2. Economic Cycle

• What is the basic economic problem

  Everyone has unlimited needs and wants but the resources and solutions required to fulfil these needs and wants are limited as resources (money) is limited.

  = SCARCITY
• There are certain needs that are fulfilled for free = people do not have to pay

  Majority of needs and all wants cost money = people create a plan to acquire money.
• Characteristics of Free goods

  • Satisfy needs
  • Need not be paid for
  • Generally available in unlimited quantities.
  • No one can possess or control it
  • It is not regarded as an indication of wealth.
• Characteristics of economic goods

  • Satisfying needs and wants

  People are prepared to pay for them.

  Limited offer therefore it has a price attached to it.

  It belongs to someone who is prepared to sell it to a buyer who will then own it.

  If people own these, they are generally regarded as wealthy.
• The economic cycle is a continuous two-way movement where goods and services are exchanged for money so that needs and wants can be satisfied.

  A) Expenditure

  B) Market for goods and services

  C) Income

  D) Business

  E) Expenditure

  F) Households

  G) market for factors of production

  H) Goods and services

  I) Goods and services

  J) Factors of produtions: Capital entreprenuership

  K) Factors of production: natural resources, labour

  L) Income

  M) Government

  N) Foreign sector

  O) imports and exports

  P) Collection of taxes and service deliveries

  
• Households

  •Possess all the factors of production and sell these to businesses which use the factors to manufacture goods and services.

  1. Capital=interest
  2. natural resources= rent
  3. Labour salaries and wages
  4. entrepreneurship= profit
• Households

  •The money earned by households is used to satisfy their own needs and wants.

  •Needs refer to the necessities that people need to survive.

  •Wants are nice to have but you won’t die without them.

  Needs

  •   are unlimited.
  • may have limited intensity.
  • -  different people have different needs according to gender, age,   career, etc.
  • -  determined by geographical location.
  • -  needs change over time.
  • -  are sometimes complementary.
  • -  are habits (need to smoke)
• 2. Businesses( private sector)

  •Businesses buy factors of production and manufacture goods and services that they will sell at a profit to households or other businesses.
• What are the types of products and services what business provide?

  •CONVENIENCE GOODS

  -  consumers are not too concerned about the brand of these items, instead   ease and convenience are important.

  Example: Bread and milk

  •SELECT GOODS

  -  products bought once a comparison between competitors has been made   regarding price, quality and brand.

  Example: clothes, shoes, and certain jewellery items
• What are the types of products and services what business provide(p2)?

  •SPECIALITY GOODS

  -  The consumer will take more time to make a decision as the consumer does   not want to make an error.

  -  Consumers tend to be brand loyal.

  Example: vehicles, household appliances

  •SERVICES (intangible)

  -  Offering of time and expertise.

  -  can be an individual service or part of a product offering.

  Example: hairdresser vs delivery after purchase
• 3. Government(public sector)

  •Receives taxes from households and businesses and uses this revenue to create infrastructure to promote economic activities in the country.

  •Infrastructure is also known as Collective Goods.

  Example: schools, roads, hospitals, safety services, airports, sewerage systems
• 4. the foreign sector

  •Only involved in an open market where goods and services are imported and exported from other countries.

  •Possible reasons for international trade:

  -Improved transport and communication make it easier to import or export products.

  -Able to obtain certain goods and services if the country doesn’t have resources to produce them.

  -If climate makes it difficult to farm certain products, the products will have to be imported from another country.
• 4. THE FOREIGN SECTOR

  •Possible reasons for international trade(p2):

  -Consumers with spending power may decide to purchase luxury items from overseas rather than locally.

  -Countries usually have a range of natural resources but need to import the resources they do not have from other countries.

  -International trade may occur because of international tourism.
• 4. THE FOREIGN SECTOR

  •Possible problems that may arise from international trade:

  X  Large distances between countries may make it difficult or too expensive   to import.

  X    Different laws in different countries may make importing and exporting   difficult.

  X  If the creditor and the debtor are in different countries, it may add to   the complexity of international trade.

  X   Different currencies and the fluctuating exchange rate sometimes makes   it cheaper or more expensive to import from other countries.
• SOUTHERN AFRICAN DEVELOPMENT COMMUNITY (SADC)


  •SADC consists of 15 countries: Swaziland, Lesotho, Namibia, Botswana, Zimbabwe and more.

  Has the following aims:

  1. Sustainable economic development of countries which are members of SADC.
  2. To alleviate poverty in the area and improve living conditions.
  3. Promote and defend peace and security in the region.
  4. Regional integration to create a stronger trade bond between countries.
• THE NEW PARTNERSHIP FOR AFRICA’S DEVELOPMENT (NEPAD)


  •NEPAD has the goal of helping Africa, as a continent to develop by focusing on:

  1. Agricultural initiatives.
  2. Improving infrastructure.
  3. Improving trade between countries inside and outside of Africa.
  4. The improvement of skills and job creation in member countries.
  5. The preservation and sustainable use of the natural environment and resources.
  6. Building relationships with the G8 countries to gain support and aid in health and educational issues.
• AFRICAN UNION (AU)


  •The AU was established to try and get international aid for African countries from the rest of the world to develop economic growth.

  •Cyril Ramaphosa is the chairperson of the AU.

  
• Which trade is this symbol?

  THE NEW PARTNERSHIP FOR AFRICA’S DEVELOPMENT (NEPAD)

  
• BRICS COUNTRIES


  •The BRICS agenda includes aims such as:•

  1. Improving international trade in order to improve member countries’ financial positions.
  2. Better ties and relationships with international organisations like the UN, the World Bank and the IMF.
  3. Monitor political developments in the Middle East, North Africa, Afghanistan, Iran and Syria and the impact it has on other member countries and the world economy.
  4. Monitor international terrorism.
  5. Monitor climate change.
  6. Improve food and energy security.
• Label the BRICS countries

  label

  A) Brazil

  B) Russia

  C) India

  D) South Africa

  E) Saudi Arabia

  F) Argentina

  G) Egypt

  H) Ethopia

  I) Iran

  J) U.A.E.

  K) China