scarcity.

Scarcity, Choice and Opportunity cost:

Scarcity:
Scarcity is the central economic problem.
It exists due to the unlimited needs of humans and the limited resources.
Scarcity forces us to choose between alternatives and make choices

OR
It is resources which are difficult to find or are in short supply.

Alternatives:
Trade-offs are all the alternatives that we give up whenever we choose one course of action over others.
The most desirable alternative given up because of a decision is known as opportunity cost.

Choice:

Choice is a result of scarcity

Choice means that one alternative is selected over another.

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Opportunity cost:
Scarcity caused people to make choices so that they can satisfy their needs
Consumers place their needs in order of importance: Important needs are satisfied first and less important
needs are satisfied last.
It will become necessary to sacrifice certain goods or services for other goods and services.

Opportunity cost is the value of the best alternative that could have been chosen but was not chosen.

OR
Opportunity cost is the value of the best forgone opportunity.

The sacrifice you make is known as OPPORTUNITY COST.

The scarcity problem:

Absolute scarcity:
Absolute scarcity is the inability of nature to provide the necessary resources to satisfy our daily needs.
E.g. a drought may limit the supply of agricultural produce.
A lack of food may lead to starvation.

Relative scarcity:
Relative scarcity occurs when goods and services are available, but you do not have the resources to acquire
it.
E.g. you want to buy Levi jeans but you do not have enough money to purchase it.

Difference between Economic goods and Free goods:

Free goods:
Is freely available in unlimited quantities, sea sand, sun light.
Does not command a price because nobody wants to pay a price for it.
Has value in use but no exchange value.
The owner does not benefit from it.
It is not controlled by human beings.
The possession and use of free goods do not indicate wealth or prosperity.

Economic goods:
Are available in limited quantities, often insufficient to meet needs, e.g. coal, petrol, electricity
Command a price – Consumer must pay for it.
It has both value in use and exchange value.
The owner benefits from it.
It is controlled by human beings.
The possession and use of economic goods indicate wealth and prosperity.

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The basic processes:

Production Exchange Consumption

Production:
Production is the process to change resources (inputs) into goods and services (outputs) which are bought by
consumers, governments and businesses to satisfy their needs and wants.

The production process:

Inputs: raw materials, labour and capital

Processing: factory or bakery

Outputs: the final product - bread

Classification of Production:

Production of goods and services occurs in THREE sectors: Primary sector, Secondary sector and Tertiary
sector.

Primary Sector:
The primary sector is the sector where raw materials such as agricultural, fishing, forestry and mining products
are produced.
Natural resources are extracted, collected and cultivated as raw materials.

Secondary Sector:
The secondary sector is the manufacturing part of the economy in which raw materials and other inputs are
used to produce other goods and services.
The secondary sector produce:
1. Intermediate goods: minerals are processed into steel, gold ore is produced into gold, etc.
2. Consumer goods: clothing, footwear, furniture, etc.
3. Capital goods: machinery, buildings, etc.

20
Tertiary Sector:
The tertiary sector consists of the service and trade section of the economy.
It is also known as the service sector
Services in the tertiary sector includes:
1. Transport
2. Communication
3. Education
4. Financial services
5. Personal and government services

The following FACTORS OF PRODUCTION are used as inputs in the production process:

Natural Resources:
Natural resources are free gifts from nature.
E.g. It include Minerals, Raw materials, Land, Water, etc.

Labour:
Labour is all human effort, mentally and /or physically, provided by people to earn remuneration.
E.g. Skilled labour, Semi-skilled labour, Unskilled labour.

Capital:
Capital is man-made resources that are used to produce more goods and services.
Capital makes the production process easier. E.g. Buildings, Machines, Tools, Vehicles, ships, etc.

Entrepreneurship:
The entrepreneur is the person who takes the initiative to start the business, organize its production and take
risks.
OR
It is the person who manages, organizes and coordinates natural resources, capital and labour.

21
Goods:
Goods are tangible objects like food, clothes, houses, books, shoes, etc.

Services:
Services are intangible things like medical services, legal services, financial services

Large scale production takes place in a factory where large amounts of goods can be produced.
The goods are identical.

Small scale production is called Micro, medium size business that employs a small number of workers and
does not have a high volume of sales.

Formal sector:
The formal sector is businesses which are legally registered, and their production is recorded in GDP figures of
the country.
Jobs with normal hours and regular wages.
Businesses pay tax on their profits to the government.
They must be involved with legal activities.

Informal sector:
The informal sector is businesses which are not legally registered and their production is not recorded in the
GDP figures of the country.
Do not recognise the normal working hours.
Do not pay taxes on their profits to the government.
Informal sector includes the illegal activities.

22
Public goods:
Public goods are goods that are used by the community or society.
E.g. traffic light,

Private goods:
Private goods are goods that are consumed by individuals or households.
e.g. consumer goods.

Capital intensive production:

Capital intensive production is when man-made (capital equipment and machines) are predominantly used in
the production process and relatively few workers are employed.
Bad for South Africa because it can lead to more unemployment.

Labour intensive production:

Labour intensive is when manual labour is predominantly used in the production process and less machinery is
used.
Good for South Africa because it will generate more employment.

23
Specialisation:
Specialisation occurs when people, businesses and countries concentrate on different activities to which they
are best suited. E.g.
Some people specialise in teaching others in medicine, etc.
Some businesses produce clothes, other businesses produce food, etc.
Some countries specialise in the manufacturing of minerals, others rice farming, and Japan produces
electronic goods and sells these at a lower price.

Division of labour:
Division of labour occurs when the production process is broken up into different steps or parts, and each step
or part is performed by an individual worker or a group of workers.

Consumer goods:
Consumer goods are goods that are used or consumed by individuals or households to satisfy their needs
E.g. furniture, food, household appliances, etc.

Capital goods:
Capital goods are goods that cannot be consumed but are used in the production of other goods.
E.g. machinery, equipment, tools, school buildings, etc.

24
Intermediate goods:
Intermediate goods are goods that are purchased to be used as inputs in producing other goods.
Intermediate goods are processed further before they are sold to end users.
E.g. car manufacturer.

Final goods:
Final goods are goods that are ready for sale to be used or consumed by households, individuals and firms.
E.g. a loaf of bread.

There are THREE QUESTIONS that must be solved in ALL economic systems:
1. What goods or services will be produced?
2. How will goods and services be produced?
3. For whom will the goods and services be produced?
The way a country will answer these questions determines what kind of economic system it will have, e.g.
Traditional system; Command (Centrally planned economy); Market economy; Mixed economic system.
Exchange:
Exchange is the process of trade (selling and buying) that takes place when goods and services are traded for
money.

Describe the term Market:

A market exists in any place or under any circumstances where buyers and sellers make contact, with the aim
of exchanging information about the buying and selling of goods and services and to determine the quantities
that will be bought and sold.
OR
A market is an institution or mechanism that brings the buyers and sellers of a good or a service together.
OR
A market is a place where buyer and sellers exchange goods and services.

The activities that happen in markets:

Buyers and sellers exchange information.
Price and quantities are determined.
The amounts of goods and services that will be bought or sold are determined.

The role of money:

Money is used as a medium of exchange.
Money is standardised and everybody will accept it in exchange for goods and services.
Money is an easy and convenient way for exchanging goods and services.
Money also makes specialisation possible.

25
Bartering:
Bartering is a system where goods and services are exchanged for other goods and services.
Bartering is a problem; it is difficult to find trading partners and agreeing on the exchange value at which one
good can be exchanged for another good.

Example of the difficulty of bartering:

Consumption:
Consumption is the act of using or consuming goods and services.

Consumers:
Consumers are members of households who consume or use the goods and services to satisfy their needs
and wants.

Consumption by different participants in the economy:

Consumption by households: Occurs when individuals and households buy goods and services to satisfy their
needs and wants.
Spending by households is indicated with the abbreviation C.

Consumption by businesses: Occurs when business enterprises buy raw materials to be used in the production
process.
When businesses buy capital goods it is called Investments, e.g. when they buy machinery, tools, buildings,
etc.
Spending by businesses is indicate with the abbreviation I.

Consumption by the government: Occurs when the government uses the money they receive, to finance
services that are in the interest of the public.
Spending by the government is indicated with the abbreviation G.

The different categories of consumption:

Consumer goods are classified in:

Non-durable goods:
These are goods that can only be used once because they are consumed or destroyed in the process of
being used.
E.g. food, petrol, medicine, etc.

26
Semi-durable goods:
These are goods that last and can be used over and over for a limited period then they must be replaced.
E.g. furniture, clothing, motorcar tyres, etc.

Durable goods:
These are goods that can be used over and over for many years.
E.g. furniture, household appliances, motorcars, etc.

Services:
Households and individuals use services to satisfy their needs and wants.
E.g. they rent houses, use domestic services, they use medical services, they use transport services (taxi’s),
etc.

Promotion of human rights and the environment:

27
Human rights:
Promotion of Human rights:
Human rights in South Africa are protected by the South African Constitution (1996).
The Constitution of South Africa is the supreme law and everyone in South Africa, including the government,
and all laws, are subject to and must follow the Constitution.
The Constitution contains the Bill of Rights which protects the basic rights of the people of South Africa.

What is a human right?

Human rights are rights that everyone must enjoy, by the mere fact that they are human beings.
These rights are unchallengeable, which means that it cannot be taken away from you except in specific
situations, e.g. your right to freedom is taken away from you when you are found guilty of a crime and must go
to jail.

Human rights include:

Political rights, for instance the right of all adults to vote in free elections and to belong to any political party.
Civil rights, which include the right to be treated fairly and equally and to freedom of speech.
Economic rights, such as the right to work and to own fixed property.

The Bill of rights:

The Bill of Rights is a cornerstone of democracy in South Africa.
It protects the rights of all people in our country and affirms the democratic values of human dignity, equality
and freedom.
The state must respect, protect, promote and fulfil the rights in the Bill of Rights.

The Bill of Rights in the South African Constitution includes socio-economic rights which protect our right of
access to:
land
adequate housing
healthcare services
sufficient food and water
social security and social assistance

The constitution gives the following rights with regards to businesses and "employment:"
every citizen has the right to choose their trade, occupation or profession freely
everyone has the right to fair labour practices
every worker has the right to form and join a trade union
every employer has the right to form and join an employers' organisation

The environment:
The natural environment includes all living and non-living things that occur naturally on the earth.
In South Africa, the natural environment is protected by the Constitution.

The Bill of Rights guarantees the following environmental rights:

Everyone has the right:

a. to an environment that is not harmful to their health or well-being; and
b. to have the environment protected, for the benefit of present and future generations, through reasonable
legislative and other measures that:
prevents pollution and ecological degradation.
promote conservation; and
secure ecologically sustainable development and use of natural resources while promoting justifiable
economic and social development.

28
 GRADE 10 ECONOMICS
PAPER 1
MACROECONOMICS – TERM 1
TOPIC CONTENT
3. Circular flow Participants, markets (product and
and factor markets), and monetary and
Quantitative real flows in an open economy.
Elements The circular flow diagram
- the diagram (two/three and four
sector circular flow model)
- the interactions (between
participants)
The participants
- households/consumers
- business enterprises
- the public sector
- the foreign sector
Markets – goods (output) and factor
(input) markets + financial market
Flows of the variables- (real and
money (monetary) flows)
Leakages and injections
Derive GDP and GNI, define them
and illuminate their importance
- Definitions of: Gross Domestic
Product / Gross National Income
- Composition
- Methods to derive: (Production,
Income and Expenditure)
- Importance of GDP and GNP
Comparison between GDP and
GNP
SCOPE AND DEPTH OF EXAMINABLE
CONTENT
Define the term circular flow model
Explain the term ‘open economy’
Emphasise the importance of the circular flow
model of an open economy
Use the flow model given to complete the
missing parts and explain the different
components
Draw a circular flow model of an open economy
and explain:
- Flows (real and money)
- Injections and leakages (effects their off
on the equilibrium of the economy)
- Markets (input, output and foreign)
- Role of the four participants
Differentiate between input and output markets
Differentiate between real and money flows
Briefly discuss the methods to determine GDP
Examine the roles of the participants in the
economy
Distinguish between leakages and injections
HOT QUESTION: Use the equation and explain
a economy in equilibrium
HOT QUESTION: Distinguish between the
different factor markets (look at trends in SA)
Define and explain the following concepts:
- Gross Value Added
- Gross Domestic Product
- Gross National Product
- Gross Domestic Income
- Gross Domestic Expenditure
Use the given information and derive national
aggregates by using the following methods:
- Production
- Income
- Expenditure
Explain the importance of the GDP aggregate
HOT QUESTION: Explain the difference
between real and nominal values
HOT QUESTION: How does the GDP relates to
economic growth?
HOT QUESTION: Distinguish between
economic growth and economic development
29
TOPIC 3: CIRCULAR FLOW AND QUANTITATIVE ELEMENTS
Participants, markets (product and factor markets), and monetary and real flows in an open economy.

Define the term “Circular flow model”

The circular-flow model of the economy is a simplification showing how the economy works and the
relationship between income, production and spending in the economy.
The circular-flow model of an open economy shows the workings of an economy that is open to foreign trade.
It is different to a closed economy because it includes the foreign sector.

Abbreviations used:
C = Consumer spending (Expenditure)
G = Government spending (expenditure)
I = Spending (expenditure) by businesses
X = Exports
Z / M = Imports

The Circular flow diagram:

Closed economy consists of THREE participants:

Households
Businesses
Government

Open economic consists of FOUR participants:

Households
Businesses
Government

30
Foreign sector
The Participants in the Economy:

Households:
There is a flow of money and goods and services between the household sector and business sector
Households are the owners of factors of production, and they sell their factors of production on the factor
market to businesses.
Households earn income in the form of wages, rent, interest and profit when they sell their factors of production
to business.
Businesses use the factors of production to produce goods and services which they sell to households on the
goods market.

Business Sector:
Business buys the factors of production on the factor market.
The business sector spends money when they buy factors of production from the households to produce
goods and services
The household sector receives an income, and they spend their income when they buy the goods and services
on the goods market.
Business receives an income.

Government:
There is a flow of money and goods and services between the household sector and government.
The government spend money when they buy factors of production (mainly labour) from the households on the
factor market. Households receive an income.
The government provides public goods and services to the households, e.g. social grants, hospitals, schools,
etc.
Households pay taxes to the government which is an income for the government.
The government uses the tax income to finance its spending.

There is a flow of money and goods and services between the business sector and government.
The government spend money when they buy goods and services from the business sector on the goods
market. Businesses receive an income.
The government provides public goods and services to the business sector, e.g. Roads, harbours, Electricity,
etc.
Businesses pay taxes to the government which is an income for the government.
The government uses the tax income to finance its spending.

Foreign Sector:
Imports:
There is an inflow of goods (Imports) from the foreign sector to the domestic (local) businesses, households
and government.
Businesses, households and government import goods and services from other countries and pay for it.
This is regarded as a spending by businesses, households and government.
The outflow of money for imports is regarded as a leakage.

Exports:
There is also an outflow of goods and services (exports) from the business in the country to the foreign sector.
Businesses export their goods and services to other countries and earn money for it.
This will be regarded as an income for the business, households and government.
The inflow of money for exports is regarded as an injection.

31
Product market and Factor market:

Goods/Product market:
These are markets for consumer goods and services.
Buying and selling of goods that are produced in markets.
E.g.:
- Durable consumer goods
- Semi durable consumer goods
- Non-Durable consumer goods
- Services

Factor market:
Factors of production are traded on these markets.
Natural resources, Labour, Capital, and Entrepreneurship are traded on this market.

Real Flow and Money Flow:

Transactions takes place on markets.

The exchange process has two components, namely:
Real flow consists of: Goods and services and Factors of production.
Money flow consists of: The earning of money (income) and payments that are made.

Real flow
Factors of production flow from the owners (households) to producers via the factor markets.
Goods and services flow from the producers via the goods markets to households and other users of goods
and services.
Factors of production and goods and services flow from foreign countries to South Africa (imports).
Factors of production and goods and services flow from South Africa to foreign countries (exports).

Money flow:
Producers / Businesses spend on production factors and the households receive an income (wages, rent,
interest and profit).
Household spend their income (private consumption expenditure) on goods and services and the producers
receive an income.

32
Leakages and Injections:

Leakages:
A leakage represents the withdrawal of money from the economic cycle (local economy)
It does not give rise to a further round of income.
It causes domestic purchases on goods and services to decrease.
In an open economy, the leakages are taxes (T), the expenditure on imports (Z) and savings (S).

L=S+T+M
Leakages = Savings + Taxes + Import expenditure

Savings: It is that portion of money that is not spent on goods and services. The money leaves the circular flow
and goes to financial institutions.

Taxes: Household and businesses pay taxes to the government. This money leaves the circular flow and goes
to the government. Household pay taxes on their income and businesses pay taxes on their profits. Examples
of tax are Income tax and Value added tax (VAT).
Imports: It is when goods are imported from other countries. Money leaves the circular flow because money
flows to foreign countries.

Injections:
Injections represent the injection of money into the economic cycle (local economy)
It refers to the flow of any spending which is not derived from income (Y)
Additional money enters the economy, and it increases income.
Domestic purchases on goods and services increase.
In an open economy, injections are government spending (G), the revenue earned from exports (X) and
investment spending (I).

J=I+G+X
Injections = Investments + Government expenditure + Export Income

33
Investments: Businesses get loans from various financial institutions and this money is used to buy (invest) in
property, machines, equipment, etc. They also use this money to buy stock and intermediate goods.

Government Expenditure: The government spends money on goods and services to provide economic and
social services and infrastructure, e.g. building of dams, schools, hospitals, etc.

Export: Goods and services are exported to foreign countries. Money enters the circular flow because the
foreign sector pays for the goods and services they received.

Derive GDP and GNI:

Definitions:
Gross Domestic Product:
(GDP) It is the total value of all final goods and services produced within the borders of a country within a
specific period, usually a year.

Gross National Product:

(GNP) It is the total value of all final goods and services produced by the permanent citizens of the country
within specific period, usually a year.

Gross National Income:

(GNI) It is the total value of all income earned by the citizens or permanent residents of a country within a
specific period, usually a year.

Gross Domestic Expenditure:

(GDE) The total value of spending on goods and services within the country, within a specific period, usually a
year.

Composition and Calculation:

The following abbreviations mean the following:
C = Consumer spending (expenditure) by households
I = Investment spending (capital formation) by businesses
G = Government spending
X = Expenditure on exports (Exports)
Z / M = Expenditure on Imports (Imports)

The calculation of Gross Domestic Product (GDP)

GDP = C + I + G + (X – M)
The calculation of Gross National Income (GNI)
GNI = GDP + (plus) primary income from the rest of the world – (minus) primary income to the rest of the
world.

Explanation:
Primary income from the rest of the world means that the incomes earned by South African citizens who work
in other countries are added in the national account of the country.
Primary income to the rest of the world means that the income earned by foreigners who work in South Africa
are deducted for the national accounts.

The calculation of Gross Domestic Expenditure (GDE); GDE = C + I + G + (M – X)

34
Comparisons:

Gross Domestic Product:

Measures the performance of the economy.
Measures Production within the borders of a country.
GDP measure economic growth, an overall picture of the state of the economy.
GDP can be used to compare the production output of countries with each other within a specific time.
GDP provide figures that allow countries to compare changes in the economy.

Gross National Income:

Measures the performance of the economy.
Measures the value of income earned by citizens or permanent residents.
GNI figures reflect the standard of living of people.
GNI can be used to compare the standard of living of countries with each other.
GNI provide figures that allow countries to compare changes in the economy.

35
 GRADE 10 ECONOMICS
PAPER 1
MACROECONOMICS – TERM 1
TOPIC CONTENT
4. Business cycles Reasons for business cycles:
explanation and illustration of
their composition and noting their
impact on the economically
vulnerable.
Time series and Composition
definition
diagram
cyclical patterns (phases of
business cycles)
measuring business cycles
The phenomenon
South African business cycles
Business cycle indicators
(leading, lagging, coincident)
Reasons / explanations
exogenous reasons
(Monetarists)
endogenous reasons
(Keynesian)
The effects of business cycles on:
the aggregate supply and
aggregate demand
economic growth
employment
price levels / inflation rate
exchange rates
the economically vulnerable
SCOPE AND DEPTH OF EXAMINABLE
CONTENT
Define and explain the relevant concepts
Draw a fully labelled business cycle and
explain the different phases
Briefly explain the measuring of business
cycles
HOT QUESTION: Unpack the features
of a typical business cycle -
(Contraction, Expansion, Trend,
length, frequency and amplitude)
Explain the following indicators: leading,
lagging and coincident.
Analyse the exogenous explanation as
reason for economic fluctuations.
(Monetarists)
Analyse the endogenous explanation as
reason for economic fluctuations.
(Keynesian)
Examine the reasons for fluctuations in
the business cycle
Discuss the effects of economic
fluctuations on the participants in the
economy
HOT QUESTION: In your opinion, what
value can business cycles add to
decision making in the business
environment?
HOT QUESTION: Draw a typical
business cycle and explain the
position of the South Africa’s economy
36
TOPIC 4: BUSINESS CYCLES:
Reasons for business cycles: explanation and illustration of their composition and noting their impact on the
economically vulnerable.

Definition of Business cycles:

Business cycles refer to the phenomenon of successive periods of increasing and decreasing economic
activity.

Composition of Business cycles:

Economic activity shows the upward (Recovery / Prosperity) and downward (Recession / Depression) in the
economy.
A period where there is a general increase in economic activity is known as UPSWING.
A period of general decline in the economic activity is called a DOWNSWING.
The business cycle oscillates between the upper (Peak) and lower (Trough) turning points.
The length of the business cycle is measured from peak to peak or from trough to trough.
The entire period from the peak to the trough is known as the Downswing.
The entire period from the trough to the peak is known as the Upswing.
The period immediately before and through the upper turning point of the cycle is called the BOOM.
The period immediately before and through the lower turning point is known as the SLUMP.
The trend line shows the general direction of the economy. An upward trend line indicates that the economy is
growing (economic growth).

37
Phases of the Business cycle:

Period of Recovery:
Recovery is the period of renewed economic growth.
During a recovery, more jobs are created, production increases and consumer spending increase.
Business confidence rises and there is increased spending by firms.
There is increased economic activity and the country enters a period of prosperity.

Period of Prosperity:
There is a great degree of optimism in the economy.
Entrepreneurs borrow more money to buy machines and equipment (Investment).
Employment levels rise, salaries and wages rise and consumer spending increases.
A peak is reached.
There is a larger amount of money in circulation, and this leads to an inflationary situation in the economy and
this condition could lead to a recession.

Period of Recession:
A recession phase is when there is a negative economic growth rate for two consecutive quarters.
During a recession, jobs are being lost and there is a feeling of pessimism.
Employment levels drop, and there is a decrease in economic activity and the economy slows down.

Period of Depression:
During a depression money is in short supply, leading to a further decline in spending.
There is a negative impact on investment spending.
When economic activity is at its lowest, a trough is reached.
There is competition for jobs and the cost of production decreases.
This encourages foreign trade and leads to a recovery.

38
Reasons for Business cycles:

Exogenous factors:
Factors that originate from outside the economic system and act as trigger mechanisms for contractions and
expansion, e.g.:

Weather (natural disasters) conditions, changes in weather conditions affect agricultural production and this
has a major influence on the economy.

Political shocks and technology shocks cause changes in productivity that causes business cycles.

Structural changes cause economic resources to become unneeded in one sector and moved to another
sector.

Money supply refers to government either increasing or decreasing the money supply which alters equilibrium
in the markets.

39
Endogenous factors:
They are factors that are part of the economic system.
The expansion phase also contains mechanisms that eventually cause a contraction of economic activity.
As the level of economic activity increases, total spending in the economy increases as well.
This causes an increase in imports which negatively affects the balance of payments and leads to a
depreciation of the exchange rate.
Increase in interest rates due to increased borrowing (negative effect on the economy).
Positive perceptions of the economy will lead to an increase in spending and vice versa.

Leading indicators:
Leading indicators change direction before the economy changes.
Leading indicators predict what is going to happen in the following months in the economy.
E.g. share prices, sale of new motor vehicles, the number of jobs advertise in the newspapers.

Coincidental Indicators:
Co-incident indicators change direction the same time as the economy.
They indicate the actual state of the economy.
Examples: the number of people registered as unemployed, value of retail sales and real GDP.

Lagging Indicators:
Lagging indicators change direction after the economy changes direction.
They reach the turning point a few months after the actual economy has turned.
They help to confirm how the economy has changed.
Example: Employment rate in non-agricultural sector, hours worked in construction, etc.

40
Effects of business cycles:

Changes in Aggregate demand and Aggregate Supply:

Aggregate demand (AD)

Aggregate Demand (AD) is the total spending on goods and services by households, businesses, government
and the foreign sector in the economy.

Aggregate supply (AS)

Aggregate Supply (AS) is the total quantity of goods and services supplied at every price level.
Expansion phase:
AD: The economy speeds up and the consumers spend more money on goods and services.
AS: Businesses increase the production of goods and services.

Contracting phase:
AD: The economy slows down and there is a decrease in the spending by consumers on goods and services.
AS: Businesses decrease the production of goods and services.

Changes in Economic growth:

Economic growth is an increase in the total production of goods and services in an economy over a period.
It is a change in the real GDP on the economy.

Expansion:
There is an increase in the production of goods and services in the economy.
Real GDP in the economy increases which indicates that the economy is operating efficiently.

Contraction:
Businesses reduce their production of goods and services in the economy.
Real GDP decreases.
Production will drop to its lowest point during the trough.

Changes in employment:
Employment is the use of labour with the view to earning an income.

Expansion:
Business enterprises hire more employees to produce more goods and services.
They also initiate new construction projects which, in turn, cause an economy’s unemployment rate to
decrease and the employment rate to increase.

Contraction:
Businesses produce fewer goods and services and that is why they reduce the number of workers on their
payroll.

Changes in Price levels:

Price levels refer to any price of a given good or service in an economy.

Expansion
Total consumer spending increases but businesses cannot increase their production levels immediately to
satisfy the demand of consumers. To prevent shortages occurring businesses increase their prices of goods
and services.

Contraction
Total consumer spending decreases and businesses reduce their prices of goods and services to attract more
consumers to come and buy.

41
Changes in exchange rates:
Expansion
There is a high demand for goods and services which cause an increase in imports.
The domestic goods are more expensive and imported goods are relatively cheaper.
There is an increase in the demand for the dollar.
The value of our currency (Rand) weakens – (depreciate)
The depreciation of the currency causes exports to become cheaper and imports to become more expensive.
Imports from other countries decrease and exports to other countries increase.

Contraction
There is a decrease in imports and an increase in exports of goods and services.
The reason being that domestic goods and services are cheaper than foreign goods and services.
There is a decrease in the demand for the Dollar.
The value of the currency (Rand) strengthens – (Appreciates).
The appreciation of the currency (Rand) causes imports to become cheaper and exports to become more
expensive. Imports tend to increase, and exports tend to decrease.

Impact on the economically vulnerable:

It is people who have very little power to protect themselves against dangers in terms of their economic
wellbeing, e.g. children, women, disabled, poor, elderly and rural people.

Expansion
People have more discretionary money available to spend on goods and services.
Government earns more revenue in the form of taxation.
The government collects enough money to provide for the basic needs of people in the form of social grants.
There are more job opportunities available and economically vulnerable people can find work to support their
families.

Contraction
Poor people struggle to find work and families struggle to survive.
People will have less discretionary income available to purchase the goods and services that businesses
produce.
Government’s tax revenue decreases.
Government expenditure on services is cut due to economically difficult times.
Social grants may also be cut if government struggles to collect enough tax money.

42
 GRADE 10 ECONOMICS

PAPER 1

ECONOMIC PURSUITS – TERM 3

TOPIC CONTENT SCOPE AND DEPTH OF EXAMINABLE

CONTENT
8. Economic growth Approaches to economic Briefly discuss early economic
and development development in historical and development.
and globalisation comparative context - with particular Briefly discuss emergence of trade
reference to Africa where relevant.
Briefly discuss the evolution of markets
Early economic development and Briefly discuss the reasons why consumers
emergence of trade and businesses save
self-sufficiency and Briefly discuss reasons why the nation
dependence on agriculture should be encouraged to save
barter, trade and emergence of
money HOT QUESTION: Debate some
language, skills and learning arguments in favour of saving
wealth, power and
accumulation
Evolution of markets
surplus production, trade and
transport development
the growth of towns and cities
specialisation of labour and
emergence of guilds
mercantile Law and the
development of business forms
technological progress
Saving
Reasons why consumers and
businesses save.
Reasons why the nation
should be encouraged to save
Forms of saving e.g. Stokvels

Governments and the

regulation of markets
state involvement in trade
taxation and mobilisation of finance for Briefly discuss the government and the
investment in infrastructure regulation of markets
comparative economic systems
public finance and the emergence of
ideas
about economic policy
Industrial development
Briefly discuss the industrial development
43
 manufacturing
technological progress, the
mobilisation of energy and
mechanisation of production
urbanisation and migration
Briefly discuss the evolution of limited
liability companies
Evolution of economic Briefly discuss the evolution of labour
institutions unions
limited liability companies Briefly discuss the evolution of financial
labour unions institutions and the emergence of joint
financial institutions and stock companies
the emergence of joint
Briefly discuss the evolution of globalisation
stock companies and international economic cooperation
globalisation and international
economic cooperation

44
TOPIC 8: GROWTH DEVELOPMENT AND GLOBALISATION
Early economic development and emergence of trade:

Self-sufficiency and dependence on agriculture

The earliest humans were nomadic hunters.

They gathered their food from wild plants and animals.
Their tools were clubs and spears which they used for hunting and protection.
Over time the people developed tools to assist them to cultivate the land and weapons for protection and
hunting.
Later they tamed animals to assist them to farm.
Agricultural development started slowly.

Barter, trade and emergence of money

People grouped together because they needed protection and to organise their agricultural activities.
People started to specialise and start producing one single commodity.
This was the first form of trade.
There was no formal means of payment (no money) and people started to barter with each other - (one good
was exchange for another good)
Because of the problems with bartering a primitive form of payment was developed.
The first means of payment developed was gold, silver, cowry shells, beads, grain, cattle, sheep, chickens, etc.

Language, skills and learning

People who lived in the same regions and communities spoke the same language.
There were no communication problems and barriers.
The skills of early humans were very simple.
Early humans developed the skills such as hunting, taming animals, producing primitive tools and producing
agricultural commodities and cultivating the soil.
These skills were taught to children by their families and the community.
The skills such as language, hunting, agriculture, cultural practices, etc. were transferred from parents and
community members to children in an informal way.

Wealth, power and accumulation

People settled down permanently on farms and it let to the growing of surpluses.
Successful farmers were growing surpluses which give rise to the first-class divisions.
Successful farmers obtained larger pieces of land and later become landlords.
Owing land was the main form of wealth.
Peasants were allowed to live on the landlord’s land but had to pay their landlord with their surplus production.
This surplus assisted the landlord to build their wealth and become more powerful.
Power was vested in the kings, churches and landlords.

Evolution of markets:

Surplus production, trade and transport development

Agriculture becomes more productive because of changes to the production methods.

Increased specialisation caused production to become more productive and lead to surpluses.
These surpluses lead to trade.

45
Developments in manufacturing caused an increase productivity which led to surpluses in manufacturing
goods such as shoes, furniture, clothing, agricultural equipment, etc.

Trade developed between communities and even between countries

Traders from other countries brought silk, spices, wood products and leather products.
Traveling merchants move from town to town to sell their merchandise.

Transport assisted trade – Transport played a major role in the transportation of surpluses from one country to
another country and one community to other community.
Roads, animals, cart and horses were first used as a means of transport.
Land and water transport were developed, and it promoted trade.
Water transport allowed trade to other countries.

The growth of towns and cities

Towns developed along rivers and main trading routes.

Towns and cities grew and become centres for trading and manufacturing.

The use of money contributes towards an expansion in economic growth.

Many peasants left the farms and move to cities and towns to look for better jobs and to earn money.
Peasants became entrepreneurs such as merchants, artisans.
Trade boom in towns and cities and this led to a rise in entrepreneur’s e.g. merchants and artisans (people
who specialise in a specific trade).

Improved farm technology means that less people are needed on farms and more people move to the cities
and towns.

Governments were introduced and start to dominate the cities and towns.
They arrange better planning of the cities and towns, e.g. roads, water supply, sewerage, etc. and they provide
security to traders and inhabitants.
Governments started to collect taxes to pay for the services.

Specialisation of labour and emergence of guilds

The needs of people become diverse which leads to and increase the demand for goods and services in cities
and towns.
Producers increased their production – they started to specialise in manufacturing activities for example wine
making, furniture making, making clothes, weaving, leather tannery, etc.
People started to specialise in a specific area of manufacturing, and they were called artisans.

Merchants and artisans were found in cities and town and they formed organisations which protect and
regulate the members in the organisation called guilds.
A guild was an association of craftsmen or merchants who pursue a common goal.
There were different guilds namely, craft guilds e.g. bakers, cobblers, stone masons, carpenters, etc. and
merchant guilds.

Each group of artisans had its own guild.

Guilds were exclusive and well organised organisations that protected the rights and privileged of the members
who belonged to the guild.
Guilds become powerful bodies and they influenced economic and political decision making.
Mercantile Law and the development of business forms

Mercantile law has its roots in the medieval times.

46
Improvement in shipping technology and urban growth has led to the rapid increase in international trade.
As people have conducted their business with each other and they made their own rules which later became
commonly accepted by all.
These rules later became law.
These rules were accepted by local and international governments and protected both parties to the trading
contract.
At first it was very minimal but later formed the foundation of general practices, e.g. contracts, credit notes, etc.
When individuals contravene the code, they were kicked out by fellow traders.

Trade increased nationally and internationally

More factories had to be established or expanded to meet the increased demand - Producers needed more
money for these expansions
The cost of maritime and the establishing of factories were very high and traders started working together
New forms of ownership come into existence - e.g. partnerships, companies, corporations, etc.

An example just for clarification:

1 party (usually older trader with experience) provides capital, while another partner (usually younger)
undertook the journeys
profits were divided
multiple partners in many cities - began corporations

Main types of legal business organisations were:

● simple partnerships (partners were individually / collectively liable for all the debts of the business)

● limited partnerships (active partner had an unlimited liability for the institution's business and the silent
partners only run the risk of losing the capital invested)
● corporations (limited liability for all owners, are officially registered with a notary, most popular type of
business organization)

Technological progress

Technological innovation and inventions that were related to economic activities of the time include the
following:
● mining

● navigation

● military technology

● architecture

● cottage industry (weaving)

● printing

47
Growth of money and forms of saving:

Money starts to play an important role in the economy:

Money becomes the main medium of exchange – (use in trade)
Money become a store of value - (can be save or invested)
Money become a unit of account – (goods and services can be given a value)

Importance of saving for the economy

Savings are considered the cornerstones of economic growth.
As savings by households, state and private sector increase, banks and other financial institutions have more
money available to lend to new and current businesses for expanding existing businesses and the
development of new businesses
Capital is formed through savings by the private households, the state and the private sector (businesses).
The more money that is saved, the more is available for economic growth and development

Reasons why consumer save

People save to:
● Become financially secure

● Build a house, buy a car, etc.

● Pay for unforeseen expense

● Provide a safety net for emergencies

● Save money to build up a fund in the event that a person might lose his/her job. (Sudden loss of
income)

The following sources of savings have become important:

Household savings, the part of household's income that is not consumed.
Government savings: when tax revenues are more than government spending.
Business savings: profit is saved after paying tax.
Foreign savings, including foreign aid, loans and direct investments.

Where can I save money?

● Banks: savings account, fixed deposits, unit trusts, etc.

● Insurance companies: saving policies, unit trusts, etc.

● Stock exchange: buying of shares

● Stokvel: community-based saving schemes

A stokvel
It is a group savings scheme where members contribute a fixed amount of money every month to a common
pool.
Members draw the money on a rotational basis or when the need arise or a special occasion.

48
Governments and the regulation of markets:

State involvement in trade

The feudal system faded and eventually collapsed.
Wealthy individuals and government join forces and they back the discovery voyages.
Government involvement in the market grew because governments benefit from taxes, tariffs, custom duties,
etc.

Discovery voyages (Establishment of colonies)

One of the most important developments in Europe was the discovery voyages which led to the expansion into
new markets outside Europe.
Governments encouraged the discovery voyages because they benefited from it - they imported precious
metal, spices, scarce products, etc.
Discovers look for unexplored places where they found resources that strengthen the economic and political
power of the mother country.
Precious metals flowed from the colonies into Europe which increase their wealth.
The colonies served as outlets for manufactured goods from Europe.
The discovery voyages led to the colonisation of countries.

Mercantilism
Mercantilism is based on the idea that a country’s prosperity is based on the amount of gold and silver.

Mercantilism was based on the view that the government regulate economic activities:
- Promote economic growth – the trading of goods and services for gold and silver.
- Import substitution – Imports are discouraged to prevent money from flowing out of the country.
- Export promotion – the production and exports of goods are encouraged.
- Protectionism – to protect local markets and resources with the state’s military.
- To regulate trade.

Taxation and mobilisation of finance for investment in infrastructure

Taxation
Taxes were raised to finance the activities of the state
● The common taxes that were raised were:
o Direct taxes: poll taxes, income taxes, inheritance tax, land and property taxes.
o Indirect taxes: excise taxes, toll tax, custom duties, sales tax

Mobilisation of finance for investment in infrastructure

Infrastructure refers to:
o Physical infrastructures such as roads, ports, government buildings, water supply, and electricity
supply, sewers, military installations, etc.
o Social infrastructure such as schools, hospitals.

● Infrastructure is important for the production of goods and services.

● Governments finance infrastructure projects through collecting taxes and by borrowing money from
banks and through private business financing.

Comparative economic systems

1. Traditional system
49
 The traditional system is normally subsistence economies.
The producers were also the consumers of the goods.
The tasks of everybody, method of production and allocation of resources are prescribed by ritual, habit
or custom.
The traditional system is a rigid system – it adapts slowly to change and innovation.
The traditional system is characterised by economic stagnation – no economic growth.

2. Manorial system
Manorial system was based on agriculture
People were self-sufficient and they make a living from the land
Peasants and serfs supplied the labour to produce the food that was decided by the landlords.
The landlord of the manor took a part of the produce of the peasants and serfs in return for the land
they live on, shelter and protection against external dangers.

3. Mercantilism
The feudal system was replaced by mercantilism.
Mercantilism was based on the idea that a country’s wealth and power is based on the number of
precious metals like gold and silver the country has.
At the heart of mercantilism is also the view that increasing net exports is the best route to national
prosperity.
Mercantilism led to the rise of colonial powers such as England, Spain and France who conquer
countries for their own benefit.
Capitalism developed during the mercantile period.

4. Free market economic system / Capitalism

Adam Smith is regarded as the Father of Capitalism.
He published his famous book “An Inquiry into the nature and causes of Wealth of Nations” simply
referred to as the “The wealth of Nations”.
In his book he talked about the “Liasséz-Faire economic systems”, meaning capitalism without
government intervention.
Capitalism is an economic system in which the market mechanism (demand and supply) drives
economic activities.
Prices of products are determined by the interaction between demand and supply.
Factors of production are privately owned.
Government intervention (involvement) in the economy is restricted.
Decisions of “What goods or services will be produced?”, “How will goods and services be produced?
and “For whom will the goods and services be produced? are answered by the market mechanism
(demand and supply).

5. Centrally planned economy / Socialist system / Socialism / Command economy

Karl Marx is regarded as the Father of Socialism.
He published his famous book called “Das Kapital”.
All factors of production (except labour) are owned by the state (government)
Decisions of “What goods or services will be produced?”, “How will goods and services be produced?
and “For whom will the goods and services be produced? are answered by a central body.
E.g. North Korea
The aim of socialism is to ensure an economic equality and state ownership of various goods and
services.

Communism
Communism is not an economic system, but political systems brought into existence through a
revolution.
One single dominant communist political party governs the country.
50
 6. Mixed economy
Both the private enterprise and the state coexist in the economy.
Some market orientated decisions and functions are made through the market and some market
orientated decisions and functions are handled by the state.
South Africa is an example of a country that has a mixed economy.

In a mixed economy both the private sector and the government plays an important
role:
Private enterprise Government intervention
Private individuals: Government provides:
- Are owners of Private property - Large scale infrastructure (ESCOM,
- Can take private initiative SABC, Denel, Transnet, etc.)
- Can peruse self-interest - Supply a defence force
- Etc. - Provide state medical service to
people who cannot afford private
medical care
- Etc.

Public finance and the emergence of ideas about economic policy:

Public finance
● Public finance is concerned with how the government raise income and how the income is spent on the
people of the country and the economy.

Public finance concentrates on how:

1. resources are allocated
2. income is distributed
3. to stabilise the economy

● The government uses fiscal policy to change government spending and the collection taxation to
achieve the macro economic objectives of the country.
● The government uses fiscal policy to influence the economy to achieve economic and social goals.

Economic Policy
● Economic policy refers to the actions that governments take in the economic field.

● It covers the systems for setting levels of taxation, government budgets, the money supply and interest
rates as well as the labour market, national ownership, and many other areas of government
interventions into the economy.

Industrial Development:

Manufacturing

Technological progress, the mobilisation of energy and mechanisation of production

51
 ● The Industrial Revolution was the transition to new manufacturing processes in the period from about
1760 to sometime between 1820 and 1840.
● The processes change from an agrarian and handicraft economy to one dominated by industry and
machine manufacturing.
● Before mechanization and factories, textiles were made mainly in people’s homes using basic
equipment.
● Industrialization marked a shift to powered, special-purpose machinery, factories and mass production.

● Industrialisation led to the establishing of factories. (Machinery was placed under one roof.)

● An increased in demand for goods, resulted in the needed more cost-effective methods of production,
which led to the rise of mechanization and the factory system.
● The goods were manufactured on large scale in the factories.

● The factory system was characterised by division of labour.

Technological innovations led to ever-increasing productivity, while requiring less human energy.
● Industrialization meant that some craftspeople were replaced by machines.

● Greater volume and variety of factory-produced goods were manufactured which raised the standard of
living of many people.
● Coal and iron ore become essential for industrialisation.

● Coal replaces wood.

● Steam becomes the source of energy.

● Iron is used to build machines such as the steam engine, locomotive and the steamboat.

● The steam engine was also integral to industrialisation.

Transportation improved.
● The steam engine went on to power machinery, locomotives and ships.

● The transportation industry underwent significant transformation and steam-powered ships, and steam
powered locomotives came into use.

Communication improved
● Communication became easier with inventions such as the telegraph.

Banking improved
● There was a rise of banks and industrial financiers, as well as a factory system dependent on owners
and managers.
● The stock exchange was established in London in the 1770s; the New York Stock Exchange was
founded in the early 1790s.

Urbanisation and migration

Urbanisation
52
 ● Urbanisation is an increase in a population in cities and towns.

● Urbanization started during the industrial revolution, when workers moved towards manufacturing
centres in cities to find work in factories because agricultural jobs became less common.

Urbanisation leads to the following:

Overcrowded / lack of housing
Large scale pollution
Unsanitary living conditions
Inequality
Increase poverty
Slum conditions
Etc.

Migration
● Migration is the movement by people from one place to another with the intentions of settling,
permanently in the new location.
● The movement is often over long distances and from one country to another, but internal migration is
also possible.
● Migration can be voluntary or forced.

Modern day Migration:

Refugees - People are forced to leave their country in order to escape war, persecution, or natural
disaster.
Displaced people - People moving around in their own county, they flee in their own country yet.
Economic migration – People choose to move to improve the standard of living by gaining a better
paid job.

Mass migrations over long distances are possible due to modern and improved communication and transport.

Evolution of economic institutions:

Limited liability companies

Limited liability companies were allowed to operate by law in then1400 in England.
By 1800 most of the European countries adopted the principle of limited liability

Limited liability in South Africa

A limited liability company (LLC) is a corporate structure whereby the members of the company cannot be held
personally liable for the company's debts or liabilities.
A company is a legal person who has the capacity and powers to act on its own.
All companies must be registered at the Registrar of companies and they must submit required documentation.
Company’s need one constitutional document, the Memorandum of Incorporation (MOI).
The MOI sets out the rights, duties and responsibilities of shareholders, directors and others in relation to the
company.
Companies are now classified as either profit or non-profit companies.

Labour unions – add evolution only

In 1919 – The formation of the Industrial and Commercial Workers Union (ICU) in Cape Town, the first mass
trade union of black workers.

53
Since 1919 different unions was formed in different industries in South Africa
COSATU (Congress of South African Trade Unions) as a federation was established in 1985 and a number of
trade unions are affiliated to COSATU for example, SAMWU, DENOSA, POPCRU, SADTU, etc.

Financial institutions and the emergence of joint stock companies:

What is a financial institution?

● Banking originated in medieval Italy but was based on mathematical knowledge acquired from wide-
reaching trade interactions.
● The development of the banking industry made trade and transferring funds over long-distances easier.

● Banks are institutions that accept and manage deposits of money from people and also offer credit—or
loans—to clients.
● Banks play an important role in the economic development of the country.

● Joint-stock companies emerged in the 17th and 18th centuries in Europe and for serving a leading role in
spurring on global commerce and colonisation.
● Joint-stock companies were a means to limit the many risks and costs associated with certain types of
business.
● In a joint-stock company, individuals were able to purchase portions of the company in the form of
shares, thus making the new shareholders partial owners and investors in the company.
● In this way both the risk and cost of doing business were distributed over a large number of people.

● The most famous and successful of these companies were the “English East India Company” and the
“Dutch East India Company”.
● Joint stock companies encouraged the growth of the stock exchange.
Globalisation and international economic cooperation:

Globalisation is a world- wide exposure and interaction of economies with trade as a key element and
information and communication technology making it possible.
The World Trade Organisation (WTO) promotes and facilitates free trade by persuading countries to abolish
import tariffs.
GATT = General Agreement on Tariffs and Trade – is a legal agreement between many countries, whose
overall purpose was to promote international trade by reducing or eliminating trade barriers such as tariffs or
quotas.

These are the current international economic agreements in place:

Free trade areas (FTA

● E.g.
North American Free Trade Area (NAFTA)
European Free Trade Association (EFTA)

Custom Union
● E.g.

54
 The European Union (EU)
Southern African Custom Union (SACU)

Mercusor
● Mercusor – SA: SA signed a Framework Agreement with Mercusor in 2000,

● The Free Trade Area will eventually include all SACU members.

Monetary union
● South Africa, Namibia, Lesotho and Swaziland form the Common Monetary Area (CMA).

● The South African Rand is also accepted as a means of payment in these countries.

The African Growth and Opportunity Act (AGOA)

● E.g.
South Africa and US in agreement

55
 GRADE 10 ECONOMICS

PAPER 1

ECONOMIC PURSUITS – TERM 3

TOPIC CONTENT SCOPE AND DEPTH OF

9. Population and labour force
Composition of the South
African population and
labour force; explanation of
the factors (such as HIV /
AIDS) that impact on them.
EXAMINABLE CONTENT
Use for SBA
purposes: Investigate
and outline the South
African population
and labour force.

An in-depth discussion of the

The population size: South African population size is
population growth required.
natural growth rate
the demographic cycle
projected growth rates
An in-depth discussion of the
Migration
South African labour force is
The South African labour required.
force:
age composition
labour force numbers
unemployment
employment
geographic distribution
Note: Infuse factors impacting
on the population and labour
force growth and composition,
for example, HIV/ AIDS

56
TOPIC 9: POPULATION AND LABOUR FORCE
Population size

The total population in South Africa was last recorded at 59.31 million people in December 2020.
The population of South Africa represents 0.76 percent of the world´s total population.

There are FOUR factors that affect the size of the population (Population growth):

Birth rate: the number of live births per 1000 per year
Death rate (mortality rate): the number of deaths per 1000 per year.
Immigration: the number of people moving into the country.
Emigration: the number of people leaving the country of origin.

Counting of the population:

When the population of a country is counted, it is called a census.
The last census held in South Africa was in 2011.
It was also the third census of the first democratic government.

Population growth

Population growth is an increase in the number of people who reside in a country.

A population is growing when:

1. the birth rate is higher than the death rate.
2. more people immigrate into the country

A population is decreasing when:

1. the death rate (mortality rate) is higher than the birth rate.
2. more people emigrate to another country.

To determine whether the population has grown the following formula is used:
(Birth rate + Immigration) – (Death rate + Emigration)

57
Population estimates per Province: - Complete the table below with current figures.
Population estimate % of total population
Eastern Cape
Free State
Gauteng
KwaZulu-Natal
Limpopo
Mpumalanga
Northern Cape
North West
Western Cape
Total

Population Growth rate:

● The population growth rate is the rate at which the size of the population increases over a
period of time, usually measured in a year.
● The rate may be positive or negative.

● It is important governments, businesses, organizations, etc. to have an idea of the countries

growth rate.
● The growth rate is an indicator of the changing needs of the people; governments want to
know the financial burden of providing infrastructure e.g. (schools, hospitals, roads, housing,
etc.); businesses / government wants to know the how resources should be allocated e.g.
(water supply, electivity, food, etc.) and how many jobs should be generated annually.

Positive growth rate Negative growth rate

- The birth rate is more than the death rate - The birth rate is less than the death
- Natural growth occurs rate
- High population growth rate leads to - Negative natural growth
population explosion - Population shrinks

Natural growth rate

Natural growth rate is the difference between the birth rate (live births) and the death rate of a population
during a year.

58
 www.Google.com

Life expectancy rate:

The number of years a new born infant could expect to live if prevailing patterns of age-specific mortality rates
at the time of birth stay the same throughout the infant’s life.
South Africa’s life expectancy is 62.4 years and Sweden have a life expectancy of 82.55 years.

The demographic cycle:

The demographic cycle, or population cycle, refers to the evolution over time of the population profile of a
country, region or other defined geographical area.

59
Phase 1
During this phase:
Birth rate and death rate is high.
There is no birth control.
The community is poor and absence of medical facilities and medical care.
The average age of the population low.
This is known as a young population.
The natural growth is low.

Phase 2
During this phase:
Birth control and family planning is not practiced – birth rate is high.
Living conditions improve.
Death of babies and mothers decrease.
People live to an older age.
The natural growth rate is higher than the first phase.
Average age of the population increase.

Phase 3
During this phase:
The phase has two parts:

Part 1:
Income and standard of living increase for a large part of the population.
This result in social development - families accept new values which lead to a decrease in births.
Death rate decreases at a faster rate and ensures a high natural growth rate.

Part 2
Birth rate decreases more rapidly than the natural death rate and the natural growth rate starts to
decrease.

Phase 4
During this phase:
Birth rate decreases rapidly.
People realise that their standard of living can increase if they have fewer children.
Family planning is accepted by a greater number of families – the natural growth rate declines.
Medical care and services become affordable – death rate declines.

Phase 5
During this phase:
The natural growth rate is low and starts to level out.
Birth rate and death rate is low.
The average age of the population increases – known as old populations, e.g. some European countries.

Projected growth rates:

● It is important to monitor the changes in the country’s population growth rate.

● The government, policymakers and planners use population projections to gauge future demand for
food, water, energy, and services.

● It gives the government and planners an idea of the composition of the labour force.

60
 ● It gives the government and planners an idea on the size of future school age population - it assists
governments to plan to meet the demand for housing, education (building of schools, number of
teachers needed, educational infrastructure; desks, books, etc.).

Migration:
Migration is the movement of people between countries, regions, areas, etc.
Migration = Immigration – Emigration

Large scale migrant workers from neighbouring countries employed in mines have work permits that
give them legal residence in the country for a specific period of time.

Voluntary Migration
People choose to move to other areas, countries, regions for:
● better living conditions

● access to health care

● access to good education

● better employment opportunities

● higher wages

Forced (Involuntary) migration

Forced migration is the movement of refugees and internally displaced people.
People are displaced by conflicts (wars) within the country or region.
People are displaced by natural or environmental disasters, chemical or nuclear disasters, famine, etc.

People are forced to move to other areas and regions as a result of:
Wars: Rwanda: 1994; Iraq: 2003 / present; Syria: present; DRC: 2006 / present; etc.
Natural disasters: Ethiopia, 1984, 2006, present; en Eritrea: 1996 and present.
Nuclear disaster: Chernobyl April 1986.
Environmental disasters: Earthquake Taiwan 1999; Guatemala earthquake 2018.

Immigration
Immigration is when people enter a country to settle themselves permanently in the country.

Emigration:
Emigration is when people leave a country to settle permanently in another country.
South African people are free to emigrate.
Those who emigrate is professional people and technical skilled people of South Africa.
This is harmful to the economy because it creates a skill shortage.

Labour force:
Describe the term: Labour force
The labour force of a country consists of those people who take part in the country’s production and
exchange activities.

Three groups not part of the labour force:

1. Children and senior citizens (0-14 and 64+)
2. People who cannot work (Disabled people)
61
3. People who prefer not to work (students, homemakers)

62
Age composition:

Youth
● Children younger than 15 years of age
0-14
● They are depended on adults for their food, clothing and education.

● The youth population is divided between males (31.0%) and females (29.1%).

● 30.1% of the total population of South Africa’s is younger than 15 years old.
EAP
● It is persons between the ages of 15 and 64.
15-64
● They form part of the economically active population (EAP).

● They support the youngsters and the elderly.

● 64.9% of the population between the age group 15-64 is males and 64.6% is
female
● 64.7% of South Africa’s population fall between the ages of 15 and 64.
Elderly
● People in this group is 65 and older
65+
● They are not regarded as part of the economic active population

● These people are mostly pensioners

● 4.1% of the elderly is male and 6.3% is female.

● 5.2% of the elderly population in South Africa is 65 years old and older.

Describe the term “Economically Active Population” (EAP)

The economic active population is all those people between the ages of 15-64 years of age who present their
labour for the production of goods and services in return for remuneration.
The EAP is that portion of the population who can work.

There are people in the age group 15 – 64 who are not part of the EAP:
1. Disabled and ill people who cannot work
2. Learners and students
3. People who prefer not to work (for example, homemakers, people looking after their kids) and they do
not receive remuneration.

The South African labour force:

Labour force numbers

● Employed =

● Unemployed =

Describe the term “Labour force participation rate” (LFPR)

63
 ● The labour force participation rate is the rate to determine which part of the population is economically
active.
● Labour force participation rate = Labour force (EAP) ÷ Population (15-64) X 100

South Africa’s labour participation rate (2017)

● Labour force participation rate (2017) = Labour force ÷ Population (15-64) X 100

64
 GRADE 10 ECONOMICS

PAPER 1

ECONOMIC PURSUITS – TERM 3

TOPIC CONTENT SCOPE AND DEPTH OF

EXAMINABLE CONTENT
10. Unemployment Unemployment and the various
approaches to solve the problem.
Take cognisance of the
economically marginalised.
Discuss unemployment
The nature of unemployment
the numbers
unemployment rates
characteristics of South Africa’s
unemployment
causes of unemployment Discuss the methods to combat
unemployment
effects of unemployment

Approaches to solve unemployment

growth of production
public works programs
unemployment insurance Briefly discuss the economically
marginalised groups
Economically marginalised groups

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TOPIC 10: UNEMPLOYMENT AND EMPLOYMENT
Describe the term Unemployment

An unemployed person is someone between the ages of 15 -64, who is able to work, wishes to work and is
looking for a work but cannot find a work or become self- employed.

There are two kinds of Unemployment:

Expanded definition of unemployment Strict (official) definition of unemployment

Include unemployed persons not looking for a job
or trying to become self-employed.
South Africa’s expanded unemployment rate
is _______%
Include only persons actively looking for work or
trying to become self-employed
South Africa’s official unemployment rate is
______%
No of unemployed persons ÷ labour force =
unemployment rate

Employment
It the engagement of the factors of production called labour in the productive activity for which they receive a
remuneration.

Employment rate = Employment ÷ population (15-64) x 100

Graphic distribution
South Africa’s population is unevenly distributed across the nine provinces.

Population estimate % of total population

Eastern Cape
Free State
Gauteng
KwaZulu-Natal
Limpopo
Mpumalanga
Northern Cape
North West
Western Cape
Total 100

Migration of people between provinces is unavoidable.

People move from rural areas to urban areas causing the uneven geographical distribution in areas.

People move to certain areas in the search of:

1. Better economic opportunities
2. Employment opportunities
3. Better living conditions
4. Better climate
5. Access to water resources
6. Fertility of soil

Urbanisation
Urbanisation is the movement (migration) of people from rural areas to urban areas.

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Urbanisation has led to the growing numbers of people in cities.

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