Directorate: Curriculum FET

SUBJECT AND GRAAD ECONOMICS GRADE 11

TERM Term 3 Week 4

SUBJECT ECONOMIC PURSUITS: ECONOMIC GROWTH
AIM OF LESSON TO BE SUCCESSFUL YOU MUST:
understand the process of economic growth

INTRODUCTION ECONOMIC GROWTH IS LINKED TO CONTENTS IN:

Gr 10 - Term 1: Business cycles, i.e. the effects of business cycles on economic growth.
Gr 11 - Term 1: Production factors, i.e. the importance of land, labor, capital and entrepreneurship.
DURATION 1 week (5 lessons / 4 hours)

CONCEPTS AND SKILLS TO MASTER THE TOPIC OF ECONOMIC GROWTH YOU MUST DO THE FOLLOWING:

1. Describe and explain economic growth.

2. Discuss economic growth (calculation, importance, methods, constraints).
3. Explain the importance of economic growth figures.
4. Critically evaluate the economic growth figures of South Africa.
5. Describe and explain standard of living.
6. Briefly discuss the standard of living (population size, per capita income).

INFORMAL ACTIVITIES CONSOLIDATION: ACTIVITIES 1, 2 & 3

RESOURCES Paper-based resources Digital resources

Grade 11 Core notes: Topic 8 https://wcedeportal.co.za/
Any approved textbook https://www.education.gov.za/

1 | Page
 WEEK 4
ECONOMIC GROWTH

CALCULATION OF ECONOMIC GROWTH

DEFINITION OF ECONOMIC GROWTH
● Economic growth is an increase in the production of goods and services in a country over a The formula for calculating economic growth rate is:
year. (real GDP in year 2 - real GDP in year 1) x 100
● Economic growth is measured and expressed in terms of real GDP. real GDP in year 2
● Real GDP is GDP after taking into account the increase in the general price level (inflation).

IMPORTANCE OF ECONOMIC GROWTH

● Achieving a high economic growth rate is one of the five most important objectives of South Africa's macroeconomic policy.
● Economic growth contributes to the general welfare of the community.

METHODS OF ACHIEVING ECONOMIC GROWTH

1. Increase in productivity ● Productivity is the efficiency of one unit of factor input.

2. Availability and utilization of
production factors
3. Technological change
4. Effective Government and
Administration policies
● Increases in productivity mean that more production is produced with the same amount or less input than before.
● It also increases if the output remains constant while the input decreases.
● Also, if the output drops lower than the input.
● Economic growth can occur when the working population increases faster than the total population increases.
● Soil can be used for new purposes that produce better yields, for example for cultivating canola rather than wheat.
● When it comes to capital, capital must be broadened and deepened.
● As new production methods are developed or more efficient ways exist to run a business so that more goods and services are produced with the
same input, technology has improved.
● E.g. cell phones, internet, computers, etc.
● The government must have policies that will achieve more exports, growth in tourism and the expansion of the manufacturing industry.
● Effective administration means that policies are implemented in a way that minimizes time wastage, inconvenience and costs.

5. Investment ● An increase in capital per worker will generally increase production.

● In other words, the more suitable equipment workers use, the greater their production will be.
● Increase in capital requires investment and investment requires savings (S = I).
● The production of a country depends on the available capital stock (C).

2 | Page
 LIMITATIONS TO ACHIEVE ECONOMIC GROWTH
1. Low savings and Savings are needed to finance investments.
investment levels A. Savings
● Household savings are too low to achieve an annual growth rate.
● Household savings are low because those with a low income make up the bulk of the population and do not have enough income to save.
B. Investment
● South Africa's fixed investment rate is too low to create economic growth, mostly due to our low savings rate.
2. Insufficiently Highly skilled workers are in demand in SA, but are not available. This is because of the following:
qualified labor A. School education
● The number of candidates who qualify for university admission is too low.
● School literacy and numeracy rates are low.
B. Apprenticeships
● Too few candidates pass the apprenticeship test.
● The number that qualifies is too low to meet the needs of the economy.
3. HIV / AIDS South Africa is one of the highest HIV-infected populations in the world.
A. Working-age population
● The economically active population has a high infection rate.
● Once people become infected, they become less productive and when they die, their knowledge and experience are lost.
B. Medical expenses
● The government must spend money on health care to treat infected people, so there is less money available for economic growth policies.
● This has a negative impact on savings, taxes and profits.
SOUTH AFRICA'S recent economic growth experience
● South Africa's economic growth rate was 0.8% in 2018 and -2.1% in 2019. It is too low to reach a better standard of living of people.
● A sustained economic growth rate of 6% has been identified, as a minimum, to significantly reduce unemployment

STANDARD OF LIVING
● Economic growth is desirable because it enables society to consume more goods and services, which means that people's quality of life is higher.

FACTORS DETERMINING THE STANDARD OF LIFE OF PEOPLE

Size of population
● When the population grows at a higher rate than GDP, people are worse off because there is less goods and services available per person.
● Per capita economic growth rate, also known as per capita real GDP = (Real GDP ÷ total population) is used to determine the standard of living.
● Per capita GDP is used to compare year-on-year living standards in a country and between countries and changes in welfare and the level of economic development
Per capita income
Real income per capita = [(Real GNI ÷ total population) x 100] is used to determine the standard of living.

3 | Page
 ACTIVITY 3

SA's economic growth figures

CONSOLIDATION

ACTIVITY 1

1. Give ONE concept for the following descriptions.

1.1 A measure of standard of living. (1)
1.2 The proportion of the population that has a high HIV infection rate. (1)
1.3 The statistics used to measure economic growth. (1)

2. Discuss the importance of economic growth. (2x2) (4)

3. Discuss FOUR methods of achieving economic growth. (4x2) (8)

4. Discuss three limitations to achieving economic growth. (3x2) (6)

5. Describe South Africa's recent economic growth experience. (2x2) (4)

6. Discuss the factors that determine the standard of living of people. (2x2) (4)
3.1 What is represented by the graph above? (1)

3.2 What was South Africa's GDP growth rate in Quarter 2 of 2019? (1)
ACTIVITY 2
3.3 Give ONE possible reason why the South African growth rate was 0.8% in Quarter 3
ESSAY QUESTION of 2019. (2)

Discuss fully the constraints on economic growth. (26) 3.4 Briefly describe the concept 'Gross Domestic Product'. (2)
In your opinion, how can economic growth be promoted? (10)
3.5 Distinguish between monetary and fiscal policy. (2x2) (4)

4 | Page