Exchange Hundreds of years ago, most people were self sufficient Now we rely on markets Money is exchanged for goods and services Before the existence of money, bartering was used for exchange It is still used in some forms today eg Oil for arms

Money as a means of exchange It facilitates exchange easier than barter Money has the following functions: places a value on goods It is a store of value It is a recognised medium of exchange

Money and banking The first banks were merely a place of safekeeping while merchants travelled Today electronic banking makes exchange easier Banks provide services such as savings, loans, transfers, settling of payments etc

Foreign trade Countries produce different goods Some produce many goods but not all equally well This is when they specialise and import the goods they have given up producing Foreign trade is essential for economic welfare It leads to wide variety of goods, higher standard of living, generates income

Importing and exporting is the way that international exchange takes place Importing Nike from USA means we have to pay in $ The price of $ is quite high as the $ is stronger than the R The price of foreign currency is called the exchange rate We buy $ on FOREX markets

Discussing Foreign trade Who do you think are the worlds richest countries? Why are they rich? Do they trade a lot and with whom? How can poorer countries become richer through trade? Why are some poor countries “excluded” from trade?

Economics & the Environment The population of the world is 6.7 billion Our increased consumption requires environmentally harmful production Governments have a responsibilty to weigh up costs & benefits of production While the private cost of a new factory may be R500 million, the pollution caused may cost R1 billion to clean up - the disease and death associated is incalculable – ie the social cost