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SAVINGS AND INVESTMENT
When you have completed this section, you will be able to discuss the importance of savings and investment opportunities.
What is the meaning of SAVINGS in regard to economics?
SAVINGS can be regarded as that portion of your income that is not used to satisfy your needs . This means that it is the portion of your income (or pocket money) that you “put away”. The “surplus” might be kept in a piggy bank (where it earns no interest) or it can be deposited in a savings account with in a financial institution (where it will earn interest) as an investment.
Activity1:
SELF:
Provide reasons for why you might decide to put away pocket money rather than use it immediately.
Note : You may decide for yourself where you are going to “put it away”.
Submit a written account of your decisions (one page).
The implication for the PRIVATE INDIVIDUAL is that he or she, by saving, refrains from spending the money on consumer goods and services, or the postponement of satisfying needs to a later occasion. As explained above, such a surplus may be “hoarded” or deposited with a financial institution.
Activity 2:
SELF:
Provide possible reasons why private individuals may decide to postpone satisfying of needs to a later date:
for the PRODUCER, saving implies the portion of his production that is not made available for consumption, or the production surplus that is not consumed.
Activity 3:
SELF:
Why would a producer decide against making all of his production available? Suggest reasons:
In the simplest form, SAVINGS can be represented as:
SAVINGS = INCOME - CONSUMPTION
The portion of income that is not spent on consumer goods (i.e. savings) and is deposited with financial institutions is made available to clients (or enterprises) who wish to utilize the funds for further production. The money is also made available to producers or industrialists who want to extend their production capacity, i.e. who want to INVEST in capital goods such as buildings, machinery, etc.
please note: Capital goods include all goods that are used to produce consumer goods, and, possibly, capital goods as well.
Activity 4:
SELF:
Explain the difference between consumer goods and capital goods. Make use of examples.
Give examples of consumer goods that are capitol goods as well.
Activity 5:
Group:
Select an enterprise or enterprises from your immediate environment and describe all the capital goods that have been acquired as an INVESTMENT to make production viable.
Provide a report for presentation to the class.
| LO 2.3 | ||||
| Learning outcomes(LOs |
| LO 2 |
| SUSTAINABLE GROWTH AND DEVELOPMENTThe learner will be able to demonstrate an understanding of sustainable growth, reconstruction and development, and to reflect critically on related processes. |
| Assessment standards(ASs) |
| We know this when the learner : |
| 2.1 investigates and describes how the national budget is used to influence growth and redress economic inequalities; |
| 2.2 investigates how the RDP could have been used to stimulate economic growth and restructuring (e.g. capacity building jobs); |
| 2.3 discusses the importance of savings for investments; |
| 2.4 investigates and reports on how technology can improve productivity, economic growth, living standards, etc. |
ACTIVITY1: PERSONAL SAVINGS
SELF:
ACTIVITY2: SAVINGS AND THE PRIVATE INDIVIDUAL
SELF:
ACTIVITY 3: SAVING AND THE PRODUCER
SELF:
ACTIVITY4: CONSUMER AND CAPITAL GOODS
SELF:
food, clothing, car, house, furniture, etc.
machinery in factories
refrigerators in butcheries
furnaces at ISCOR
trucks belonging to Pickfords
cement mixers of building contractors
company car that is used for private excursions on Sundays, but for promoting sales during the week (by a representative of the company)
cell phone that is used for private as well as for company calls.
ACTIVITY 5: CAPITAL GOODS AND INVESTMENT
GROUP:
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