Gr 8-Economic and Management Sciences-Study Guide by Impaq

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ECONOMIC AND MANAGEMENT SCIENCES STUDY GUIDE Grade 8

Economic and Management Sciences Study guide

CAPS aligned

S Loots B Pretorius

2108-E-EMS-SG01

Í5(È-E-EMS-SG01IÎ

Grade 8

Study Guide G08 ~ Economic and Management Sciences

CONTENTS Lesson elements ........................................................................................................................... 4 Preface........................................................................................................................................... 5 Study tips ...................................................................................................................................... 6 Year plan ....................................................................................................................................... 7 UNIT 1 ............................................................................................................................................ 8 Lesson 1: Revision ....................................................................................................... 8 ACTIVITY 1.1 ......................................................................................................... 12 Lesson 2: The economy: Government ........................................................................ 12 ACTIVITY 2.1 ......................................................................................................... 13 ACTIVITY 2.2 ......................................................................................................... 14 Lesson 3: The economy: National budget ................................................................... 16 ACTIVITY 3.1 ......................................................................................................... 18 ACTIVITY 3.2 ......................................................................................................... 19 Lesson 4: The economy: Standard of living ................................................................ 20 ACTIVITY 4.1 ......................................................................................................... 22 ACTIVITY 4.2 ......................................................................................................... 23 ACTIVITY 4.3 ......................................................................................................... 24 ACTIVITY 4.4 ......................................................................................................... 26 ACTIVITY 4.5 ......................................................................................................... 27 ACTIVITY 4.6 ......................................................................................................... 28 Lesson 5: Financial literacy: Accounting concepts ...................................................... 29 ACTIVITY 5.1 ......................................................................................................... 32 ACTIVITY 5.2 ......................................................................................................... 32 ACTIVITY 5.3 ......................................................................................................... 33 ACTIVITY 5.4 ......................................................................................................... 33 ACTIVITY 5.5 ......................................................................................................... 34 ACTIVITY 5.6 ......................................................................................................... 35 ACTIVITY 5.7 ......................................................................................................... 38 ACTIVITY 5.8 ......................................................................................................... 39 ACTIVITY 5.9 ......................................................................................................... 40 ACTIVITY 5.10 ....................................................................................................... 41 ACTIVITY 5.11 ....................................................................................................... 42 ACTIVITY 5.12 ....................................................................................................... 43 Lesson 6: Financial literacy: Source documents ......................................................... 44 ACTIVITY 6.1 ......................................................................................................... 51 ACTIVITY 6.2 ......................................................................................................... 54 ACTIVITY 6.3 ......................................................................................................... 54 ACTIVITY 6.4 ......................................................................................................... 57 ACTIVITY 6.5 ......................................................................................................... 59 ACTIVITY 6.6 ......................................................................................................... 61 UNIT 2 .......................................................................................................................................... 66 Lesson 7: Revision ..................................................................................................... 66 ACTIVITY 7.1 ......................................................................................................... 68 Lesson 8: Financial literacy: Accounting cycle ............................................................ 69 © Optimi

Study Guide G08 ~ Economic and Management Sciences

ACTIVITY 8.1 ......................................................................................................... 70 Lesson 9: Financial literacy: Accounting equation ....................................................... 70 ACTIVITY 9.1 ......................................................................................................... 72 ACTIVITY 9.2 ......................................................................................................... 73 ACTIVITY 9.3 ......................................................................................................... 73 Lesson 10: Financial literacy: Cash Receipts Journal ................................................. 74 ACTIVITY 10.1 (ACTIVITY 9.1 continued).............................................................. 78 ACTIVITY 10.2 (ACTIVITY 9.2 continued).............................................................. 79 ACTIVITY 10.3 (ACTIVITY 9.3 continued).............................................................. 79 ACTIVITY 10.4 ....................................................................................................... 80 ACTIVITY 10.5 ....................................................................................................... 81 ACTIVITY 10.6 ....................................................................................................... 82 ACTIVITY 10.7 ....................................................................................................... 84 Lesson 11: Entrepreneurship: Factors of production ................................................... 85 ACTIVITY 11.1 ....................................................................................................... 86 ACTIVITY 11.2 ....................................................................................................... 87 ACTIVITY 11.3 ....................................................................................................... 90 Lesson 12: The economy: Markets ............................................................................. 90 ACTIVITY 12.1 ....................................................................................................... 92 Lesson 13: Revision test ............................................................................................. 95 UNIT 3 .......................................................................................................................................... 97 ACTIVITY 14.1 ....................................................................................................... 99 Lesson 15: Financial literacy: Cash Receipts Journal ................................................. 99 ACTIVITY 15.1 ..................................................................................................... 100 ACTIVITY 15.2 ..................................................................................................... 101 Lesson 16: Financial literacy: Accounting equation ................................................... 101 ACTIVITY 16.1 ..................................................................................................... 103 ACTIVITY 16.2 ..................................................................................................... 104 ACTIVITY 16.3 ..................................................................................................... 104 Lesson 17: Financial literacy: Cash Payments Journal ............................................. 105 ACTIVITY 17.1 ..................................................................................................... 108 ACTIVITY 17.2 ..................................................................................................... 108 ACTIVITY 17.3 ..................................................................................................... 109 ACTIVITY 17.4 ..................................................................................................... 110 ACTIVITY 17.5 ..................................................................................................... 111 ACTIVITY 17.6 ..................................................................................................... 113 ACTIVITY 17.7 ..................................................................................................... 114 ACTIVITY 17.8 ..................................................................................................... 115 ACTIVITY 17.9 ..................................................................................................... 116 ACTIVITY 17.10 ................................................................................................... 117 Lesson 18: Entrepreneurship: Forms of ownership ................................................... 118 ACTIVITY 18.1 ..................................................................................................... 121 ACTIVITY 18.2 ..................................................................................................... 124

Study Guide G08 ~ Economic and Management Sciences

UNIT 4 ........................................................................................................................................ 129 Lesson 19: Revision ................................................................................................. 129 ACTIVITY 19.1 ..................................................................................................... 130 Lesson 20: Financial literacy: General Ledger and Trial Balance .............................. 131 ACTIVITY 20.1 ..................................................................................................... 134 ACTIVITY 20.2 ..................................................................................................... 134 ACTIVITY 20.3 ..................................................................................................... 135 ACTIVITY 20.4 ..................................................................................................... 139 ACTIVITY 20.5 ..................................................................................................... 140 ACTIVITY 20.6 ..................................................................................................... 143 ACTIVITY 20.7 ..................................................................................................... 145 ACTIVITY 20.8 ..................................................................................................... 147 ACTIVITY 20.9 ..................................................................................................... 149 ACTIVITY 20.10 ................................................................................................... 152 ACTIVITY 20.11 ................................................................................................... 154 ACTIVITY 20.12 ................................................................................................... 156 ACTIVITY 20.13 ................................................................................................... 156 ACTIVITY 20.14 ................................................................................................... 158 ACTIVITY 20.15 ................................................................................................... 160 Lesson 21: Entrepreneurship: Levels and functions of management ........................ 161 ACTIVITY 21.1 ..................................................................................................... 164 ACTIVITY 21.2 ..................................................................................................... 166 Lesson 22: Revision test ........................................................................................... 169 Glossary .................................................................................................................................... 175 Bibliography and references .................................................................................................... 180

Study Guide G08 ~ Economic and Management Sciences

Lesson elements LEARNING AIMS

What you should know at the end of the lesson (taken from CAPS)

DEFINE

Definitions of concepts to be able to understand the content

TIPS

Any information, other than the content, to guide you through the learning process

ACTIVITY

Questions throughout the lesson that must be answered in order to test your knowledge of the lesson

EXERCISE

In conclusion of the specific unit. Formative assessment.

STUDY/REVISION

Time spent to study the content in conclusion of the unit and in preparation for the test or examination

Study Guide G08 ~ Economic and Management Sciences

Preface Welcome to Economic and Management Sciences. The subject deals with the efficient and effective use of different types of private, public or collective resources to satisfy human needs. Economic and Management Sciences is a practical subject that equips learners with real-life skills for personal and communal development. The content is applicable to the unique South African situations with regard to communities, businesses, etc. Here are some tips on how to use the study guide: • It is essential that you work through all the units in the study guide. • Each lesson contains appropriate activities you need to complete to better understand the lesson. • An open book test at the end of each unit will test your knowledge of that unit. This will facilitate preparation for future tests and examinations. • You are also provided with a workbook containing all the necessary answer sheets you will need to complete the financial literacy activities. It is indicated when you should use the workbook. • You need a calculator to help you with the financial literacy sections. • It is important that you read magazines and newspapers on various topics covered in the study guide to acquire in-depth knowledge of the topics. • You need to know what is happening in the economy and finances of the country.

Study Guide G08 ~ Economic and Management Sciences

Study tips Economic and Management Sciences mainly consists of three sections, namely the economy, entrepreneurship and financial literacy. You must be able to clearly distinguish between these three sections. You will have to complete a great amount of work during the year. It is important that you use the correct study methods to prepare for tests and examinations. Here are some study tips you may use: • Skim each unit before the work is explained. • Listen attentively as 70% to 80% of learning and understanding occurs while the work is being explained. • Make sure you read and understand each word or term used in the lesson. Use the glossary at the back of the study guide or a dictionary. • Focus and concentrate on each step of the section that is discussed. Do not let your mind wander. • Actively participate in the lesson by asking questions and giving answers. • Revise the work that has been completed every day. • Try to identify different types of questions every day and make notes. • Ask for help if you need it. It is important to understand all the work before proceeding to the next section.

Study Guide G08 ~ Economic and Management Sciences

Year plan UNIT

Revision

The economy: Government

The economy: National budget

The economy: Standard of living

5 6 7 8 9 2

10 11

Revision Financial literacy: Accounting cycle Financial literacy: Accounting equation Financial literacy: Cash Receipts Journal Entrepreneurship: Factors of production The economy: Markets

Revision test

Revision

16 17 18 19 20

4 21 22

Financial literacy: Accounting concepts Financial literacy: Source documents

15 3

DATE STARTED

LESSON

Financial literacy: Accounting equation Financial literacy: Cash Receipts Journal Financial literacy: Cash Payments Journal Entrepreneurship: Forms of ownership Revision Financial literacy: General Ledger and Trial Balance Entrepreneurship: Levels and functions of management Revision test

DATE COMPLETED

Study Guide G08 ~ Economic and Management Sciences

Unit

UNIT 1 Lesson 1: Revision STUDY/REVISION The following will refresh your memory on what was covered in Economic and Management Sciences in Grade 7. 1.1.1

The economy

History of money Thousands of years ago, people used to supply their own needs. These societies were self-sufficient and independent from anyone else. The first economic system was a subsistence economy, which meant that people only produced enough of something they needed. For example, they planted maize for maize meal and kept cows for milk. People used to exchange goods for other goods and did not use money. Instead, they traded in non-perishable items, such as shells, salt, clay discs and livestock. This was known as bartering. However, bartering created some problems: • Goods did not have a set value because different societies attached different values to items. • For bartering to occur successfully, the two parties involved in the bartering process each needed to have what the other wanted. • Some goods were only available at certain times of the year and they could not be stored, e.g. perishable food. Money was invented to replace bartering. The most important role of money is that it can be exchanged for goods and services, eliminating the need to barter. Money, as a medium of exchange, overcame the limitations of bartering in finding a party who both has what you want and who wants what you have. Money refers to anything of value that is generally accepted as a payment method for goods and services, usually in the form of coins and banknotes. Since its early beginnings as an effective substitute for bartering, money has become so interwoven with modern society that we cannot imagine a world without it.

Study Guide G08 ~ Economic and Management Sciences

Unit

Needs and wants Needs and wants will affect the way individuals, families, communities and countries work, live and spend money. People’s needs and wants are unlimited, but the resources needed to satisfy these needs and wants are limited. A need refers to something that is essential for our survival, which is why we refer to it as a primary need. Examples of primary needs are food, water, shelter, etc. A want refers to something we really desire, but we do not need it to survive, which is why we refer to it as a secondary need. Examples of secondary needs (wants) are cellphones, luxury cars, jewellery, etc. Examples of the different needs: 1. Physiological needs: food, water, oxygen, shelter, etc. 2. Safety and security needs: personal, emotional and financial security, and health. 3. Social needs: companionship, love and friendship. 4. Esteem needs: recognition, respect, acceptance and success. 5. Self-actualisation needs: self-development, creativity and spirituality. Goods and services When you buy or sell something, you are part of the flow of goods, services and money in the economy. Goods refer to things we can see, smell, touch or taste, and which we can buy in stores. Services refer to deeds that are performed to satisfy needs. A person who renders a service ‘sells’ their knowledge and skills to the person who wants them to perform the service, e.g. a doctor or a plumber. It is impossible to satisfy everybody’s needs and wants, which is why goods and services must be used in effective and efficient ways. Inequality and poverty Inequality refers to differences in people’s circumstances, where one person or group of people have a higher income, better facilities, more opportunities and access to better quality services than another person or group of people. Poverty means that people do not have money to satisfy their basic needs. Factors that contribute to poverty are: • Inequalities of the past. • Illiteracy and a lack of education and training. • The current economic conditions in the country.

Study Guide G08 ~ Economic and Management Sciences

Unit

Production process Production is the process during which natural resources are used to create usable products for consumers to satisfy their needs or wants. Certain inputs are required to make this process possible. These inputs are known as the factors of production. An entrepreneur has the ability to combine all the factors of production to manage a successful business. The four main factors of production include natural resources, capital, labour and entrepreneurship. 1.1.2

Entrepreneurship

Businesses A business is a shop or company that exchanges goods or services for money. A formal business conducts its business in the formal sector, is registered with the government, and pays tax to the South African Revenue Service (SARS). Formal businesses are subject to legislation as regulated by the Department of Labour. Examples of formal businesses include companies such as Checkers, Pick n Pay, Makro, etc. Unlike formal businesses, informal businesses are active in the informal sector, are not registered with the government and do not pay tax. Workers in such businesses are also not protected by the Department of Labour. Examples of informal businesses include hawkers, street vendors, car guards, flea markets, etc. There are three different types of businesses: • Producers and manufacturers These are businesses that grow or make things. They use natural resources or raw materials to produce or manufacture goods. Then they sell these goods to retailers who sell the goods to consumers. • Trading businesses These are businesses such as retailers that buy goods from producers or manufacturers and then sell these goods to consumers at a profit. • Service businesses Service businesses ‘sell’ their knowledge and skills to consumers who want them to perform the service, e.g. a doctor or a plumber. Formal and informal businesses can be both producers and consumers in the economy.

Study Guide G08 ~ Economic and Management Sciences

Unit

The entrepreneur An entrepreneur is a person who converts a profitable idea into a business. An entrepreneur must be willing and able to take risks, accept failure, and develop new and innovative ideas. They are constantly working to find new ways of improving products, reducing costs and increasing profits. Some of the characteristics of an entrepreneur include the following: • Innovative/creative • Willing to take risks • Passionate • Confident • Committed • Clear vision • Persevering • Flexible • Competitive 1.1.3

Financial literacy

Accounting concepts • Capital: Money a person uses to start their own business. • Assets: Valuable things that a business owns such as machinery and buildings and benefits from in generating an income. • Liabilities: Money a business owes to a person or another business. • Income: Money received for goods sold or services rendered. • Expenses: All the money that a business spends on paying its debt or its expenses. • Profit: The difference between money earned and money spent when income is more than expenditure. It is the surplus remaining after total costs have been deducted from total revenue. A profit is reflected when a business’s assets and/or owner’s equity are more than its liabilities. • Loss: The difference between money earned and money spent when a business’s expenditure exceeds its income. • Budget: An estimate of income and expenditure for a certain period. • Savings: Part of the money which you have earned and which you put away to use again later or to convert into wealth. • Banking: A bank is a financial institution that uses money deposited by clients for investments or saving, grants loans at interest, and exchanges currency. A bank charges people a fee for using its services. • Financial records: Formal documents which represent the transactions of a business or individual. Financial records include income and expenditure statements, tax returns, etc. • Transaction: Any activity in which money is involved.

Study Guide G08 ~ Economic and Management Sciences

Unit

ACTIVITY 1.1 Do this activity in your script. Are the statements true or false? 1.1.1 1.1.2 1.1.3 1.1.4

Before the invention of money, people used to barter. The three factors of production are capital, labour and natural resources. A formal business must be registered with the government. Saving is when you put away part of the money which you have earned to use again later or to convert into wealth. 1.1.5 A budget is an estimate of income and expenditure for a certain period. 1.1.6 An entrepreneur is a person who converts a profitable idea into a business. 1.1.7 An entrepreneur is always successful. 1.1.8 A trading business buys and sells goods and services. 1.1.9 The primary sector produces raw materials. 1.1.10 Formal and informal businesses can be both producers and consumers in the economy. Lesson 2: The economy: Government LEARNING AIMS At the end of this lesson, you must be able to: • understand the meaning of the government. • know the different levels of the government and the roles of the different levels of government. • know the different levels of government in respect of households and businesses in the use of resources and services. In this lesson, we will learn about the government, the purpose of government, different levels of government, as well as how the government works. 1.2.1

Meaning of government DEFINE Democracy: A system of government in which the leaders and representatives of a country have been elected by the people of the country Infrastructure: Physical facilities such as roads, bridges, and buildings that a country’s economy needs to function and grow; can also include services such as electricity, water, and sewage services

Study Guide G08 ~ Economic and Management Sciences

Unit

A government is an organisation that has to govern a country. It is responsible for maintaining law and order and to ensure that infrastructure and services are provided to citizens. The government’s leaders are elected through a democratic election system. In South Africa, a national election is held every five years in which citizens vote for the leaders they want in power. Managing a country and its citizens is a very big task. The government’s responsibilities include: • Governing the country’s citizens through legislation and the enforcement of these laws. • The provision of services and infrastructure required for economic growth. • Generating government revenue (tax collection) and spending it in such a way (national budget) that social and economic objectives can be achieved. • Protecting the country’s citizens. Although the government has many other responsibilities and duties, the above-mentioned responsibilities are regarded as the most important.

ACTIVITY 2.1 Do this activity in your script. Answer the questions. 2.1.1 2.1.2 1.2.2

Make a list of ten questions you would like to ask the president of South Africa. Would you want to be president? Give two reasons for your answer. Different levels of government

Since it is an enormous task to govern a country, the government is divided into different levels, namely: • National government • Provincial government • Local government

Study Guide G08 ~ Economic and Management Sciences

Unit

The following diagram illustrates how South Africa’s three levels of government fit together and function. National government Responsible for the general management of the country

Provincial government South Africa has nine provinces, each with its own objectives to better the province and, in turn, the country

Local government Deals with issues on a local level within towns and cities The government has three main tasks to perform, namely: • Legislative: Creates and implements laws. • Executive: Enforces the laws made by the legislative branch. • Judicial: Ensures that justice is upheld by interpreting the laws. All three levels of government play an important role in performing these tasks. For example, laws are created at national level but are implemented and enforced on provincial and local levels.

ACTIVITY 2.2 Do this activity in your script. Answer the questions. 2.2.1 2.2.2 2.2.3

Name the three levels of government. Name and discuss the three main tasks of the government. Name and discuss each level of government and its function.

Study Guide G08 ~ Economic and Management Sciences

1.2.3

Unit

Roles of the different levels of government in respect of households in the use of resources and services

One of government’s responsibilities is to provide basic services to citizens. Each level of government plays a role in respect of households. The government, however, needs money to meet basic needs such as healthcare, water, electricity, housing and police services. The government generates an income from businesses and households. Let’s look at the way the government makes money.

Households pay for the resources and services provided by the government.

The national government allocates money to provincial and local governments to providensure that services to households.

Households provide labour to businesses and the government and receive salaries or wages as remuneration.

Households pay a portion of their income earned to the government. This is called income tax.

Money flows into the economy through spending by local, provincial and national governments. The government employs households in the same way businesses do and pays salaries and wages to employees. The government is therefore also a consumer of the labour that households provide. Various goods and services are provided to households free of charge, e.g. police services. Households must, however, pay for other services, such as water, electricity and refuse removal. The government also provides certain households with subsidies and grants, like pension and child care grants as well as housing subsidies. It is government’s responsibility to provide resources to households and the country, but households, businesses, provincial and local governments also have a responsibility to fulfil this need.

Study Guide G08 ~ Economic and Management Sciences

1.2.4

Unit

Roles of the different levels of government in respect of businesses in the use of resources and services

Infrastructure is essential for businesses to function and operate effectively, and includes necessary laws and regulations that provide certain policies and frameworks within which businesses must operate, e.g. the employment policies of a business. The government must ensure that businesses can operate in a safe and orderly environment. Furthermore, the government also plays a role in encouraging new businesses and thereby creating more jobs. The government buys resources from businesses that it needs to provide certain services to the country and its residents. Lesson 3: The economy: National budget LEARNING AIMS At the end of this lesson, you must be able to: • understand the meaning and aim of the national budget. • identify the difference between direct and indirect tax. • understand government expenditure. • understand the influence of the national budget on economic growth and redressing of economic inequalities. The national budget refers to the country’s expected income and expenses. The national budget is prepared, reviewed and implemented by the Office of the Minister of Finance. The minister decides how the money that the South African government receives in the form of taxes, levies and debts, will be spent. The budget must be set up in an efficient way and money must be spent effectively to achieve the country’s economic goals. South Africa’s economic goals include: • Jobs for all citizens (no unemployment) • Economic growth • Exchange rate stability • Price stability (combat inflation) • Equality Equality aims to ensure that the wealth of the country will be fairly distributed, so all citizens will have the means to satisfy their needs.

Study Guide G08 ~ Economic and Management Sciences

1.3.1

Unit

Government revenue DEFINE Direct taxation: Tax citizens pay directly to the government for goods and services provided Expenses: Money that is spent to satisfy basic needs Income: Money received for goods sold or services rendered; also known as revenue Indirect taxation: Tax citizens pay to the government indirectly through businesses and municipalities, e.g. VAT. Levies: Additional taxes or fees added to the price of goods and services Needs: Something that is essential for our survival, e.g. food, water, shelter, etc. Tax: A compulsory contribution by the citizens of a country to the government for the goods and services it provides to satisfy needs

The government is responsible to meet the basic needs of all citizens of the country, which requires a lot of money. Not only do households and businesses contribute to the economy of the country, but also to the government’s budget by paying taxes. Tax is the country’s biggest source of income. The government collects two types of tax, namely direct and indirect tax. Examples of direct tax • Income tax: Tax which the government levies on an individual’s annual personal income, calculated as a percentage. • Company tax: Tax which the government levies on a business’s profit. Examples of indirect tax • Value added tax (VAT): Tax levied on goods and services consumers buy from businesses. In South Africa, the VAT rate is currently 15%. • Sin tax: Tax levied on goods that have a negative impact on the consumer, e.g. tobacco and alcohol. The purpose of sin tax is to discourage consumers from buying these products. • Import tax: Tax levied on goods we buy from foreign countries and import. • Municipal tax: Tax levied directly by municipalities for refuse removal, sewage services, etc. The South African Revenue Service (SARS) is an organisation responsible for the collection of income tax for the South African government.

Study Guide G08 ~ Economic and Management Sciences

Unit

ACTIVITY 3.1 Do this activity in your script. Answer the questions. 3.1.1 3.1.2 3.1.3 1.3.2

How does the government get money to spend? Who is responsible for preparing the national budget? Name and discuss any two types of direct and indirect tax. Government expenditure on services DEFINE Expenses: Money that is spent to satisfy basic needs Levies: Additional taxes or fees added to the price of goods and services

After having drawn up the national budget and allocating the money to the various government departments, the money should be spent in such a way that it satisfies as much of the country’s needs as possible. Money from the budget is spent primarily on the following: • Healthcare: hospitals, clinics, etc. • Education and training: to provide quality education and training to all South Africans • Safety and security: police, defence force, etc. • Water and sanitation services • Transport networks: roads, railways, etc. • Housing • Social grants: pension and child support The diagram illustrates how the government allocates money to the different levels of government. National budget

National level

Provincial level

Local level

• Police and army

• Education

• Water and electricity

• Courts and prisons

• Health

• Housing

• Social grants

• Roads and transport

• Refuse removal

Study Guide G08 ~ Economic and Management Sciences

Unit

ACTIVITY 3.2 Do this activity in your script. Answer the questions. 3.2.1 3.2.2

Make a list of five goods and services on which the government spends money. Use newspapers, magazines and the internet to find any three pictures of basic needs that the government must satisfy by spending money from the national budget.

The national budget and government spending have a major impact (direct and indirect) on each other. The following cycle shows why both are important: National budget

Expenditure on education

The government receives more income by collecting more taxes

People develop skills

People who work pay taxes

Businesses develop and create job opportunities

1.3.3

People start their own businesses

The influence of the national budget on growth and redressing of economic inequalities DEFINE Apartheid: The political policy of the South African government from 1948 to 1994, which implemented and maintained segregation and separate development of different racial groups

Study Guide G08 ~ Economic and Management Sciences

Unit

Before the first democratic election was held in South Africa in 1994, there were numerous socio-economic imbalances in the country in terms of education, jobs, etc. To resolve the issue of inequality in South Africa, government must focus on the poor and previously disadvantaged race groups. This means that the above-mentioned groups and communities must have access to basic services and be empowered by job opportunities. Today, government is aiming at correcting the inequalities of the past by implementing certain programmes and legislation. Examples of legislation and strategies that were put in place to rectify these inequalities are: • Broad-Based Black Economic Empowerment (B-BBEE): A strategy put in place to ensure previously disadvantaged people’s participation in the economy • Skills Development Act: An Act to ensure that previously disadvantaged groups are taught skills such as learning to read and write; in-service training is an important part of this Act • Employment Equity Act: An Act put in place to eliminate and prevent any discrimination and inequalities in the workplace The South African government has allocated large amounts of money for education and skills development. Certain programmes were introduced to fight the inequality and injustice in education. The programmes include: • Building new schools. • Creating transport networks to transport learners to schools. • Focusing on the development of knowledge and skills in subjects such as science, technology, engineering and mathematics. • Subsidies to enable learners to receive free education. Since South Africans’ needs are quite significant and because South Africa is a developing country, it is a huge task to meet all these needs. Many problems that were created by apartheid still exist today, and government is struggling to rectify these. Lesson 4: The economy: Standard of living LEARNING AIMS At the end of this lesson, you must be able to: • distinguish between self-sufficient, modern and rural societies. • understand the impact of development on the environment. • understand unemployment. • understand productive use of resources to promote a healthy environment.

Study Guide G08 ~ Economic and Management Sciences

Unit

Not all people maintain the same lifestyle and standard of living. People who are fortunate enough to have access to money can afford goods and services to maintain a high standard of living. Their lifestyles are drastically different from people who earn less money or who have no money to afford basic goods and services. In this lesson, we will look at how people’s lifestyles differ and what impact it has on societies. 1.4.1

Lifestyles DEFINE Lifestyle: The way in which people and societies live and express themselves Standard of living: The degree of access people and societies have to goods, services and wealth which make their lives easier

Lifestyle refers to how you and your family live and function within your society, but also how you spend money on different goods and services. Due to South Africa’s socioeconomic inequalities, not all citizens have and maintain the same lifestyles. Here are two questions you can ask yourself to determine your type of lifestyle: • Do you and your parents use public transport or does your family own a car? • Does your family eat out often or do you go on holiday every year? Here are two questions you can ask yourself to determine your standard of living: • Do you live in a society where people live in houses or in informal structures? • Does your society have access to running water and electricity? Lifestyles vary from person to person, generation to generation, racial groups, age groups and families. You must know the difference between standard of living and lifestyle. Though it seems to be the same, there is a difference between the two concepts.

Study Guide G08 ~ Economic and Management Sciences

Unit

ACTIVITY 4.1 Do this activity in your script. Indicate the differences between the lifestyles of the two families in the pictures.

1.4.2

Family A

Family B

Image 4.1

Image 4.2

Self-sufficient societies DEFINE Self-sufficient society: A society in which the people can support themselves and survive without help from other societies or people

Self-sufficient societies are societies where the residents meet their own basic needs by using all the resources available within the society. Agricultural products and activities are often the most important elements in these societies. People who live in self-sufficient societies and regions generally maintain a low standard of living.

Image 4.3: A self-sufficient society

Study Guide G08 ~ Economic and Management Sciences

Unit

ACTIVITY 4.2 Do this activity in your script. Read Thando’s story and answer the questions. Thando and his family live in a remote rural area. There are no towns or cities with large shopping centres nearby and Thando’s parents don’t own a car. Every day, Thando and his younger sister walk down to the river to collect water in containers. The family grows their own vegetables and harvests fruit from tree which they have planted. The family’s cattle and sheep provide them with meat and milk. Even though Thando and his family work hard, all their basic needs are met. Compare your society with Thando’s self-sufficient society in terms of the following headings: 4.2.1 4.2.2 4.2.3 4.2.4 1.4.3

Transport Access to basic services Access to shopping centres Income Modern societies DEFINE Modern society: A society characterised by its high level of development and the availability of specialised facilities, goods, and services

People who live in large industrialised towns and cities have access to many facilities and are classified as modern societies. In other words, there is a variety of goods and services, as well as specialised goods and services available in a modern society. You will also notice that a modern society tends to have a larger population compared to self-sufficient and rural societies. The following facilities and services are generally available in modern societies: • Large shopping centres • Technology • Medical care, e.g. hospitals, clinics and doctors • Main roads and highways • Primary, secondary and tertiary education • Recreation areas such as parks, amusement parks, etc. • Cultural facilities such as theatres and dance clubs © Optimi

Study Guide G08 ~ Economic and Management Sciences

Unit

People who live in modern societies have access to tertiary education, which enables them to achieve a higher level of skill and education. Since people in modern societies can earn a good income, they maintain a higher standard of living. The larger population and high skill levels present in modern societies creates many business opportunities to offer a variety of goods and services to these societies. Goods and services are produced and sold in bulk. Modern societies, therefore, contribute greatly to the economy of a country. 1.4.4

Rural societies DEFINE Rural society: This is a society generally found on the borders of modern towns and cities. Although this society is somewhat isolated, a degree of interaction still takes place and they contribute to the country's economy.

People who live in rural areas do not have access to all the facilities, services and technology of a modern society. They should, however, not be confused with a selfsufficient society. People who live in rural areas mainly contribute to the primary sector, e.g. mining, forestry and agriculture. They buy goods and services from government and larger businesses in modern societies. These societies are very dependent on existing infrastructure such as roads, water and electricity to deliver their products and to participate in the economy.

ACTIVITY 4.3 Do this activity in your script. Answer the questions. 4.3.1

What is the nearest modern society to where you live? Do you live in a modern society? Describe in ten sentences the modern society you live in, or the one closest to you.

4.3.2

Use newspapers, magazines and the internet to gather information about the lifestyles and living standards of two different communities or countries. Compare the following: • Poverty • Unemployment • Population size

Study Guide G08 ~ Economic and Management Sciences

1.4.5

Unit

The impact of development on the environment DEFINE Sustainability: The responsible use and management of natural resources to ensure that future generations can still enjoy the benefits of these resources

When a country develops it holds many advantages for its citizens, its urban areas and the economy. Although development has many benefits, it can have a very detrimental effect on the environment. Natural resources, such as water, coal, gold, trees, plants and animals are used in urban societies in the production of other resources and products. Many businesses use natural resources to produce goods. They attempt to make as much profit as possible by producing and selling as many products as quickly as possible. The continued use of limited natural resources will eventually result in the resources becoming fully depleted. To prevent this from happening consumers, businesses and government must all work together to ensure that resources are used sustainably. The mind map shows the negative impact human activities have on the environment:

Worsening of the greenhouse effect

Trees are cut down and forests are destroyed

Animals are wiped out, e.g. rhinos

Human activities

Depletion of natural resources, such as coal

Soil, water and air are polluted

Study Guide G08 ~ Economic and Management Sciences

Unit

ACTIVITY 4.4 Do this activity in your script. Answer the questions. 4.4.1

1.4.6

Use newspapers, magazines and the internet to find any three pictures of different types of renewable energy sources. Write a brief description of each of your examples. Unemployment DEFINE Labour force: All the people in the country between 15 and 64 years, who are willing and able to work Unemployment: When a person does not have a job, but they are looking for one and they want to work Unemployment rate: The percentage of the total labour force who is unemployed and who is looking for a job

Unemployment means that a person is willing and able to work, but cannot find employment and therefore doesn’t earn an income. The reasons for this can be varied: • The person has been fired or retrenched and they are still looking for a job. • The person has just finished their studies and they are looking for a job. • The person has no qualifications or they are illiterate, and they are struggling to find a job. • The area in which the person lives does not offer any job opportunities. Unfortunately, South Africa has a high level of unemployment, as measured by the unemployment rate. The unemployment rate is the percentage of the labour force which is unemployed, calculated as follows: Unemployment rate =

Number of unemployed people 100 × Labour force 1

Job creation is one of the key elements of our country’s economy. Businesses and government are both responsible for creating as many jobs as possible for the citizens of the country. Since unemployment has created major problems for the economy, government must try to rectify these problems.

Study Guide G08 ~ Economic and Management Sciences

Unit

Government aims at dealing with the problem of unemployment as follows: • Providing quality training and education to all. • Encouraging entrepreneurs to start their own businesses. • Creating new infrastructure. • Promoting and supporting existing businesses. Unemployment not only affects the unemployed person but also their family and other dependants they may have. This can lead to other socio-economic problems such as high crime rates and drug abuse, which will have more negative implications for the economy.

ACTIVITY 4.5 Do this activity in your script. Read the article and answer the questions. Unemployment gets worse in SA Johannesburg – South Africa’s frightening high unemployment rate, according to the recent census results, are significantly higher than experts initially thought, reports Business Report. According to the census the population now stands at 51,8 million, 8,2% higher than in 2007. Almost 80% of these are black, 9% are coloured, 9% are white, while 2,5% described themselves as Asian. The census also shows the official unemployment rate is 29,8%, which is almost six percentage points higher than the 23,9% that another survey indicated. According to the report, the official unemployment rate is the highest – 35,6% among blacks, compared to coloureds (22,3%), Asians (11,7%) and whites (5,9%). 4.5.1 4.5.2 4.5.3

Define the term ‘unemployment’. What percentage of the population is unemployed and how much higher is it than in 2007? According to the article, among which race is unemployment the highest?

Study Guide G08 ~ Economic and Management Sciences

1.4.7

Unit

Productive use of resources to promote a healthy environment DEFINE Recycling: Collecting, processing and converting of waste into reusable material, such as plastic

We already know that people’s needs and wants are unlimited, but the resources needed to satisfy these needs are limited. It is impossible to satisfy everybody’s needs and wants, which is why goods and services must be used in effective and efficient ways. Many businesses use natural resources to produce goods. They attempt to make as much profit as possible by producing and selling as many products as quickly as possible. Businesses and people must use natural resources (water, fuel, agricultural land, energy, trees, etc.) as sustainably as possible to allow future generations to also provide in their own needs. How to reduce the use of natural resources: • Conserve energy by using alternative and sustainable sources of energy, e.g. solar power, wind energy, biofuel, etc. • Conserve water. • Reduce pollution. • Reuse and recycle. • Launch awareness campaigns and introduce education programmes to encourage the sustainable use and conservation of natural resources, e.g. the Go Green Initiative.

ACTIVITY 4.6 Do this activity in your script. Answer the questions. 4.6.1 4.6.2

Make a list of five ways businesses and people can use the environment and its resources in a sustainable manner. Name three materials you use each day that can be recycled.