Grade 7 EMS Term 1 Notes

THE ECONOMY - THE HISTORY OF MONEY
Traditional societies
All long time ago people were self-sufficient and lived on whatever was provided by nature. There
was no trade or money eg. Hunter-gatherers.
They lived on meat from the wild animals and the food from plants. People had to produce all the
goods and services they needed but the range was limited. As the community used basic methods to
hunt and harvest foods. They lacked technology, so most of their activities revolved around people
producing all the things that they needed, to survive. This is called a SUBSISTENCE ECONOMY
Modern Societies
Modern societies use coins, notes and debit or credit cards to pay for goods or services. Modern
method of payment used today is electronic banking, such as Internet banking rather than walking
into a bank. People have specialized skills and have to rely on other people to produce goods and
provide services that they cannot make or provide.
Bartering
Over time Hunter-gatherers were gradually able to tame and keep their animals. This led to herding.
Herders moved from place to place to find food and water and animals. They kept cattle and goats
and would rather live off the goats’ milk than kill them. Animals were only killed when there was not
enough wild meat to eat. Herders moved in larger groups from place to place and when they met
they exchanged goods.
As societies developed and started to travel, people started to specialise in the production of specific
goods and foods. They realised that people in other areas had items they needed or wanted. A
system of trade developed, whereby personal possessions of value could be exchanged for other
goods. This kind of exchange dates back to 9000-6000 BC and is called bartering, and is still in use
today.
Disadvantages of bartering
1. It was not always practical.
2. It was difficult to find what you wanted or needed.
3. Goods were difficult to carry or to transport.
4. There is no common measure of value.
5. Certain goods cannot be divided into smaller units.
6. No late payments can be allowed.
7. Storing goods is difficult.
8. It was difficult to work out the real value of the items because people attached different values to
different items.
Early forms of money

The first evidence of a type of money was cowry shells. They were used in 1200 BC in China . In
about 500 BC, pieces of silver were the earliest coins. These coins were first used in Lydia (Turkey). In
118 BC, leather banknotes were used in China. In 1950, credit cards were used in the USA and today
people all over the world use Internet banking.
Promissory notes
This means a written and signed promise to pay a sum of money.
Payer: Somebody who pays somebody.
Payee: Somebody to whom money is paid or owed to.
A promissory note must include:

  The term “Promissory Note”.
  The amount that the note is worth.
  Interest that will be added.
  When the payment has to be made.
  The place where payment is to be made.
  Name of the Payee.
  Payer’s signature.
  Terms of repayment.
  Date until when the promissory note is valid.
Advantages and disadvantages of using the Internet for banking and buying
Advantages Disadvantages
Available 24 hours a day. More choice in products and services.
More information needed by online store Cannot check the quality before you buy.
before purchasing a product. Saves on travelling and time.
Consumers and producers need not No personalised customer service.
be in the same place.
Personal information not always safe. Faster communication and access to
information.
Credit card fraud Difficult to return faulty goods.
Security features on a South African Banknote

  Watermark within the paper
  Security thread running through the paper.
  High quality paper
  Print quality
When people started trading goods for money, they gathered in certain areas to make it easier for
buyers and sellers to meet. This is called Urbanization.
The role of money

 It is a medium of exchange – use it to buy goods and services.
 Unit of account – standard measure of how much goods and services are worth.
 Store of value – it holds its value over time.
Consumer Economy
 An economy where businesses encourage consumers to spend as much money as
possible on their goods or services is called a Consumer Economy.
 Consumer spending puts a lot of pressure on the environment.
 Businesses use raw materials to produce goods.
 Sometimes these raw materials run out.
 We need to concentrate on sustainable resources that can be “re-generated” again.
.
Money is used as a medium of exchange. (Anything that is used to enable trade to take place) Money
has four important characteristics that make it a sustainable medium of exchange:
  It is scarce
  It is durable
  It is portable
  It can be divided into smaller units
NEEDS AND WANTS

An individual’s basic needs
1. Air to breathe
2. Water to drink and wash with
3. Food to eat
4. Shelter to live and be protected
5. Fuel for warmth and cooking
6. Clothes
Basic needs of communities and countries
1. Health services – clinics, hospitals

2. Transport services – roads, buses, trains
3. Communication services – postal services, telephones, internet
4. Education services – schools, universities
5. Waste disposal services – sewage systems, garbage removal,
6. Safety and security – police, army, fire-fighters
Different types of needs

SECURITY NEEDS
People also need to feel safe and secure.
The need to feel that others will not hurt us.
The need to feel that our belongings will not be taken or broken.
The need for structure, rules, law and order.
The need to know that we live and work in a safe environment.
SOCIAL NEEDS
People like to have friends and be a part of a group.
The need to have friends.
The need to be a part of a team or group.
The need to feel that we belong somewhere.
The need to give and receive love.
SELF-ESTEEM NEEDS
Our self-esteem is the way we feel about ourselves.
The need to achieve success.
The need to be good at something.
The need to feel that what we do is important and valuable.
The need to be recognized and feel that others respect us.
Needs and wants affect communities in the following ways:

They determine what kind of products and services are sold in the community.
Can affect how communities work – use of illegal drugs will lead to gang activity, crime and violence.
Poor communities will not be able to spend money at their local shops and businesses.
Wealthy communities will spend money at local shops, so their communities will become
prosperous.
The needs of a country are met by the National government
Limited resources to satisfy needs and wants

Resources:
Are things we use to help us do something. They satisfy our needs and wants.
Resources are things we use to produce goods and services.
They can be any one of the following::
Natural resources – gold and diamonds satisfy our need/wants for beautiful jewellery.
Human resources - we need a builder to build our house, a farmer to grow our food, a plumber to fix
our taps.
Human-made resources - clothes, tools machines, motor vehicles and money
Limited resources:
Our wants are unlimited, but we have limited resources to satisfy our wants.
Resources such as water, people, land, crops, metals, buildings, machines, electricity, transport,
animals and tools are often limited because there is not a lot of, such as oil or coal and it will not last
forever. We need to use these resources carefully and it should be re-used in different ways,
e.g. recycling.
The most common limited resource is MONEY.
Non-renewable resources:
  They can run out, and can’t be replaced.
Renewable resources:
  These will not run out and can be replaced
Free goods -These goods are not scarce because they occur in large quantities - their supply is not
limited. Eg. air
Economic goods - Goods that are not free goods are called economic goods.
Economic problem - The economic problem which we all face is that we have unlimited needs and
wants, but have limited resources to satisfy them.
GOODS AND SERVICES

There are three business sectors:
The Primary Sector - Businesses in the primary sector are mostly in the rural areas eg, farming and
fishing
The Secondary Sector - Businesses in the secondary sector are normally located just outside the
towns eg, manufacturing
The Tertiary Sector - Businesses in the tertiary sector are usually located inside the towns eg,
Schools, hospitals, banks, etc
Goods are things that we can see, feel and touch, e.g. a pen, a chair, etc.
Services are provided to fulfil a need, e.g. the supply of electricity to fulfil the need for light and
power.
Consumer goods are products that are directly involved in satisfying consumers’ needs and wants.
Capital goods are goods used to produce other goods and services such as machinery and vehicles
Semi-finished goods are those goods that are used to manufacture other goods, eg steel.
Personal Services aimed at the final consumer and are often carried out by professionals eg, Doctors
Commercial services are activities involved in getting goods and services to the consumer, eg Banks
The role of households as producers and consumers

A household is a group of people who purchase and use goods and services and who live in a house.
A household is a place where one or more people live, eat, sleep and raise children.
A household can be a flat, a farm or an informal dwelling.
One person’s spending becomes another person’s income.
Households therefore buy and consume goods and services. Households produce goods and services
by selling their labour in exchange for an income or a salary. Households provide labour, land, capital
or management skills and they pay businesses for goods and services. Businesses in turn pay salaries
or wages, rent, interest or profits and provide goods and services. Households are therefore both
producers and consumers.
Purchase recycled goods

Recycling means that we use waste (rubbish or waste materials) to make new products, instead of
throwing these materials away. There are three key factors when we think about how to recycle
– Reduce, Reuse & Recycle
Benefits of recycling
If we recycle, we use less of the resources (raw materials) from earth.
Recycling helps save energy
If we reuse metals such as iron, we do not need to use electricity to process iron ore.
Recycling reduces pollution

Waste is buried in landfill sites when it rains is contaminates underground water. Waste is also
burned which causes air pollution.
Socio–economic imbalance is a term used to describe a situation where people do not have equal
access to resources.
Reasons for the difference in income:

Education and training: People with skills and education are able to earn more money than those
without an education.
Sexism: Sexism refers to a situation where someone is discriminated against because of their gender.
Nepotism: some individuals are employed by their parents or family members or friends
Racism: Racism refers to a situation where someone is discriminated against because of the colour of
their skin
The need for education and skills

There is a direct relationship between low levels of education and poverty. People with no schooling
or only a little primary schooling are more likely to live in poverty because they cannot find
employment or the jobs that are available, are poorly paid. People who have completed school and
studied further are unlikely to live in poverty because there are more well-paid employment
opportunities available to them. The quality of education that children receive has an effect on their
chances/opportunities in life.
Urban Area
An urban area is an area where many people live and is densely populated.
Socio-economic challenges in urban areas

Traffic congestion
High cost of living

Pollution
Influx of people
Rural Area
A rural area is an area where not many people live and has a low population density.
Socio-economic challenges in rural areas
Lack of infrastructure
Inadequate access to public services
Lack of employment opportunity
Strategies to create employment include:

Promoting entrepreneurship and new business
Stimulating business development
Encouraging manufacturing
Improving the infrastructures

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Grade 7 EMS Term 1 Notes

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THE ECONOMY - THE HISTORY OF MONEY

Early forms of money

A promissory note must include:

Security features on a South African Banknote

The role of money

NEEDS AND WANTS

Basic needs of communities and countries

1. Health services – clinics, hospitals

Different types of needs

Needs and wants affect communities in the following ways:

Limited resources to satisfy needs and wants

  They can run out, and can’t be replaced.

GOODS AND SERVICES

The role of households as producers and consumers

Purchase recycled goods

Recycling reduces pollution

Reasons for the difference in income:

The need for education and skills

Socio-economic challenges in urban areas

High cost of living

Strategies to create employment include:

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