GR 12 ECONOMICS U1

GRADE 12

ECONOMICS

UNIT MODULE 1

MANAGING THE ECONOMY: A Macro-Economic Focus

TOPIC 1: THE CIRCULAR FLOW OF INCOME MODEL

TOPIC 2: THE ECONOMIC GOALS OF PAPUA NEW GUINEA

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 GR 12 ECONOMICS U1 ACKNOWLEDGEMENT

ACKNOWLEDGEMENT

We acknowledge the contributions of all Secondary Teachers who in one way or another
have helped to develop this Course.

Our profound gratitude goes to the former Principal of FODE, Mr. Demas Tongogo for
leading FODE team towards this great achievement. Special thanks to the Staff of the
English Department of FODE who played an active role in coordinating writing workshops,
outsourcing lesson writing and editing processes, involving selected teachers of Central
Province and NCD.

We also acknowledge the professional guidance provided by Curriculum and Development

Assessment Division throughout the processes of writing, and the services given by
member of the English Review and Academic Committees.

The development of this book was Co-funded by GoPNG and World Bank.

DIANA TEIT AKIS

PRINCIPAL

Flexible Open and Distance Education

Papua New Guinea

Published in 2017

@ Copyright 2017, Department of Education

Papua New Guinea

All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means electronic, mechanical, photocopying,
recording or any other form of reproduction by any process is allowed without the prior
permission of the publisher.

ISBN: 978 9980 89 724 4

National Library Services of Papua New Guinea

Compiled and finalised by: Social Science Department-FODE

Printed by the Flexible, Open and Distance Education

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 GR 12 ECONOMICS U1 CONTENTS

TABLE OF CONTENTS

Contents………………………………………………………………………………………………………………….….3
Secretary’s Message…………………………………………………………………………………………………….4
Course Introduction…………………………………………………………………………………....................5

Unit Introduction …………………………………………………………………………………………………………6

Learning Outcomes ……………………………………………………………………………………………………..6

TOPIC 1 THE CIRCULAR FLOW OF INCOME MODEL........................................7

12.1.1.1: The Two Sector Model……………………………………………………………….…….8-9
12.1.1.2: The Three Sector Model ………………………………………………………….........10-11
12.1.1.3: The Four Sector Model ……………………………………………………………………12
12.1.1.4: The Five Sector Model …………………………………………………………………….13
12.1.1.5: National Income Analysis…………………………………………………………………14-15
Summary 12.1.1 …………………………………………………………………………………………………………16
Student Learning Activity 12.1.1 …………………………………………………………………………………17-19

TOPIC 2 THE ECONOMIC GOALS OF PAPUA NEW GUINEA……………………………20-21

12.1.2.1: Economic Growth and Fair Distribution of the Benefits …………………..22
12.1.2.2: Economic Independence and Self-Reliance ……………………………………..23
12.1.2.3: Income Earning Opportunities and Growth in Employment……………..24
12.1.2.4: External Balance and Price Stability……………………………………………….…25-27
Summary 12.1.2 …………………………………………………………………………………………………….……28
Student Learning Activity: 12.1.2……………………………………………………………………….….…….29-31

ANSWERS TO LEARNING ACTIVITIES 12.1.1 to 12.1.2 ….................................................32-36

GLOSSARY:…………………………………………………………………………………………………………………..37

BIBLIOGRAPHY/REFERENCE……………………………………………………………………………………….…38

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 GR 12 ECONOMICS U1 SECRETARY’S MESSSAGE

SECRETARY’S MESSAGE

Achieving a better future by individual students and their families, communities or the nation as a
whole, depends on the kind of curriculum and the way it is delivered.

This course is a part of the new Flexible, Open and Distance Education curriculum. The learning
outcomes are student-centred and allows for them to be demonstrated and assessed.

It maintains the rationale, goals, aims and principles of the national curriculum and identifies the
knowledge, skills, attitudes and values that students should achieve.

This is a provision by Flexible, Open and Distance Education as an alternative pathway of formal
education.

The course promotes Papua New Guinea values and beliefs which are found in our Constitution,
Government Policies and Reports. It is developed in line with the National Education Plan (2005 -
2014) and addresses an increase in the number of school leavers affected by the lack of access into
secondary and higher educational institutions.

Flexible, Open and Distance Education curriculum is guided by the Department of Education’s Mission
which is fivefold:
To facilitate and promote the integral development of every individual
To develop and encourage an education system satisfies the requirements of Papua New
Guinea and its people
 To establish, preserve and improve standards of education throughout Papua
New Guinea
 To make the benefits of such education available as widely as possible to all
of the people
 To make the education accessible to the poor and physically, mentally and
socially handicapped as well as to those who are educationally disadvantaged.

The college is enhanced to provide alternative and comparable pathways for students and adults to
complete their education through a one system, many pathways and same outcomes.

It is our vision that Papua New Guineans’ harness all appropriate and affordable technologies to
pursue this program.

I commend all those teachers, curriculum writers, university lecturers and many others who have
contributed in developing this course.

UKE KOMBRA, PhD

Secretary for Education

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 GR 11 ECONOMICS U1 SECRETERY’S MESSAGE

COURSE INTRODUCTION

Economics is a specialised subject that requires a high level of English competency. Students
need to be fluent in reading, writing and speaking English for research, report writing and
oral and written presentations.
Economics is the study of the way we try to satisfy our material wants with the limited
resources available to us. The subject covers earning and spending of income, and the
production of goods and services. From these areas of study emerge topics such as savings
and investment, inflation, unemployment, trading with other people and other nations,
paying taxes and being governed.
People in all societies have recognised the need to obtain goods and services to satisfy their
wants. They must choose which wants to satisfy, how to produce the goods and services to
satisfy these wants and how to share (distribute) them among the members of the
community. Students will study these Economic problems, and develop the knowledge and
skills about various systems that can enable them to solve or overcome them.
Grade 12 Economics course comprises of three unit modules. They include:
Module 12.1: MANAGING THE ECONOMY: A MACRO – ECONOMIC FOCUS.
Module 12.2: GOVERNMENT ECONOMIC POLICY STRATEGIES.
Module 12.3: THE GLOBAL ECONOMY.
Module 1: Managing the Economy: A Macro – Economic Focus. This unit is primarily
concerned with the explanation of the simple circular flow of income model and its
development to the extended model. The model of the simple circular flow of income is ideal
for demonstrating the equality of total spending, output and income. This model is
adaptable and students can learn a good deal about the economy by considering leakages
and injections of money flows.
Module 2: Government Economic Policy Strategies: This unit highlights the broader
economic issues surrounding the concepts of economic growth and key economic policies,
such as budgetary/fiscal and monetary policy which the government uses to regulate the
economy. Students focus on analysing the effects of government policies on the economy
and identify possible solutions to tackle problems such as inflation, unemployment and
unequal distribution of income associated with economic growth.
Module 3: The Global Economy: This unit talks about the importance of Papua New
Guinea’s trade relations with other countries. The basis for, and the costs and benefits of
international trade and the issues surrounding globalisation are the main focus in this unit.
Students develop an understanding of foreign relationships by identifying trade motives
behind trade and defining and analysing the key economic concepts, principles and
economic theories that apply to Papua New Guinea’s international relations with the rest of
the world.

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 GR 12 ECONOMICS U1 SECRETARY’S MESSSAGE

12.1: MANAGING THE ECONOMY: A Macro – Economic Focus

UNIT INTRODUCTION

This unit is primarily concerned with the explanation of the simple circular flow of income
model and its development to the extended model. The model of the simple circular flow of
income is ideal for demonstrating the equality of total spending, output and income. This
model is adaptable and students can learn a good deal about the economy by considering
leakages and injections of money flows.

Broad Learning Outcomes

On successful completion of this module, students will be able to:

 explain the nature and operation of government macro-economic policy and evaluate its
effectiveness in achieving the macro-economic objectives of Papua New Guinean
Government.
 describe the weaknesses in the market economy and illustrate the reasons for
government intervention and regulation in the market.
 identify the range of macro-economic issues currently impacting on the economy of
Papua New Guinea and link appropriate macro-economic management strategies to
those issues.

Time Frame

This unit should be completed within 10 weeks.

If you set an average of 3 hours per day, you should be able to complete the unit
comfortably by the end of the assigned week.

Try to do all the learning activities and compare your answers with the ones provided at the
end of the unit. If you do not get a particular exercise right in the first attempt, you should
not get discouraged but instead, go back and attempt it again. If you still do not get it right
after several attempts then you should seek help from your friend or even your tutor. Do not
pass any question without solving it first.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

TOPIC: 1: THE CIRCULAR FLOW OF INCOME MODEL

The circular flow of income shows how money income circulates in the economy. It is a
simple model of the real economic activities.

A modern economy is a very complex organisation consisting of many different parts

reacting with each other. To understand this very clearly it has been divided into five (5)
broad sectors as:
1. Household
2. Firm
3. Capital
4. Government
5. Overseas

Specific Learning Outcomes

On successful completion of this topic, students will be able to:

 identify the different sectors and income flows in the economy
 correctly draw and explain the circular flow of income model
 explain the income flows in the economy
 identify and explain the three ways of measuring national income including the risk
involved

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

12.1.1.1: The Two Sector Circular Flow of Income Model

The two sector circular flow of income model consists of two sectors namely; household and
firm. The household sector represents consumers and the owners of productive resources
(factors of production). Firm sector represents the business firms or producing firms.

The two sector model is drawn on the following assumptions or views:

1. The economy consists of only two groups, owners of productive resources (i.e.
Households) and the firms.
2. All production in the economy are done by firms.
3. There is no savings in the financial market by either households or firms.
4. There is no taxation by the government or spending by the government.
5. There is no overseas trade.
6. There are no intermediate (capital) goods, only consumer (final) goods and services are
produced.

Let us look at the two sector model illustration and the explanation below.

TWO SECTOR CIRCULAR FLOW OF INCOME MODEL

Household income(Y)

Factors of Production

Household Firm

Goods/Services (O)

Consumption spending (C)

The household sector owns the factors of production. It supplies the resources to firm sector
and in return receives income (factor income) from the firm sector. The producing firms
purchase productive resources from the household sector and use it to produce goods and
services.
These goods and services are then supplied to the household sector. The household sector
uses the factor income to pay for the goods and services. The consumption spending that
flows to the firm is used to pay for more productive resources from the household.
Hence, the income flows in a cyclical manner between the two sectors and there is no
leakage or injection in the two sector circular flow of income model.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

Therefore, the conclusions that can be drawn from the simple circular flow of income model
drawn above are:
1. Household income equals the value of the productive resources used by the business
firms, since money was paid directly in exchange for productive resources.
2. The goods and services produced have the same value as the total amount of resources
used to make them.
3. The expenditure flow of the households which is also the sale value (receipts) of the
business firms is equal to the value of goods and services produced and sold to
consumers.
4. The sales receipts of the firms are available to pay out for more resources in the next
time period.
5. Since, there are no leakages (money going out) or injections (money coming in), the
economy is said to be in equilibrium, total Income= total Expenditure=total output
(Y=O=E)
The economy is said to be in equilibrium and there will be no pressure to change

There are two flows in the basic circular flow of income model and they are:
i. Commodity flows - resources and finished goods, and
ii. Money income flows - household income (Y) and consumption spending (C).

Factor Income: refers to income received from applying factors of production;

LAND rent
LABOUR wages
CAPITAL interest
ENTERPRISE profit

L
Household income
(rent, wages, interest, profit)
Factors of Production
(land, labour, capital, enterprise)

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

12.1.1.2: The Three Sector Circular Flow of Income Model

Capital sector is added to the two sector model which results in three sector circular flow of
income model. Capital sector refers to financial institutions such as banks, savings and loans
societies and micro-finance companies. Capital sector is also known as Financial sector.

Let us look at the three sector model illustration and the explanation below.

THE THREE SECTOR CIRCULAR FLOW OF INCOME MODEL

Household Income (Y)

Household Firm

Consumption spending (C)

Savings (S) Investment (I)

Capital
Market

People and firms which have surplus money save their money in the capital market such as
commercial banks, savings and loans societies or invest in other financial institutions. They
deposit their money as Savings and in return receive interest payments. Those people and
firms who need additional finance for business expansion purposes also borrow from the
capital market as loans for investments.

Injection refers to money added to the circular flow of income. Leakage refers to withdrawal
of money from the circular flow of income. Therefore, Savings is a leakage as money being
taken out from the circular flow of income. Whereas, Investment is an injection as it adds
money onto the circular flow of income.

The household sector earns income from supplying factor inputs. Some people may prefer to
use their income partly for consumption and partly for savings. This is represented by an
equation Y = C + S. Others may prefer to use their income earned partly for consumption and
partly for investment. This is represented by an equation E = C + I.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

Assuming that income earned is all spent and the value of savings is equal to investment,
then, the three model economy will be in equilibrium, and it is represented by:

Y=E Given: Y = Income

C+S=C+I E = Expenditure
C-C +S = I C = Consumption spending
S=I I = Investment
S = Savings
If S = I, the economy is in equilibrium. If S > I, the economy will contract or economic
activities will decrease, and if I > S, the economy will expand or economic activities will
increase. (Note: = means equal to; > means greater than).

Injections, Leakages and the level of economic activity

Injections
Level of economic
activity

Leakage
s
When injections are greater than leakages the level of economic activity will increase. When
leakages are greater than injections the level of economic activity will decrease.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

12.1.1.3: The Four Sector Circular Flow of Income Model

We have discussed in three sector model that household sector uses its income for
consumption spending and partly for either savings or investment. Now, with the inclusion
of the government sector, some of the household income will go to the public sector
(government) in the form of various taxes. However, taxation is a major source of
government revenue and so the government generates income from it. The government
pumps the money back into the economy through its annual budget allocations known as
the government expenditure.

THE FOUR SECTOR CIRCULAR FLOW OF INCOME MODEL

Y

Household Firm

S I

Taxation (T) Capital Government

Market Expenditure (G)

Government

The government sector is added to the three sector model to become four sector circular
flow of income model. Tax is a main source of government revenue. The government
collects various taxes such as personal income tax, company profit tax, export tax, import
tax, excise duty and VAT. Tax is a compulsory payment from the private sector (people and
firms) to the public sector (government).

The four sector model will be in equilibrium if the income is all spent and the value of savings
and taxation are equal to the value of investment and government expenditure. In other
words, if S + T = I + G then, the economy will be in equilibrium.

Taxation (T) is a leakage from the circular flow of income and Government Expenditure (G)
is an injection onto the circular flow of income. The leakages are now S + T and injections are
now I + G. If S + T > I + G, the economy will contract, this means that there will be a decrease
in economic activities such as fall in production level which reduces Gross Domestic Product
(GDP) and the national income, thus fall in economic growth. Also, fall in investment results
in decrease in employment level (rise in unemployment). If I + G > S + T, the economy will
expand, this means that there will be an increase in economic activities such as rise in
production level which increases Gross Domestic Product (GDP) and the national income,
thus achieves economic growth. This also means a rise in investment consequently increases
employment level (fall in unemployment).

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

12.1.1.4: The Five Sector Circular Flow of Income Model

The overseas (or foreign) sector is added onto the four sector model to derive a five sector
model. The five sector model is also called a complete circular flow of income model.

THE FIVE SECTOR CIRCULAR FLOW OF INCOME MODEL

Household Firm

T S I G
Capital
Market

Government

Import (M) Export (X)

Overseas

The overseas sector takes into account, trading with other countries in terms of Imports (M)
and Exports (X). Import (M) is a leakage as money is paid to firms in other countries and it is
a withdrawal of money from the circular flow of income. Whereas, Export (X) is an injection
as money income is received from overseas countries and it is added onto the circular flow
of income.

Therefore, leakages are now S + T + M and the injections are now I + G + X. If the leakages
are equal to injections (S + T + M = I + G + X), the economy will be in equilibrium. If the
leakages are greater than the injections (S + T + M > I + G + X), the economy will contract,
and if the injections are greater than the leakages (I + G + X > S + T + M), the economy will
expand.

Now, we have finished discussing the complete five sector circular flow of income model and
we can work out the important equation that represents the National Income which is also
equivalent to Gross Domestic Product (GDP) of the country. It is developed on the
assumption that S = I and T = G, hence, the equation is as follows;
National Income (GDP) =Consumption + Investment + Government Expenditure + (Export-
Import)
Y = GDP = C + I + G + (X - M).

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

12.1.1.5: National Income Analysis

The national income is formally defined as the net value of the economic goods and services
currently produced by the private and public enterprises of the nation over a period of time,
usually a calendar year. The national income earned by the government during the year is
spent as government expenditure through annual budgets by the national government.

Papua New Guinea is a developing nation and its national income is lower or small compared
to developed or industrialised countries such as Australia, Japan and New Zealand. However,
in the recent years PNG has experienced economic boom which led to a rise in national
income, the GDP of the country.

For instance, the establishment of PNG LNG mining project had attracted so many
multibillion foreign investors to PNG and created an ideal economic environment for both
local and foreign investors.

In addition, some Papua New Guinean business people, especially the Land Owners (LOs) are
going into overseas markets by investing in properties or doing other businesses which
increases PNG’s Gross National Product (GNP).

Methods of measuring National Income /Total Production (GDP)

National income can be measured in the following three ways:
1. The production/value added method - by adding together value of all final goods and
services produced in the economy.
2. The income method - by adding up all the incomes received during the production
process: various incomes are rent for land, wages for labour, interest on capital, and
profits for management (entrepreneur).
3. The expenditure (outlay) method - by adding together the expenditure to produce all
final goods i.e. spending on C+I+G+(X-M) are all added together to find the GDP.

Gross Domestic Product (GDP) - the value of all goods and services produced for
final consumption and for investment within an economy during a year. It does
not include income received from overseas by residents.

Gross National Product (GNP)-the sum of all incomes received by residents of the
country as a result of economic activity. It includes the value of all goods and
services produced in the economy during a year and income received by
residents from overseas

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

The risk in measuring GDP is double counting. Some examples of double counting are:
 counting same income more than once
 counting the same product more than once
 counting the value of intermediate or capital goods instead of final goods only
All three methods will always result in the same answer or total because the value of Total
Production in the country during the year (GDP) equals the Total Income (National income)
which equals the Expenses incurred to produce final goods (Total outlay). However, the
national income equals gross national product (GNP) when the incomes earned from
overseas investments by the residents are added to GDP.

YOU HAVE COME TO THE END OF TOPIC 1. YOU MAY

NOW READ THE SUMMARY ON THE NEXT PAGE.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

Summary 12.1.1

 The circular flow of income shows how money income circulates in the economy. It is a
simplified model of the real economic activities.

 The complete circular flow of income consists of five (5) sectors including household,
firm, capital market, government and overseas sectors.

 The basic circular flow of income model consists of the households and firms and is
drawn on the assumption that there are no injections and leakages. Hence, it is in
equilibrium, in other words, the value of household income from factors of production
equals the value of final goods and services produced which equals the household
consumption spending (expenditure) on goods and services, hence, derived Y=O=E.

 In the basic circular flow of income model there are two commodity flows comprising
resources and finished goods, and two money income flows comprising of household
income and consumption spending.

 When the leakages equal injections the economy is in equilibrium. However, when
injections are greater than leakages the economy expands, and when the injections are
less than the leakages the economy contracts.

NOW DO LEARNING ACTIVITY 12.1.1 ON THE NEXT PAGE.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

Student Learning Activity 12.1.1

1. What roles do models play in economic analysis?

_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________

2. What relationship does the two-sector circular flow of income model show between
income, output and expenditure?
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________

3. Why do money flows not contract or expand in a simple two-sector circular flow of
income model?
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________

4. Explain why savings cause the circular flow of income to diminish or contract?
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________

5. What injection in the circular flow of income helps compensate for the leakage through
savings?
_________________________________________________________________________
_________________________________________________________________________

6. Under what circumstances will the circular flow of income remain in equilibrium when
savings and investment are in the analysis?
_________________________________________________________________________
_________________________________________________________________________
______________________________________________________________________

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

7. What happens to the economy when;

(a) savings is greater than investment?

_________________________________________________________________________
_________________________________________________________________________

(b) investment is greater than savings?

_________________________________________________________________________
_________________________________________________________________________

8. Explain why taxation reduces the circular flow of income?

_________________________________________________________________________
_________________________________________________________________________

9. Give at least two examples of government payments which are part of the funds
representing flows of resources and finished goods and services in the circular flow of
income model.
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________

10. Under what circumstances is Y = O = E in an economy with the government sector?

_________________________________________________________________________
_________________________________________________________________________

11. What happens when G does not equal T?

_________________________________________________________________________
_________________________________________________________________________

12. How can the government use it’s spending and taxation powers to regulate the
economy?
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________
13. Under what circumstances will the economy be in equilibrium when both the financial
sector and the government sector are included in the circular flow analysis?
_________________________________________________________________________
_________________________________________________________________________
_________________________________________________________________________

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

14. What factors have led to increased international interdependence?

_________________________________________________________________________
_________________________________________________________________________

15. Why is import (M) considered to be a leakage from the circular flow of income?
_________________________________________________________________________
_________________________________________________________________________

16. Explain how the payment for export (X) adds new funds to the circular flow of income?
_________________________________________________________________________
_________________________________________________________________________

17. What happens to the circular flow of income when export is greater than import (X >
M)?
_______________________________________________________________________
_______________________________________________________________________

18. Relate National Income to GDP and GNP.

_______________________________________________________________________
_______________________________________________________________________

19. What is the risk involved in measuring National Income?

_______________________________________________________________________
_______________________________________________________________________

NOW CHECK YOUR ANSWERS AT THE END OF THE UNIT

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

12.1.2: THE ECONOMIC GOALS OF PAPUA NEW GUINEA

The Government of PNG, like any other government, is a planner, producer (of goods and
services) and a regulator of our economy. The government uses its economic policies to
regulate the economy and make it conducive (ideal) for all sectors to achieve their goals.

The government must define its goals clearly to avoid people working against each other. In
other words, conflicting goals will prevent people from achieving their goals.

Imagine you are driving on Waigani Drive in Port Moresby city where there are no traffic
lights. People and businesses will not achieve their goals (destination) as expected due to
enormous traffic jams. However, erecting traffic lights eases the traffic jam and creates an
easy flow of vehicles and people, hence, people and businesses would achieve their goals.

In the similar manner, the economic goals provide guidance and direction for the
government and its people to achieve their goals. The greatest aim of the government to
achieve its economic goals is to ensure that people are satisfied with their basic needs and
wants and improved standard of living.

Before we discuss the economic goals of the PNG government, let us first go through the
Eight Aims, and National Goals and Directive Principles of the PNG government.

Papua New Guinea’s Eight Aims

1. A rapid increase in the proportion of economy under the control of Papua New Guinean
individuals and groups and the proportion of personal and property income that goes to
Papua New Guineans.
2. More equal distribution of economic benefits, including movement towards equalization
of incomes among people and toward equalisation of services among different areas of
the country.
3. Decentralisation of economic activity, planning and government spending, with emphasis
on agricultural development, village industry, better internal trade, and more spending
channelled to local area bodies.
4. An emphasis on small scale artisan, service and business activity, relying where possible
on typically Papua New Guinea forms of business activity.
5. A more self-reliant economy, less dependent for its needs on imported goods and
services and better able to meet the needs of its people through local production.
6. An increasing capacity for meeting government spending needs from locally raised
revenue.
7. A rapid increase in the equal and active participation of women in all forms of economic
and social activity.
8. Government control and involvement in those sectors of the economy where control is
necessary to achieve the desired kind of development.
National Goals and Directive Principles of the PNG Government

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

1. Integral Human Development

We declare our first goal for every person to be dynamically involved in the process of
freeing himself or herself from every form of domination or oppression so that each
man or woman will have the opportunity to develop as a whole person in relationship
with others.
2. Equality and Participation
We declare our second goal to be for all citizens to have an equal opportunity to
participate in and benefit from the development of our country.
3. National Sovereignty and Self-reliance
We declare our third goal to be for Papua New Guinea to be politically and economically
independent and our economy basically self-reliant.
4. National Resources and Environment
We declare our fourth goal to be for Papua New Guinea’s natural resources and
environment to be considered and used for collective benefit of us all and to be
replenished for the benefit of future generations.
5. Papua New Guinean Ways
We declare our fifth goal to be, to achieve development primarily through the use of
Papua New Guinea forms of social, political and economic organisations.

These eight aims, and national goals and directive principles guide the government to
achieve its economic goals. So now, let us discuss the economic goals of the PNG
government.

Specific Learning Outcomes

On successful completion of this topic, students will be able to:

 identify and explain the economic goals of the government
 analyse the economic conditions in relation to the economic goals of the government
and propose measures to solve the economic problems.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

12.1.2.1: Economic Growth and Fair Distribution of the Benefits of

Development
___________________________________________________________________________
Economic growth is defined as an overall increase in the per capita income of a country. The
government aims to achieve economic growth every year through increasing its income per
capita (or person).

Income per capita is calculated based on National Income (the total value of Gross Domestic
Product and/or Gross National Product) over total population of the country. Therefore:
i. GDP per capita = GDP ÷ Population (To show that income per capita is calculated based
on GDP)
ii. GNP per capita = GNP ÷ Population (To show that income per capita is calculated based
on GNP)

GDP is the total value of final goods and services produced during a year. GNP is total value
of GDP plus income earned from overseas by residents of a country.

For example, let us assume that the government of PNG earned K12 billion which is
equivalent to its GDP and K3 billion earned from its overseas investments, and in total
earned K15 billion which is equivalent to its GNP. PNG has a population of 7.5 million. Now,
income per capita based on GDP is K1733.33 per person (K12 billion ÷ 7.5 million =
K1733.33), and based on GNP would be K2000 per person (K15 billion ÷ 7.5 million = K2000).
Income per capita shows an average income a person earned when the national income is
spread over its population at that time period.

So, when income per capita rises compared to previous year then, the country is said to have
achieved an economic growth. Conversely, when income per capita falls compared to
previous year then the country is said to have faced a decline in economic growth.

A country can achieve a greater economic growth but another challenge for it is the fair
distribution of benefits of development. The government ensures that the wealth of the
nation is equally distributed to its people. The government redistributes income through its
annual National Budget by allocating funds to various government departments, public
services such as health, education and justice, statutory institutions like IRC, ICCC, NDB,
BPNG, the government corporations such as PNG Power, Telikom PNG, PNG Ports and as
well as Provincial and Local Level Governments.

However, corruption is one factor that causes unequal distribution of benefits of

development. As a result, those who are in key positions get richer through corrupt
activities such as stealing public funds budgeted for people and greedily accumulate wealth
while people unfortunately miss out on the benefits and become poorer. This creates a gap
between the rich and the poor.

IRC : Internal Revenue Commission

ICCC : Independent Consumer Competition Commission

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

12.1.2.2: Economic Independence and Self-Reliance

The government aims to achieve economic independence and for the economy to become
self-reliant. In other words, most of the country’s needs such as production of goods and
services, finance, capital and expertise as much as possible, must be taken from within the
country and not from foreign countries. The government has in place, Import-Substitution
Manufacturing, Export-Oriented Manufacturing and downstream processing policies in
relation to achieving self-reliance and economic independence goal.

Import-substitution manufacturing refers to production of goods to replace the goods that

are imported. It aims to increase domestic production and reduce foreign imports.

Export-oriented manufacturing refers to production of goods mainly for export. It aims to

increase domestic production and increase exports.

Down-stream processing refers to the process where the raw materials are processed into
finish products (secondary production) within the country. Any foreign investment in PNG,
especially in resource extraction (primary production) should be encouraged to do
downstream processing.
For example, we have South Pacific Brewery producing beer, Besta cannery in Lae, Diana
Tuna cannery in Madang, Ox & Palm cannery at 14 Mile in Central province and Napanapa oil
refinery in Central province.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

12.1.2.3: Income Earning Opportunities and Growth in Employment

Creation of income earning opportunities or employment creation refers to providing of an

economic climate where people are able to create employment opportunities for both
formal/informal employments. Creation of more employment opportunities leads to growth
in employment.

In developed countries it is termed as full employment because they have the capacity to
provide employment for everyone. However, in developing countries including PNG the
economy has not yet developed to the stage where it is able to provide such a large number
of jobs to achieve full employment and therefore, it is termed as employment creation.

There are also other factors which push people out of the workforce and hinder (slow down)
the employment creation goal. The use of machineries in the production process substitute’s
human labour thus, increases unemployment.

For example, in a farm such as Ramu sugar, when the machines are used to do ploughing,
planting and harvesting, the workforce is greatly reduced because machines are substituting
labour, so it results in unemployment or lowers employment level.

However, encouraging more investments in the country including national and foreign
investors will provide increased income earning opportunities, and will achieve growth in
employment.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

12.1.2.4: External Balance and Price Stability

Balance of payment equilibrium refers to a situation where the value of payments to

overseas countries is equal to the payments received from them. In other words, the
government aims to equal the value of money outflow to value of money inflow to achieve
external balance equilibrium and so results in price stability.

Price stability is also termed as inflation control and it is referred to as controlling the rate at
which the general price level increases. Inflation is defined as the long-term increase in the
average price level of goods and services.

Achieving external balance equilibrium lessens fluctuation in exchange rate (lowers

appreciation or depreciation of exchange rate) and controls the rate at which the general
price level increases. However, imbalance in external balance results in opposite effects on
prices.

External balance deficit (balance of payment deficit) causes exchange rate to depreciate and
imports become expensive and so prices in the domestic market rise and finally results in
inflation in the domestic market. External balance surplus (balance of payment surplus)
causes exchange rate to appreciate and imports become cheaper and so fall in prices in the
domestic market and lowers inflation.

If prices increase at a rapid rate people will no longer be able to purchase the goods and
services they require. This will reduce their standard of living. Inflation also tends to reduce
savings and redistribute income away from the poorer and older members of the economy.
Therefore, the aim of the government is to achieve external balance equilibrium which
stabilises the exchange rate fluctuation which, in turn, controls the price of goods and
services so that its people can afford to satify their needs and wants to improve their
standard of living.

Conflicting Economic Goals

This means that policies to achieve one economic goal may conflict (go against) with
achieving another economic goal. One goal has to be sacrificed (at least temporary) to
achieve the other one. Three examples of conflicting economic goals are given below:

1) Economic growth versus employment creation.

The aim to achieve economic growth may result in producing new goods and finding
better ways (new technologies and techniques) of production. This will lose old goods
producers and workers employment (technology substituting human labour),
resulting in rise in unemployment.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

2) To lower inflation rate versus lower unemployment rate.

Government aiming to control inflation rate by reducing its expenditure may result in
decrease in economic activities and lessen employment opportunities which conflicts
with lower unemployment goal.

3) Lower inflation rate versus economic growth.

Government through its monetary policy may raise interest rates to encourage
savings and discourage borrowing to control inflation. This may possibly result in
reduced investment and less employment opportunities and lower economic growth.

Philip’s Curve
Philip’s curve shows a conflict between the lowering rate of inflation (Price stability) and
lowering rate of unemployment. Therefore, a trade-off is required, that is, to achieve lower
inflation rate, it must accept higher rate of unemployment, and to lower rate of
unemployment, it must accept higher rate of inflation.

Rate of
Inflation Philip’s curve
(%) 10

0
4 8
Rate of unemployment (%)

Explanation: In order to lower inflation rate from 10% to 5% must accept a trade-off of rising
unemployment rate from 4% to 8%, and to lower unemployment rate from 8% to 4% must accept
rise in inflation rate from 5% to 10%.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

Stagflation
Stagflation is a period of simultaneous high rate of inflation and high rate of unemployment.
It is common during economic recession. Philip’s curve shifts to the right during stagflation.

Inflation rate
Inflation (%)

10

5 2 Philip’s curve

1
0
4 8
Unemployment rate (%)

Economic recession is an unfavourable economic situation where there is down turn in all
economic activities characterized with decline in economic growth, lower economic activities
(decline in investment and production), rising cost of living (high inflation) and high
unemployment.

YOU HAVE COME TO THE END OF TOPIC 2. YOU MAY

NOW READ THE SUMMARY ON THE NEXT PAGE.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

Summary 12.1.2

 The national income is formally defined as the net value of the economic goods and
services currently produced by the private and public enterprises of the nation over a
period of time, usually a year.
 National income can be measured in the following three (3) ways: the production
method, the income method, and the expenditure method. The calculation of national
income adds value of final goods and services and not intermediate (capital) goods and
services which are used in the production process to produce other goods and services.
 The government uses its economic policies to regulate the economy and make it
conducive (ideal) for all sectors to achieve their goals. The government needs to clearly
define its goals, if not (clearly stated its goals) the government and the people may find
themselves working against each other. That is, conflicting goals may prevent anyone
from achieving his or her goals.
 The economic goals of the government are: economic growth and fair distribution of the
benefits of development, creation of income earning opportunities and employment
growth, and external balance equilibrium and price stability.
 Economic growth is achieved when the income per capita rises compared to previous
year, and a fall results in a decline in economic growth. Increase in income per capita
leads to an improvement in the standard of living, and fall a will result in a decline in
living standards, and vulnerable (at risk) to poverty.
 Encouraging more investments from both national and foreign investors creates more
income earning opportunities and thus, increasing employment level. However, the fall
in investment will create less income earning opportunities and rise in unemployment.
 The aim of the government is to achieve external balance equilibrium which stabilises
the exchange rate fluctuation. This, in turn, controls the price increase of goods and
services so that its people can afford their needs and wants to improve their standard of
living.
 Philip’s curve illustrates a trade-off between the controlling of inflation rate and
unemployment rate. That is, to lower inflation rate we must accept a higher rate of
unemployment, and vice versa, to lower the unemployment rate we must accept higher
inflation rate in the economy.
 Stagflation is a period in which the economy is simultaneously experiencing high rate of
inflation and unemployment. When the economy experiences recession the Philip’s
curve shifts rightward and when the economy experiences economic growth the Philip’s
curve shifts leftward.

NOW DO STUDENT LEARNING ACTIVITY 12.1.2 ON THE NEXT PAGE.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

Student Learning Activity 12.1.2

1. What is an economic goal?

_______________________________________________________________________
_______________________________________________________________________

2. Explain why it is important for governments to have clearly defined economic goals for
their country?
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

3. Give two examples that demonstrate the eight aims in action.

_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

4. Give two examples which do not demonstrate the eight aims.

_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

5. What does a decrease in income per capita mean?

_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

6. What will be the impact of unequal distribution of development benefits?

_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
7. What do you think about the economic growth of PNG over the past five years?
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

8. Compare PNG’s dependency on other countries from the past to the present?
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

9. State some measures (ways) PNG can take to achieve economic independence.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

10. Explain the effect of introducing more advanced technologies in the production
process on employment level.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

11. Explain the impact of increasing investment in the country on employment.

_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

12. Is it possible for PNG to state its economic goal as Full Employment rather than
employment creation? Why?
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
13. Explain the meaning of external balance equilibrium.
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

14. How will achieving external balance equilibrium achieve price stability?
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

15. What will be the impact of external balance deficit on prices of goods and services in
the domestic (local) market?
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

16. What do conflicting economic goals mean? Give an example.

_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

17. Explain Philip’s curve in your own words.

_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

18. In which direction will the Philip’s curve shift during economic depression or recession?
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________

NOW CHECK YOUR ANSWERS AT THE END OF THE UNIT

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

ANSWERS TO STUDENT LEARNING ACTIVITIES 12.1.1 TO 12.1.2

12.1.1

1. The models drawn simplify the real economic activities in the economy which make it
easier to read and understand.

2. The relationship between Y=O=E in the two sector model is that the value of household
income (Y) from factors of production equals the value of final goods and services
produced (O) which equals the household consumption spending (E) on goods and
services so therefore, Y=O=E.

3. The money flows do not contract or grow in simple two-sector circular flow of income
model because there are no injections and leakages and it is in equilibrium.

4. Savings causes the circular flow of income to diminish or contract because savings is a
leakage and withdraws income out of the circular of income.
5. The injection to the circular flow of income that helps compensate for the leakage to
savings is investment.
_____________________________________________________________________________
6. The circumstance where the circular flow of income will remain in equilibrium when
savings and investment are in the analysis is when savings equals investment (S=I).

7. a. When savings is greater than investment the economy will contract thus, a decrease
in economic activities because money which supposed to be used for investments are
left unused as deposits in the financial institutions such as banks, microfinances, savings
and loan societies, etc.
b. When investment is greater than savings the economy will expand thus increasing
economic activities.

8. Tax causes the circular flow of income to diminish or contract because it is a leakage and
withdraws income out of the circular of income.

9. Some examples of government payments for flows of resources and finished goods and
services are:
a. Royalty payment to landowners for extracting resources from their land.
b. Payments to firms /suppliers for supplying machineries and equipment for use in
the project development.
c. Payments for hiring experts /specialists to work in the project.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

d. Payments to firms for supplying consumable items such as stationeries, rations, etc.
and services like communication, transport, Information Technology, media, legal,
consultancy, etc.

10. The circumstance in which Y = O = E in an economy with a government sector is when

Taxation is equal to Government Spending (T=G).

11. When G does not equal T then it will result in disequilibrium in the economy.

12. The government can use its spending and taxing powers to regulate the economy by
simply increasing or decreasing the tax rate and its expenditure (Fiscal policies).

13. The circumstance in which the economy will be in equilibrium when both the financial
sector and the government sector are included in the circular flow of income analysis is
when S + T = I + G.

14. The factors that led to increased international interdependence are such as shortage of
raw materials, machineries, finance, expertise, etc. for production. Also, countries became
specialised in producing what they are good at (according to comparative and absolute
advantage) and trade with others to have variety of products available in the domestic
market.

15. Import (M) is considered to be a leakage from the circular flow of income because it
withdraws money income out of the circular flow of income.

16. The payment for export (X) adds new funds to the circular flow of income because export
is an injection and more income flows into the economy (country).

17. When export is greater than import (X > M) in the circular flow of income the economy
expands because export is an injection and more income flows into the economy (country).
_________________________________________________________________________________
18. The relationship between National Income and GDP and GNP is that the national income
can be measured as the total net money value of the national output of final goods and
services which is equal to GDP. The national income equals gross national product (GNP)
when the incomes earned from overseas investments by the residents are added to GDP.

19. The risk involved in measuring national income is double counting and may occur in the
following situations:
 counting same income more than once
 counting the same product more than once
 counting value of intermediate or capital goods instead of final goods only

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

12.1.2
_________________________________________________________________________
1. Economic goal refers to the aims which the government plans to achieve.

2. It is important for governments to have clearly defined economic goals for their country
because if they are not clearly stated, the government and the people may find
themselves working against each other. Thus, conflicting goals will prevent them from
achieving their goals.

3. Some examples that demonstrate the eight aims in action are:

i. Localisation of expatriate held positions (in relation to aim 1).
ii. The government through its annual budget allocate national income to various sectors
throughout the country (in relation to aim 2).
iii. District Services Improvement Programme (DSIP) fund of K10 million to each district in
the country (in relation to aim 3).
iv. The government allocating fund to Rural Development Bank (RDB) to help rural
farmers and small business people as lower interest loans over longer period of time to
repay (in relation to aim 4).
v. The government paying subsidy to reduce cost of production for domestic (local)
producers to produce goods to replace imports such as Ramu Sugar (in relation to aim
5).

4. Some examples that do not demonstrate the eight aims are:

i. Those people holding key positions in the public sector such as MPs, department
heads, etc. are misappropriating allocated public funds through corrupt activities so
the nation’s wealth is unfairly distributed (in relation to aim 2).
ii. The government need to control the increasing number of Papua New Guineans
looking abroad to invest in foreign countries (in relation to aim 6).
iii. The government spending too much money to develop Port Moresby while people
in rural areas suffer from deteriorating rural infrastructures such as road, bridge,
health and education services.

5. A decrease in income per capita means that a decline in economic growth will result in
decline in living standard, and people become vulnerable (at risk) to poverty.
____________________________________________________________________
6. The consequence of unequal distribution of benefits of development is that those who
are in key positions get richer through corrupt activities while poor (unfortunate)
people continue to become poorer and so it creates a widening gap between the rich
and poor.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

7. Economic growth in PNG over the last five years is that PNG in recent years
experienced an economic boom meaning it has achieved a greater economic growth
due to increased investment by both local and foreign investors especially in the
mineral resource development (PNGLNG) and construction hence, spin-off benefits on
the retailing and service industries such as transport, accommodation, financial
institutions, etc.

8. The dependency of PNG economy on other countries is PNG is a developing country

and it was depending heavily on the foreign countries. But today, its economy is
growing and is aiming towards achieving self-reliance and economic independence
through the introduction of economic policies such as Import-Substitution
manufacturing, Export-Oriented manufacturing policies.

9. Some measures (ways) PNG government can employ to achieve self-reliance and
economic independence are introduction of economic policies such as Import-
Substitution manufacturing, Export-Oriented manufacturing, paying subsidies to
encourage local producers (manufacturers) to increase their production, downstream
processing of raw materials extracted within the country, encourage research and
development of new products, attract foreign investors through granting tax
patent/concessions, localization of expatriate held positions, etc.

10. The effect of introducing more advanced technologies, substitute human labour and
reduces employment level, or increase unemployment.

11. The impact of increasing investment in PNG will provide increased income earning
opportunities, and thus, growth in employment.

12. PNG cannot state its economic goal as full employment but as an employment creation
because PNG is a developing country and does not have the capacity to provide
employment for everyone looking for jobs.

13. External balance equilibrium refers to a situation where the value of payments to
overseas countries is equal to the payments received from overseas countries.

14. Achieving external balance equilibrium necessitates price stability because it lessens
fluctuation in exchange rate (lowers appreciation or depreciation of exchange rate)
and controls the rate at which the general price level increases. This results in price
stability.

15. The impact of external balance deficit on prices of goods and services in the domestic
(local) market is that external balance deficit (or Balance of payment deficit) causes

35
 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

exchange rate to depreciate and imports become expensive and so rise in prices in the
domestic market.

16. Conflicting economic goals means that policies to achieve one economic goal may
conflict (go against) in achieving another economic goal. However, one goal has to be
sacrificed (at least temporary) to achieve the other one. One example of conflicting
goal is achieving lowering unemployment rate and lowering inflation rate as
demonstrated by the Philip’s curve.

17. Philip’s curve shows a trade-off between the controlling inflation rate and
unemployment rate. That is, to lower inflation rate must accept higher rate of
unemployment, and to lower unemployment rate must accept higher inflation rate in
the economy.

18. The Philip’s curve shifts rightward during economic depression or recession

YOU HAVE COMPLETED UNIT 1. REVISE CAREFULLY.

NOW DO YOUR ASSESSMENT TASKS IN ASSESSMENT BOOK 1.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

GLOSSARY
Words Definition
Capital Resources that have been made by people (tools, machines,
transport equipment etc...) and that are used to produce other
goods and services. In banking and commerce the term is often used
to mean money or wealth.
Circular Flow Of A simple model of the real world that shows some of the
Income movements of factors of production, income and goods and services
that take place in modern economics. It includes households, firms,
the capital market, the government and overseas sectors.
Full Employment The level of employment at which everyone who is able and willing
to work is employed. The only unemployment is frictional, i.e.
unemployment that may occur for a short period of time while a
person is changing jobs.
Gross Domestic The value of all goods and services produced for final consumption
Product (GDP) and for investment within an economy during a year. It does not
include income received from overseas by residents.
Gross National The sum of all incomes received by residents of the country as a
Product(GNP) result of economic activity. It includes the value of all goods and
services produced in an economy during a year and income received
by residents from overseas.
Injection refers to money added to the circular flow of income
Investment use of money for future profit or the outlay of money, e.g. by
depositing it in a bank or by buying stock in a company, with the
object of making a profit
Leakages Refers to anything that takes money out of the circular flow of
income and thus reduces the level of economic activity. The main
leakages from the circular flow of income are saving, taxation and
payments for imports.
Macro Economics The study of broader issues related to the economy including
government economic policy, economic growth and development,
income and expenditure.
National Income Total income of nation, the total money earned or gained by all
residents of a country over a period of time, including income from
rent, profits, interest, government benefits, salaries, and wages.
Saving The act of not consuming. To keep something for future use. Saving
is an essential part of the process of investment.
Stagflation A situation in which there are high levels of inflation and
unemployment at the same time.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

BIBLIOGRAPHY

1. Bandara, P. M. N. (2013). Economics for Grade 12. Sara Publications, Kottawa. Sri
Lanka.
2. Dixion. T. (2001). Australia in the Global Economy. Leading Edge Education, Sydney
NSW. Australia.
3. Irima A. K. (2006). Introduction To Economics Course No. 6 .00301. UPNG Printery,
Waigani. Papua New Guinea.
4. Mickleburgh. A. (1992). Economics for Developing Nations – Book Two. Pearson
Education, Melbourne. Australia.
5. Tuffley. E. J. (1995). Understanding Our Economy. Reed International Books Australia
PTY Ltd, Victoria. Australia.

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

FODE PROVINCIAL CENTRES CONTACTS

PC FODE ADDRESS CUG PHONES WIRELESS SENIOR CLERK CUG PHONE

NO PROVINCIAL (COORDINATORS) PHONES
. CENTRE
1 DARU P. O. Box 68, 72228146 77522841 Mr Kevin Sere 72229047
Daru
2 KEREMA P. O. Box 86, 72228124 77522842 Mr David Saria 72229049
Kerema
3 CENTRAL C/- FODE HQ 72228110 77522843 Mr Aubi Elodo 72229050
4 ALOTAU P. O. Box 822, 72228130 77522844 Mr Albi Bapera 72229051
Alotau
5 POPONDETTA P. O. Box 71, 72228138 77522845 Mr Stansen 72229052
Popondetta Sevese
6 MENDI P. O. Box 237, 72228142 77522846 Mr Wari Tange 72229053
Mendi
7 GOROKA P. O. Box 990, 72228116 77522847 Ms Ovin Tuki 72229054
Goroka
8 KUNDIAWA P. O. Box 95, 72228144 77522848 Mr Denge Gundu 72229056
Kundiawa
9 MT HAGEN P. O. Box 418, 72228148 77522849 Mr Robert Maki 72229057
Mt. Hagen
10 VANIMO P. O. Box 38, 72228140 77522850 Mrs Isabella 72229060
Vanimo Danti
11 WEWAK P. O. Box 583, 72228122 77522851 Mr David 72229062
Wewak Wombui
12 MADANG P. O. Box 2071, 72228126 77522852 Mrs Applonia 72229063
Madang Bogg
13 LAE P. O. Box 4969, 72228132 77522853 Ms Cathrine Kila 72229064
Lae
14 KIMBE P. O. Box 328, 72228150 77522854 Mrs Bernadette 72229065
Kimbe Litom
15 RABAUL P. O. Box 83, 72228118 77522855 Mrs Verlyn Vavai 72229067
Kokopo
16 KAVIENG P. O. Box 284, 72228136 77522856 Mr John Lasisi 72229069
Kavieng
17 BUKA P. O. Box 154, 72228108 77522857 Mr Marlyne 72229073
Buka Meiskamel
18 MANUS P. O. Box 41, 72228128 77522858 Ms Roslyn Keket 72229080
Lorengau
19 NCD C/- FODE HQ 72228134 77522859 Mrs Marina 72229081
Tomiyavau
20 WABAG P. O. Box 259, 72228120 77522860 Mr Salas 72229082
Wabag Kamberan
21 HELA P. O. Box 63, Tari 72228141 77522861 Mr Ogai John 72229083

22 JIWAKA c/- FODE Hagen 72228143 77522862 Joseph Walep 72229085

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 GR 12 ECONOMICS U1 MANAGING THE ECONOMY

SUBJECTS AND GRADE TO STUDY

Grade Levels Subjects

1. English Language
2. Mathematics
3. Science
Grades 7 and 8
4. Social Science
5. Making a Living
6. Personal Development
1. English
2. Mathematics
3. Science – Biology/Chemistry/Physics
Grades 9 and 10 4. Social Science
5. Business Studies
6. Personal Development
7. Design and Technology- Computing
1. English - Applied English/Language and Literature
1. 2. Mathematics - Mathematics A/Mathematics B
3. 3. Science – Biology/Chemistry/Physics
Grades 11 and 12
4. 4. Social Science – History/Geography/Economics
5. 5. Business Studies
6. Personal Development
7. ICT

REMEMBER
 For Grades 7 and 8, you are required to do all six (6) courses.
 For Grades 9 and 10, you must study English, Mathematics, Science, Personal Development,
Social Science and Commerce, Design and Technology-Computing is optional.
 For Grades 11 and 12, you are required to complete seven (7) out of thirteen (13) courses to
be certified.
 For Matriculation, you must successfully complete 8 courses; 5 core and 3 optional courses.
Matriculation Certificate
CORE COURSES OPTIONAL COURSES
 Basic English  Science Stream:
 English 1 Biology, Chemistry and Physics
 English 2  Social Science Stream:
 Basic Maths Geography, Introduction to Economics,
 Maths 1 and Asia and the Modern World
 Maths 2
 History of Science & Technology

Your Provincial Coordinator or Supervisor will give you more information regarding
each subject.

40