Economic and Management Sciences
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Economic and Management Sciences
Study guide
Grade 8
CAPS aligned Í7(È-E-EMS-SG01KÎ
S Loots B Pretorius SAMPLE
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
SAMPLE
Time spent to study the content in conclusion of the unit and in preparation for the test or examination
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.
SAMPLE
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.
SAMPLE
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.
SAMPLE
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.
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.
SAMPLE
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.
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
SAMPLE
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.
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.