Just Some Tips On Grade 12 Circular Flow With The Economics 101.
1. Economics needs a plan but before that we go to basics, all grade 12 lessons will be done based on the Examination guideline, CAPS document, 2021 National Recovery Annual Teaching Plan, how the final exam is set and most importantly how the final Examination is marked.
2. Economics syllabus for grade 12 is huge, it is difficult for educators for cover all topics sufficiently in class, plus you guys have 6 other subjects which are equally important, the key or solution is there:
- Economics is like Maths, it needs to be practiced everyday, especially a practice on the kind of questioning used in exam.
- Cramming does not work, studying for understanding always win.
- Summarise almost everything you study, try to understand things in your language first then change them to English when you write.
- Always ask yourselves WHY, HOW, and WHAT, in topic or concept you study, once you understand the reason then you know Economics.
3. First chapter (The Circular Flow)
- Why study the circular flow? In order to understand how the economy work so that we can make daily informed economic decisions.
- What is this circular flow, it is a model that shows how the economy works and the relationship between the 4 participants in the economy.
- Whom are these 4 participants? Households, Businesses, Government and Foreign Sector.
- How then does this economy works? There is the real flow and money flow between these participants as in like households can sell factors of production to the businesses, this means the businesses will then pay the households right? Yes, and households receives income. The businesses can pay tax (company tax) to the government on their profits, the government will provide public goods (roads, water, e.t.c) and services to the business.
- What is this money flow and real flow? (Someone please provide answers to all unanswered questions)
- Who exactly then is this foreign sector? How does in intersect with other participants? The foreign sector is the households or businesses from other countries, the foreign sector can buy goods and services from our economy, they can also provide our economy with factors of production, then our economy will pay for the factors of production which will then lead to leakages.
- With all explained above you should have figured out that exchange happens at the market, in this case it will be, the factor market, product market, financial market and foreign exchange market. (Someone please explain all these markets).
- You should have also figured out that there is injections and leakages explained. There are 3 leakages and 3 injections which you need to master. Someone please help with these.
- ultimately all these questions should lead to the government and us want the best for our economy( country), we do not like it when money leaves the country because we become poorer, but when the foreign nations buy in our country we are happy as they are bringing more money in our circular flow which then makes us richer and our Rand stronger.
4. AT THE END OF IT ALL, WITH ECONOMICS THE ANSWER ALWAYS DEPEND ON THE QUESTION ASKED. Please stay here to get more lessons like these to open your mind and PLEASE PARTICIPATE ALWAYS by any comment and tag your friends who are not here yet as that is ONE THING THAT GIVES ME COURAGE to help you out.
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Just Some Tips On Grade 12 Circular Flow With The Economics 101.
From Chapter 1 we have only one Essay...
*Discuss in detail the markets within the four sector model*
The circular flow is a model that shows how the economy works and the relationship between production, income and expenditure.
*The markets within the four sector model*
1. *Product markets*
-These are markets for consumer goods, services and capital goods, it is a market where goods and services are traded.
-Capital goods market for trading of buildings and machinery which are the goods that are used to produce other goods by the businesses.
- Consumer goods market for trading of durable consumer goods(furniture), semi-durable
consumer goods(clothes) and non-durable consumer goods(food).
-Services are defined as non-tangible actions and includes wholesale and retail and transport.
- This is the market whereby the businesses sell these goods and services to the households, government and the foreign sector in the circular flow.
2. *Factor markets*
-Households sell factors of production on the factor markets.
- The households sell the natural resources and receive the remuneration which is rent on this market.
-The businesses employ labour using this market and reward them with salaries and wages from this market.
- When businesses hire machines out or anything that leads to gross capital formation the remuneration it receives is interest.
3. *Financial markets*
-It is a market whereby the financial securities are traded, it acts as a link between households, the business sector and other participants with providing for the money flow.
- This market is devided into two;
3.1 *Money markets*
-In the money market, short term loans, deposits and investments funds are saved and borrowed by consumers and business enterprises.
-The South African Reserve Bank(SARB) is the key institution in the money market.
- The products sold in this market are bank debentures, treasury bills and government bonds.
3.2 *Capital markets*
-In the capital market long term loans, deposits and investments are borrowed and saved by consumers and business enterprises.
-The Johannesburg Security Exchange is a key institution in the capital market.
-Products sold in this market are mortgage bonds and shares.
4. *Foreign exchange markets*
-It is a market whereby a currency of one country is traded for the currency of another country.
-These transactions occur in banks and consists of an electronic money transfer
from one account to another.
-The most important foreign exchange markets are in London/New York/Tokyo, the S.A Rand is traded freely in these markets. e.g. when a person buys travellers cheques to travel abroad.
-Without the markets the economy would not function properly, it is important that the government establish laws to allow them to operate freely to ensure prosperity in our economy.
Grade 12 Chapter 1 Summary With The Economics 101. Circular Flow. (Please tag all your classmates and share o your timeline)
*Economics* is the study of how individuals, businesses, government and other organisations choose to use the scarce resources in order to satisfy their needs and wants in the most effective and efficient manner.
*Macroeconomics* is the study of the economy as a whole, it look at the aggregate demand and supply.
*Microeconomics* is the study of the decisions taken by individual participants in the economy.
*Ceteris peribus* is applied in Microeconomics and it is when all other things remain the same or unchanged.
*Circular flow* is a model that shows how the economy works and the relationship between production, income and expenditure.
*4 participants in the circular flow*
- Foreign Sector
*Open and closed circular flow*
- Real flow
- Money flow
*4 markets in the circular flow*.
- Factor market
- Product market
- Financial market (Money and Capital market)
- Foreign Exchange Market
*Injection and leakages*
- Investments (By businesses)
- Government spending
- Exports income
- Import payments
*Autonomous consumption* means people do spend even if they have zero income. (They can spend from inheritance, savings,e.t.c)
*Induced consumption* means spending by people which is dependent on income.
*National Accounts* is the accounting record of the country's total production, income and expenditure.
*Gross Domestic Product (GDP)*
- It is the total value of *all final goods and services* produced within the *boundaries of the country* in a given period of time, which is usually a year.
*Gross National Product* is the value of all final goods and services produced by the factor of production of the country irrespective of the location.
*3 methods to calculate GDP or National Accounts.* *(USE CLEVER ECONOMICS TO PRACTICE THESE METHODS)*
1. Production Method or GDP(P)
*Everything in this method is production or goods produced*
2. Income Method or GDP (I)
*Everything in this method is money earned*
3. Expenditure Method or GDP (E)
- *This method is all about the money spent by different participants*
*Know how to convert from basic prices, to market prices and to GNI*. Check Clever Economics.
*The System of National Accounts (SNA)* is a set of international guidelines for the development of economic accounts and for reporting such statistics to international organisations in a manner comparable across countries.
*Multiplier* shows how one person's spending becomes another person's income which then lead to an increase in national income.
*Multiplier effect* shows how an increase in *spending* (by businesses or households) can lead to an increase in *National income.*
*Marginal propensity to save (MPS)* is the extent to which additional income is *saved.*
*Marginal propensity to consume (MPC)* is the extent to which additional income is *spent*.
All leakages leads to a decrease in the multiplier (national income decreases) and all injections leads to an increase in the multiplier (National income increases).
If MPC is bigger it will mean the people are spending more or there is more investments which in turn lead to a big multiplier (more national income)
If MPS is big then the multiplier will decrease as more money will be saved or leak from the economy which will then reduce the multiplier and National income.
*Why is the multiplier important?*
- It helps in determining the investments needed to grow our economy or National income.
- It helps to analyse the performance of the economy as it acts as a leading indicator which tells us on where the economy is headed.
*There are 3 methods to calculate the multiplier*
*Used when MPC is given or when you have calculated MPC*
Also used when there is a graph, the number before *Y* represent MPC. E.g. (0.5Y, the 0.5 is MPC)
K = 1/MPS
*Used when you have MPS.*
K = ◇Y/◇J
*Only used when there is a graph*, ◇Y means change in income and ◇J means change in injections.
*If you are given a multiplier scenario you will have to find the value of MPC or MPS first*. MPC + MPS = 1 and this means that the value for MPC should always be between 0.1 and 0.9.
To my grade 12 Economics Class on 2022, all lessons are now postponed to next week as now it is time to focus just for the last week on
I hope you do understand and let us do everything we can to support our brothers and sisters, please do let me know that you understand and do wish them well in their results.
Updated with much love, goodnight and cheers!
Update With The Economics 101.
1. UMALUSI approves the release of DBE and IEB results for 2021, IEB results will be available from 00:01 Midnight and DBE results after 23:59 on Thursday just after the overall announcement of the results by the Minister on Thursday night.
2. Matric results will be available on newspapers and other media platforms but you need to go to your school on Friday to collect them.
3. In 2021 a total of 67 subjects were written for DBE with the marks for 35 subjects being left as they are(raw/unchanged).
28 of these subjects were adjusted upwards(marks added) and they include, Accounting, Economics, History, Physical Science, Tourism, Religion Studies, Sesotho HL, Sepedi HL, Afrikaans FAL among others.
Subjects adjusted downwards includes; Isindebele HL, Seswati HL, Technical Mathematics, Sesotho FAL.
4. For IEB (Private School Exam) 44 subjects were left raw.
14 were adjusted upwards which includes, Accounting, Economics, History, Mathematical Literacy, Physical Science among others.
7 subjects were adjusted downwards and they include; Agricultural Sciences, English FAL, Geography, Tourism among others.
5. There were some irregularities (cheating) in the NSC exams, some schools in parts of Gauteng and KZN are implicated, it was mainly in the writing of Life Sciences and Agricultural Sciences, the cheating was mostly early access to papers and group copying, the results of such learners or schools will be blocked pending the final investigations.
6. The UMALUSI presenter also stated that for DBE results, 74% of subjects were left raw in 2020 but now in 2021 only 54% were left raw.
It was indeed a very tough year for our grade 12s and the effects of Covid19 is now becoming clearer as more subjects were adjusted upwards.
7. For now we wait for Thursday Night when our very own Minister Angie Motshekga announce the performance of the class of 2021, I will be with you all the way.
8. Stay on the page and do tag your friends, we wish you all the best in your results.
Some final important tips for paper 2.
1. *Start with the question you understand the most, if you master the essay, start with it.*
2. Paper 1 works stills helps a lot in paper 2, variables such as, employment, economic growth, skills, indigenous knowledge system, Globalisation, standard of living, e.t.c are still very important in exam.
3. Skip any question you do not understand in exam and go to the ones you master, then after go to the ones you skipped and write something that relates to the question.
4. Always explain your answers, e.g. Tourism creates job opportunities such as tour guides.
5. In your final preparations, *Scan everything you sudied*, you will surely remember in exam
6. Most questions that will ask, *what is the impact of or some 8 marks questions*, will require you to answer for both *positives* and *negatives*, in order to score more marks.
7. Do not forget the multiple choice trick, 2A, 2B, 2C & 2D.
8. On my previous post I posted all possible essays in order of priority, I also posted those essays Sunday and some yesterday, scroll back of you haven't seen them and SCAN ALL HEADINGS AND SUBHEADINGS IF YOU JAD NOT YET STARTED.
9. Use 10 minutes reading time to decide on which questions to write, the ones you understand the 8 marks questions are always the best.
10. I wish you all the best for tomorrow.
Grade 12 Economics Paper 2 Tomorrow, I have provide you with possible essays already.
Section B is important too, now on this post, please do ask anything for section A & B and someone will assist you, I will also help.
Let us start now.
*Possible essays in order of priority on Thursday, any essay can still appear in your paper, you did ask on how I rate them, this is how I rate them*.
POSSIBLE ESSAYS FOR QUESTION 5
(Only 1 essay out of these will be on your paper)
4. Examine the various equilibrium positions of the perfect competition with the aid of graphs;
- Economic Profit
- Economic Loss
- Normal Profit
6. Discuss the monopoly in detail (with/without the aid of graphs):
- Economic profit, economic loss (short run)
- Economic profit (Long-run )
5. Examine the oligopoly in detail:
- Kinked-demand curve
3. *Compare and contrast any TWO types of market structures (perfect market structures to imperfect/imperfect to imperfect)* in detail in terms of the following.
- Number of businesses
- Nature of product
- Control over prices
- Demand curve
- Economic profit/loss
- Productive/Technical efficiency
- Allocative efficiency
2. *Discuss in detail how the following factors lead to the misallocation failures of resources in the market(Causes of market failure)*:
- Missing markets
- Imperfect competition
- Lack of information
- Immobility of factors of production
- Imperfect distribution of income and wealth
1. *Discuss in detail state or government intervention as a consequence of market failures, with the aid of relevant graphs*
- Direct control
- Imperfect markets
- Minimum wages
- Maximum prices
- Minimum prices
- Taxes and subsidies
- Subsidies on goods and services
- Redistribution of wealth
- Government involvement in production
*(This essay is super easy to study on the notes I gave you)*
POSSIBLE ESSAYS FOR QUESTION 6
(Only one essay out of these 6 will be on your paper)
1. *Discuss in detail the consequences of inflation.*
2. *Discuss in detail the measures to combat demand-pull and/or cost-push inflation.*
3. *Examine in detail the benefits of tourism.*
4. Examine in detail the effects of tourism.
5. Discuss in detail how the government can ensure sustainable development.
6. Discuss in detail the following problems and international measures taken to ensure sustainable development.
*Please make sure that you take no chances in essays*
Guy even if you take screenshots of our Essays... Please rewrite them on your note book
Most Said this essay is also important for Thursday and I should update it, so I now give it to you. Discuss in detail state intervention as a consequence of market failure with the aid of graphs.
Some of you asked for this question 5 essay and another one for Thursday, there you go, I will post another one later. (All question 6 possible essays were posted on Sunday)
THE CAUSES OF MARKET FAILURES. (Discuss in detail how the following factors lead to the misallocation of resources in the market)
- Market failure is when the free market fails to allocate the resources efficiently, the allocation of resources is not pareto efficient.
THE CAUSES OF MARKET FAILURE IN DETAIL
-It is a cost of benefit that affects a party who was not part of the action or transaction. Two types:
1.1 Positive externality
-It is when one party benefit from the action of other parties even when they were not involved.
-The goods with positive externality are underproduced because the benefit is not included in the market price.
-Example includes, street lights and education.
1.2 Negative externality
-The costs suffered by someone who was not involved in the activity affecting them.
-With negative externality the goods are over-produced because the costs are not included in the market price.
-Examples includes air pollution caused by firms producing and the smoke from ci******es.
1.3. Social costs and Social benefits.
a) Private cost
-Internal costs are also known as private costs.
-They are the usual costs that producers incur when they buy intermediate goods and services or capital.
b) Private benefits
-These benefits accrue to the business that produce the goods.
- This is when the business received or earn profit.
c) Social costs
-This is the costs of goods or services to those who create them and to society at large.
d) Social Benefits
-The total benefits to the producer and also to the community in which the business operates.
2. MISSING MARKETS
-Free market does not produce certain goods because they have less demand which will yield less profits for the business.
- These includes;
2.1. Public goods/Community goods.
- *Non-rivalry* - which means the consumption by one person does not in any way reduce the consumption by another person.
-E.g. a lighthouse or street light.
- *Non-excludability* -The consumption of a good cannot be confined to those who have paid for it, so there are free-riders.
2.2. Collective goods
-It is possible to exclude free riders by levying a fee.
-Examples can be parks and toll roads.
2.3. Merit goods
-Highly desirable for general welfare, but not highly rated by the market.
-E.g. health care, education and safety.
-If people had to pay the market price for them, very little would be consumed.
-The market fails because the market produces less than the desired quantity.
2.4 Demerit goods.
-These are over-consumed goods e.g. ci******es.
-Thus more of the good is produced than is socially desirable.
-The government bans or reduces consumption of these products through sin taxes.
3. Imperfect competition
-Competition in market economies is limited by the power of certain producers such as Oligopolies and Monopoly.
-There is barriers to entry in this markets because of a lack of capital
and the controlling of resources.
-The imperfect market doesn’t allow for price negotiations.
-Advertising is used to promote producer sovereignty (dominance),
which encourages consumers to buy existing products and allows
producers to delay new products from entering the market until it
is in their own interest.
-Most businesses have had the technology to
produce long-life light bulbs for many years but have chosen not to launch them in the market.
4. Lack of information
-Sometimes the different stakeholders in the economy lacks information to make rational decisions.
-This results in resources not being allocated efficiently.
-To maximise their benefits, consumers need detailed
information about goods and services.
-Although technology offers
this to the consumer, they obviously do have perfect information.
-Are often unaware of job opportunities and they stay were they are not productive.
-Lack of information on costs, availability and and the best production techniques to produce more goods and services.
5. Immobility of factors of production
-Labour takes time to move from one area to another as they need to serve a notice.
-The supply of skilled labour cannot be increased easily because of the time
it takes to be trained or educated.
-Physical capital, like factory buildings or infrastructure such as telephone lines cannot be reallocated easily.
-Structural changes like a change from producing plastic packets to paper packets requires a change in labourers’ skills which takes time to change.
6. Imperfect distribution of income and wealth.
-The market system is neutral on issues of
-Distorts earnings for women and minority groups,
disabled persons and people subject to illness and incapacity.
-The market produces goods and services only for those who can afford it.
-This leads to some people having too many goods while others have
too few goods.
-The difference in income occurs because there is a difference in market power and unequal educational opportunities.
-The market can be efficient but not necessarily fair or
-Out of 10 always and only known to the examiners.
-The government always intervene in the market to correct market failure through institutions such as competition Commission which have the mandate to ensure that prices are low and hence enforce competition.
As promised all 6 Question P2 Essays are available
POSSIBLE ESSAY 6 OF 6 for Question 6 Paper 2 Final Exam.
*The problems to the environment and measures taken internationally to address them.*
1. BIODIVERSITY LOSS.
-If species become extinct (die out completely), this cannot be reversed.
-Modern techniques such as gene transplants can limit the loss of species.
-THE CONVENTION OF INTERNATIONAL TRADE IN ENDANGERED SPECIES (CITES) sets many policies to deal with species loss
2. CHEMICAL WASTE.
-Chemical waste is toxic (It has a negative effect on living beings and can cause infertility or death).
-Chemical waste need to be carefully managed to ensure it does not seep into the ground water.
-The STOCKHOLM PROTOCOL is a United Nations agreement to limit chemical waste.
- Hazardous waste is highly toxic.
-It has a slow decomposition rate (it stays poisonous for a very long time).
-The most dangerous waste is radioactive waste from nuclear power.
-The BASEL CONVENTION is an international agreement to manage nuclear waste.
4. CLIMATE CHANGE.
-Global warming primarily causes climate change.
-Climate change can be reversed through widespread international cooperation, e.g. sharing weather information and weather patterns, agreeing on limiting pollution, and banning chemical products such as greenhouse gases that damage the ozone layer.
-The KYOTO PROTOCOL of 1997 is an international agreement to limit the production of greenhouse gases, because voluntary reductions of carbon dioxide levels did not succeed.
5. LOSS OF INDIGENOUS KNOWLEDGE.
-Indigenous people have a lot of knowledge about the natural environment, which they use to make a living.
-Indigenous people traditionally used organic methods and natural processes.
-As indigenous people lose their habitats or are urbanised, this knowledge is disappearing and is being lost to the world forever.
-LOCAL CAPACITY-BUILDING is very important for the environmental sustainability of indigenous people (finding a way for them to earn a living in their traditional environment).
- It is important that all countries adhere to the commitments on the international measures as these will guarantee a better life for future generations.
POSSIBLE ESSAY 5 OF 6 foQuestion 6 paper 2.
*DISCUSS IN DETAIL GOVERNMENT INTERVENTION TO ENSURE SUSTAINABLE DEVELOPMENT. (Measures to ensure sustainable development by the *government*)
-Sustainable development is when the environment survives it's use of economic activity in such a way that even the future generations will use it in its natural form.
1. GRANTING PROPERTY RIGHTS.
-People care for the things that belong to them and will try and use them as profitably for as long as possible.
-To prevent fauna, flora and other species from becoming extinct private individuals are given the right to property such as a farm if they agree to preserve these species.
-The developed countries can pay the developing countries for a right to pollute through the international agreement Kyoto protocol.
-An alternative is to provide subsidies for activities that reduce environmental damage.
-The government can give a cash incentive for recycling of waste and the development of an equipment to save energy.
- The government can also offer cash rewards to those businesses that takes care of their environment.
3.CHARGING FOR THE USE OF THE ENVIRONMENT.
-The pricing of the environment is one method used by the government to impose environmental charges.
-This means that government levies a fee on consumers and producers for the waste they produce and dump in the environment.
-The local authorities (municipalities) levy charges for rubbish collection or sewage disposal on households, businesses and others.
4.LEVYING ENVIRONMENTAL TAXES
-It is also known as a green tax.
-Green taxes can be imposed on the output of a good, wherever external environmental costs are generated.
-Green taxes are charged on items such as car tyres since they cause air pollution or carbon that can harm the ozone layer.
5. MARKETABLE PERMITS
-It is a licence offered by the government to a business to pollute only up to a certain point.
-The licence is offered by the department of Minerals and energy in South Africa and if a business cannot pollute without it.
-The businesses can sell this license to others if it is still valid and they no longer want to produce.
6. COMMAND AND CONTROL (CAC)
- The government use policy to set a maximum level of emission of pollution or resource use.
-This includes fishing licence to encourage conservation in organisms that live in water.
-Plays a major role in improving people’s capacity to manage the environment as it helps in transferring knowledge.
-Innovative approaches have been used to educate people about environmental sustainability.
-This includes introducing the environmental awareness in the social sciences subjects in schools in South Africa.
8. VOLUNTARY AGREEMENTS
-Rather than imposing laws and regulations, the government can seek to enter into voluntary agreements with businesses for them to cut pollution.
-Such agreement may involve a formal contract which would therefore be legally binding, or they may be more informal commitments.
-As households we need to work with the government as it is clear that by conserving and preserving the environment we all benefit for a very long time.
POSSIBLE ESSAY 4 OF 6 for Paper 2 Final Examination.
*DISCUSS IN DETAIL THE BENEFITS OF TOURISM.*
- Tourism is the activities of people travelling to and staying in places outside their usual environment for no more than one year for leisure, business and other purposes.
THE BENEFITS OF TOURISM
Households benefit through many impacts of prosperity:
-Earning an income directly from the tourism industry.
-Spending by tourists means income to households because of salaries and wages they earn through direct employment by the tourism sector.
- The households can also earn money by their own endeavours such as selling crafts and wood to tourists.
-Improved infrastructure for tourists can be used by the local people e.g. roads, water supply and electricity.
- Skills: tourism requires a variety of skills, for which education and training are needed.
Tourism has many benefits for the business sector:
-The economic and basic services infrastructure required for tourism is provided by the public sector.
-Tourism needs superstructure, which consists of businesses that provide accommodation, transport, built attractions, retailing and recreation services.
-Superstructure is normally supplied by the private sector, and the building and running of the superstructure make profits.
-Public and private sector partnerships (PPPs) are used to develop tourist destinations.
-Other work opportunities become available for the previously disadvantaged people which include:
–Employment opportunities in entertainment, laundry and transportation.
–Business opportunities in car rental, arts, craft and curio sales.
- The main avenue for the government to benefit from tourism is through the levying of taxes.
- It is customary for governments to levy specific taxes on the tourism sector. -Such taxes have two purposes:
- To recover external costs.
- To raise revenue for the government.
- The most common forms of raising public income from tourism are airport departure taxes, air ticket taxes and taxes on hotel room occupancy as well as casinos.
- Foreign tourists who visit South Africa also pay all the normal expenditure taxes, such as VAT, excise duties and custom duties.
- However, on their departure from the country tourists can reclaim the VAT that they have paid, which is usually not done because of administrative obstacles.
4. INFRASTRUCTURE DEVELOPMENT.
- Adequate and well-maintained physical and basic services infrastructure are essential for tourist destinations.
-These are normally shared by residents and visitors alike.
- The government has prioritised economic infrastructure, including elements such as ports, beaches, rivers and lake access, to support tourism growth.
- Most economic corridors have tourism as an important focus.
- The PPPs are sometimes used for the development of infrastructure.
- In addition to physical and basic services infrastructure, tourists as well as residents, also require social infrastructure.
-The examples of social infrastructure needed to be developed for tourism is, ambulance services, medicines, clinics and hospitals, police protection and information services.
-It is evident that the participants in the economy benefits from the fruits of tourism, it is important that the government support the industry in order to maintain and increase the number of people who visit our country.
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