economics circular flow essay grade 10

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Economics Gr. 10 T1 W5: Macroeconomics - Circular Flow

Economics Grade 10 Term 1 Wk. 5: Macroeconomics - Circular Flow

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Home — Essay Samples — Economics — Economy — Circular Flow Model

The Usefulness of The Circular Flow of Income Model

• Categories: Economy Taxation

About this sample

Words: 964 |

Published: Jan 15, 2019

Words: 964 | Page: 1 | 5 min read

Works Cited

• Stafford, A. (2022). Resource Sharing between Business and Household Structures during Economic Crises. Journal of Economic Dynamics and Control, 129, 104411. doi:10.1016/j.jedc.2022.104411
• American Rescue Plan Act of 2021, Pub. L. No. 117-2, 135 Stat. 4. (2021).
• Investopedia. (n.d.). Fiscal Policy. Retrieved from https://www.investopedia.com/terms/f/fiscalpolicy.asp
• Mankiw, N. G. (2001). Principles of Economics. Cengage Learning.
• Noor, A. A. (2012). The Circular Flow of Income and Expenditure: A Textbook Example. International Journal of Economics and Financial Issues, 2(1), 34-41.
• Acemoglu, D., Laibson, D., List, J. A., & Mankiw, N. G. (2014). Principles of Economics (6th ed.). Cengage Learning.
• Blinder, A. S., & Solow, R. M. (1973). Does Fiscal Policy Matter? Journal of Public Economics, 2(4), 319-337. doi:10.1016/0047-2727(73)90026-5
• Congressional Budget Office. (2021). The Budget and Economic Outlook: 2021 to 2031. Retrieved from https://www.cbo.gov/publication/56973
• Taylor, J. B. (2020). Monetary Policy Rules Work and Discretion Doesn't: A Tale of Two Eras. Journal of Money, Credit and Banking, 52(S1), 183-197. doi:10.1111/jmcb.12675
• World Bank. (2022). World Development Indicators 2022. Washington, DC: World Bank. doi:10.1596/978-1-4648-1909-1

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Preview text, circular flow, • discuss the role of the markets in the circular flow without the use of a diagram.(, introduction, • a market is a mechanism that brings a buyer and sellers together to exchange goods and, services between a willing buyer and willing seller., • markets coordinate economic activities and determine prices for goods and services., main part:body, goods/products/output markets:,  goods and services are traded on the product market,  also known as the goods and services market.,  goods are tangible items and include:, - capital goods market for trading of buildings and machinery, - consumer goods for trading of durable consumer goods, semi-durable consumer, goods and non-durable goods.,  services are defined as non-tangible actions that satisfy people`s needs and wants.,  e services offered by teacher and doctors., factors/resources/input market:,  also known as the resource or the input market.,  households are the owners of the fop.,  they sells their factors of production on the markets and are paid rent for natural, resources, wages for labour, interest for capital and profit for entrepreneurship.,  the factor market includes the labour, property and financial markets., financial markets:,  they are not directly involved in the production of goods and services, they are a link, between households, the business sector and other participants.,  e. banks, insurance companies and pension funds.,  the financial market serves those who wish to save and those who wish to borrow.,  treasury bills are traded., money markets:,  it is where short term loans and very term funds are saved and borrowed by, consumers and business enterprises.,  banks operate in the money market.,  banks debentures, treasury bills and government bonds are traded.,  the sarb is the key institution in the money market., capital markets:,  it`s is long term deposits and borrowings.,  the johannesburg stock/security exchange (jse) is the key institution of the capital,  mortgage bonds and shares are traded., foreign exchange markets:,  also known as the forex market.,  it is the market where one currency can be exchanged into another(e rand for,  in rsa these transactions take place in our banks.,  south africa uses a free-floating exchange rate.,  the exchange rate is usually determined by the interaction of demand and supply.,  markets are critically important institutions in our economic system, because they, regulate supply and demand and safeguard price stability and general business, confidence., business cycle, • discuss all the features underpinning forecasting of business cycles, excluding the, economic indicators.(26 marks), • there are a number of techniques available to help economists to forecast business cycles like, economic indicators., • a business cycle can be described as successive periods of contraction and expansion of economic, activities., • the pattern of expansion and contraction of aggregate economic activity, measured as real gross, domestic product, displays around its overall trend., • resistance points indicates forces in the economy preventing it from repeating the performance –, unfavourable forces need to change or be removed for growth to exceed previous tendencies., • it normally has a positive slope because the production capacity of the economy increases over, • channels are formed when output growth reaches successive higher turning points (upward, • length is measured from peak to peak or from trough to trough., • longer cycles show strength and shorter cycles show weakness with regard to economic activities., • cycles may overshoot with the effect that some composite indicators increase to beyond its, normal level, moving averages, • this method is repeatedly calculating a series of different average values along a time series to, produce a smooth curve., • it is used to analyse the changes in a series of data over a certain period of time., • to eliminate the effect of sharp fluctuations in the business cycle, economists use moving averages, to smooth out the business cycle so that it looks more like a straight of slightly curved line.(max 26), different methods can be used in forecasting like the quantitative method that is based on, mathematical models or qualitative methods being used in long term forecasting., • discuss the demand-and-supply-side policies used by the government to smooth out, business cycles.[26], the new economic paradigm in terms of the smoothing of business cycles discourages monetary, policy makers from using monetary and fiscal policies to fine-tune the economy., body: main part, the new economic paradigm is embedded in the demand and supply side policies., demand-side policies, • it focuses on aggregate demand in the economy., • when households, firms and the government spend more, demand in the economy increases..

• This makes the economy grow but can lead to inflation.

−significant but steady increase in price levels overtime.

• Aggregate demand increases more quickly than aggregate supply and this causes price increases.

− If the supply does not react to the increase in demand, prices will increase.

− this will lead to inflation (a sustained and considerable increase in the general price level), unemployment:, − demand-side policies are effective in stimulating economic growth., − economic growth can lead to an increase in the demand for labour., − as a result more people will be employed and unemployment will increase., − as unemployment decreases inflation is likely to increase., − this relationship between unemployment and inflation is illustrated in the phillips curve., supply-side policies, reduction of cost, − infrastructural services,  reasonable charge and efficient of transport, communication, water services and energy, − administration costs,  these costs include inspection, reports on applications of various laws, regulations and, by-laws, tax returns and returns providing statistical information. it adds to costs. in sa, businesses carry a heavy burden., − cash incentives,  it includes subsidies for businesses to locate in neglected areas where unemployment is, high and compensation to exporters for certain costs they incur in development of export, improving the efficiency of inputs, − tax rates,  low tax rates can serve as an incentive to workers. it will improve the productivity and, − capital consumption, • when prices are relatively stable and inflation is low, markets can function optimally and, the government can promote economic growth and development more effectively., • the sarb strives to keep the inflation rate within the target range of 3 to 6%, • interest rates, based on the repo rate are the main instruments used in the stabilisation, • the stable budget deficit also has a stabilizing effect on the inflation rate., • stable prices causes better results in terms of job creation and economic growth.(max 6), exchange rate stability, • if more money flows into the country than going out, we could have a surplus on the bop, • the state promotes domestic production of surpluses to increase exports and by, monitoring changes in exchange rates, • fluctuations, such as the depreciation and appreciation of a currency, can create, uncertainties for investors, producers and retailers, • south africa uses a floating exchange rate system, which allows its exchange rate to, determine its own value, based on demand and supply, • the south african currency has fluctuated considerably over the last two, • over the last decade it appreciated to reach a peak of r6,36 to the us dollar by the end of, • thereafter it depreciated sharply by 33% to r8,44 to the us dollar in 2010 and, • depreciation and appreciation, • the sarb uses a free-floating exchange rate system, • instability of exchange rates such as during the latter part of the 2000s is a great problem, for businesses, • however, the international benchmark is whether market forces determine rates (max, full employment, • full employment means that all persons who would like to work and who are looking for, work should be able to find work, or create work for themselves / where all resources are, utilised efficiently, • employment in the formal non-agricultural sectors of the economy increased at a low rate, • however, in 2009 and 2010 it turned negative because of the effect of global recession, • the average growth of less than one per cent over the ten years is disappointingly low, • the result is that the unemployment rate is increased from 15% in 1994 to 25,2% in 2012, • public sector employment increased during and after the global recession, reducing the, total effect on employment, • the government supports education, labour-intensive businesses and the informal sector, • low rates of unemployment also correlates with other socio-indicators, such as a lower, crime rate and higher standard of health (max 6), economic equity, • this is the reasonable division of income among the population, • redistribution of income and wealth achieves the reasonable division of income, • measures that the government uses to achieve that are: - using the progressive income, tax system, higher income groups pay higher tax rates, - government uses taxes to finance social goods and services such as housing, education, and primary health care, - government pays cash grants such as old-age grants, disability grants, child support, grants, etc., - government implements policies such as bbbee to achieve that (max 6), economic growth, • this refers to an increase in the productive capacity of the economy of the country for a, specific period of time e. a year / an increase in the production of goods and services in, the economy, • it is usually measured in terms of growth in the national output valued at market prices, referred to a the gross domestic product (gdp),  accountability means to give an explanation for one`s decisions, actions and expenditures.,  the people require the state to use the taxes for the purpose for which they are raised and, not to abuse the powers it was granted.,  people employed by the state do not always serve the interests of the public.,  they seek to maximise their salaries, status and power and are not required to produce a, profit and loss statement.,  they are budget driven.,  the state tries to overcome this problem by making civil servants accountable to the public., in south africa, accountability is underpinned by:,  ministerial responsibilities: ministers are spokespersons for their departments.,  the director general of each department is accountable for the activities of the department.,  portfolio committees: monitor individual departments and make recommendations to, parliament.,  treasury control: the national treasury is responsible for expenditure control.,  the treasury committee, chaired by the minister of finance, evaluates all requests for, additional funding throughout the year.,  the auditor-general reports on each government department.,  the ag reports on the standard of financial management and points out fraudulent and, unauthorised spending., inefficiency,  accountability does not guarantee efficiency.,  public goods must be efficiency provided (pareto efficiency where the welfare of the, community is at its maximum and it is therefore impossible to increase the welfare of one, individual without making another worse off), three major reasons for inefficiency:,  bureacracy: (official rules and procedures),  officials may focus on correct procedures and rules and are indifferent to the quantity (e., the number of patients attended to) and quality of service (e. explaining the use of the,  some may be insensitive to the needs of their clients,  incompetence: i. lack of skill or ability to do a task properly,  this may be due to improper qualifications, lack of training, experience and an attitude of,  corruption: i. exploiting of a person`s positon for personal gain,  taking bribes, committing fraud, nepotism, behaving dishonesty and committing, discrimination., difficulty in assessing needs,  in the private sector, the forces of demand and supply dictate prices,  the market prices act as signals to the producers, communicating the needs of consumers, and the quantity demanded,  state-owned enterprises do not operate according to the forces of demand and supply,  it therefore becomes difficult for state-owned enterprises to assess the needs of consumers, and they are prone to under-or over-supplying public goods,  people`s needs are endless, so the government is unable to provide for everyone,  serious structural weaknesses in the economy also cause the government to undersupply in, response to the needs that it identifies,  political agendas are more important than the needs that the government identifies.,  efficient public sector provisioning in south africa is key for a higher economic growth rate,, higher employment rate and better standard of living of all., foreign exchange market(globalisation), demand reasons for international trade, introduction,  international trade is the exchange of goods and services across international, boundaries., size of the population.,  if there is an increase in population growth, it causes an increase in, demand, more needs must be satisfied.,  if the country does not have enough goods and services, then goods, must be imported from other countries., income levels.,  changes in income cause a change in the demand for goods and,  an increase in the per capita income of people/more disposable income, that can be spend on goods and services.,  this greater demand must be satisfied – if there is not enough goods, and services in the country – then it must be imported from other, change in the wealth of the population:,  an increase in wealth result in an increase in demand for goods.,  when people have excess to loans – they can purchase bigger and, more luxurious goods..

• Multiple Choice

Subject : Economics

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ECONOMICS GRADE 10 : CIRCULAR FLOW 220020361

Dear learners here is introduction lesson video

https://youtu.be/PXNlzi7_nTQ

In today’s lesson you are required to write an essay based on circular flow

 40 marks

·          Discuss in detail the role of the participants in the closed economy.

·          Analyse the importance of markets in the circular flow.

Introduction

  Write relevant background information that the reader needs to know. a thesis statement that presents your main point

Main part: Discuss in detail / In –depth discussion /Examine /Critically discuss/Analyse/Compare/Evaluate /Distinguish/Explain/Assess/Debate

Additional part

Give own opinion/Critically discuss/Evaluate/ Critically evaluate/Draw a graph and explain/Use the graph given and explain/Complete the given graph/Calculate/Deduce/ Compare/Explain/Distinguish/Interpret/Briefly.

 Conclusion

Write a brief review of the key points you made in the main body. 

In this lesson I hope learners have fully understand of how important the factor of production (land, labour, capital and entrepreneurship) to the firms and how crucial the factor of income (rent, wages, interest and profit) to the household. And it is very helpful for us to know how the money flow in our economy

please don't forget to do the task!!!!!

The Circular Flow of Economics: Guide Notes

The Circular Flow of Economics: Personal Example Project Day 1

you can ask any question here or comments