Professional Documents
Culture Documents
G.C.E. (Advanced Level) Economics
G.C.E. (Advanced Level) Economics
Economics
Grade 13
ii
Guidance : Professor. W.M. Abeyrathna Banda, Director General,
National Institute of Education.
Curriculum Committee
1. Senior Professor Dani Attapattu - Head Of department, Department of Economics,
University of Ruhuna.
2. Professor .E.Dayarathne - Head Of department, Department of Commerce,
University of Sri Jayewardenapure
3. Professor. Athula Ranasinghe - Head Of department, Department of Economics,
University of Colombo.
4. Dr.. M Ganesha Moorthy - Senior lecturer, Department of Economics,
University of Colombo.
5.Dr. S.W Hirantha - Senior lecturer, Department of Commerce,
University of Sri Jayewardenapure
6.Dr.(Mrs).Anoma Abeyrathne - Head Of department, Department of Economics,
University of Peradeniya
7. Mr.Nanadasiri Keembiyahetti - Senior lecturer, Department of Economics,
University of Ruhuna.
8. Dr. Prasanna Perera - Senior lecturer, Department of Economics,
University of Peradeniya.
9. Dr. A Sivenesharaja - Director, Department of Business Studies,
National Institute of Education.
10..Mr. A.B. Wijesooriya - Chief Project Officer, Department of Business
Studies, National Institute of Education.
11.Mrs. P.H Kusumawathie - Chief Project Officer, Department of Business
Studies,National Institute of Education.
12. .Mrs. M.A.I.P.Perera - Chief Project Officer, Department of Business
Studies, National Institute of Education.
13. .Mr. K Prabaharan - Project Officer,Department of Business Studies,
National Institute of Education.
14. Mr. D.L.C.Ruwan Ajith Kumara - Project Officer, Department of Business
Studies,National Institute of Education.
15.Mr.S.R.Rathnajeewa - Assistant Project Officer, Department of
Business Studies, National Institute of Education
iii
Board of Writers :
iv
Board of Editors :
1.Senior Proffessor Dani Attapattu -Head Of department,Department of Economics,
University of Ruhuna.
2..Professor .E.Dayarathne -Senior lecturer,Department of Commerce,
University of Sri Jayewardenapure
3. Dr.M Ganesha Moorthy - Senior lecturer,Department of Economics,
University of Colombo.
4. Mr.Nanadasiri Keembiyahetti - Senior lecturer, Department of Economics,
University of Ruhuna.
5. Dr. Prasanna Perera - Senior lecturer,Department of Economics,
University of Peradeniya.
6. Mr. A.B. Wijesooriya - Chief Project Officer,Department of Business
Studies, National Institute of Education.
7. Mrs. M.A.I.P.Perera - Chief Project Officer, Department of Business
Studies, National Institute of Education
8.Mr. D.L.C.Ruwan Ajith Kumara - Project Officer,Department of Business Studies
National Institute of Education
9.Mr.S.R.Rathnajeewa - Assistant Project Officer,Department of
Business Studies, National Institute of Education.
Translation to English :
1..Mrs. I.P. Munasinghe - S.L.T.S, Holly family convent, Bambalapitiya.
v
Contents
Page No.
References 141
vi
Learning Outcomes and Model
Activities
-1-
Competency 06 : Analyses the change of price levels that affects the
macroeconomic process.
Number of Periods : 05
Learning outcomes :
Engagement
Provide instructions to compute the average of the marks obtained by the students in
the last term test.
Inquire from students about how they obtained the average of marks.
The average value of marks can be obtained by dividing the total of marks for each
subject by the number of subjects.
The average value of goods and services can also be obtained by the same method.
General Price level could be obtained through the average prices of all the goods
and services in a country.
Group the students and get them involved in the activity on the proposed instructions
for learning.
-2-
Proposed instructions for learning :
Pay attention to the price list of your group from the lists given below
Rice 35 40 42 45 48
Suger 40 42 45 48 50
Wheat 25 30 32 35 38
Total
Carrot 40 43 45 47 49
Beans 35 37 39 40 42
32
Leeks 25 27 28 30
Total
Pineapples 30 32 35 37 40
Oranges 20 23 25 28 30
Pomegranates 35 37 40 42 45
Total
Compute the total price of the three set of goods received by you every year.
Calculate the relative change of price level of the three sets of goods for the years
2006, 2007, 2008 and 2009 compared to the year 2005.
Indicate the increase or decrease as a percentage of the total of the three set of
goods in 2005.
Compare the percentage changes of prices of each respective year with the previous
year.
Through a group discussion determine conclusions that you can arrive at.
Be prepared to present the information you collected to the class in a creative
manner.
-3-
Guidelines to explain subject matter
General Price level is an index that reflects all the prices of goods and services.
Here, it is difficult to obtain a meaningful value on the general price level by simply
adding the value of each good expressed in terms of rupees and cents.
Value of any variable that varies with time can be expressed through indices.
Price indices are used to indicate the percentage changes of values of a time series
compared to the base year.
When the base year value is considered as 100 the amount of percentage changes of
time series values for other years can be calculated.
The general Price level has increased in the second year by 43% and third year by 100%
compared to the base year.
-4-
Competency Level 6.2: Investigates price indices that measure change of general price
level in Sri Lanka.
Number of periods : 08
Learning outcomes :
Names and explains the prices used to measure general the price level in Sri Lanka.
Discusses the shortcomings in the indices used to measure the general price level in
Sri Lanka.
There are many indices available to measure the general price level in Sri Lanka.
Among them, some are consumer price indices and some are prices used to measure
total price level.
The New Colombo consumers price index, Wholesale price index and GDP Deflator
are used to measure the general price level in Sri Lanka at present.
New Colombo consumers price index is used as the price index in Sri Lanka effective
from 2002.
Though the Colombo consumers price index had been in Sri Lanka since 1952 to measure
living expenses, a new CCPI has been introduced due to the shortcomings of CCPI.
The Department of Census and Statistics (DCS) revised the base year of the Colombo
Consumers Price index (CCPI) from 1952 to 2002 in November 2007.
This price index is calculated on a monthly basis by the Department of Census and
Population and published in the Government gazette.
The weights of the CCPI were revised by the DCS based on the Household Income and
Expenditure Survey (HIES) conducted in 2006/07.
This indices are prepared by calculating the nominal prices value from the above centers.
P0Qo
P1= Prices of current year
= Total
The Wholesale price index was introduced in 1977 by the Central Bank.
This index has been prepared on 13 weighted items considering the base year as 1974.
Prices in the retail market can be predicated based on the price level changes in the
primary market.
Deflator Price index is prepared based on the estimations of gross domestic product
calculated on constant and current prices.
The ratio between the gross domestic product calculated on the constant price and the
current price in the same year reflects the change of price.
-6-
Competency Level 6.3 : Studies the types of inflation by analyzing the concepts of
inflation.
Number of periods : 06
Learning outcomes :
Defines inflation
Inflation as the continuous increase of the general price level in the economy.
The level of inflation in the economy determines the average prices of all goods and
services and not on the changes of prices of individual goods.
Core inflation is the inflation ratio which is applied to mention the temporary changes of
price.
When measuring core inflation in Sri Lanka on international standards food and energy
items are not included.
Creeping inflation, Galloping inflation, hyper inflation, Spiral inflation, and Suppressed
inflation, can be identified based on inflation.
-7-
Competency level 6.4: Analyses causes and effects of inflation using different approaches
to inflation.
Number of periods : 06
Learning outcomes :
Describes causes of inflation based on various approaches.
Analyses the effects of inflation.
Describes the ways of controlling inflation.
Guidelines to explain subject matter:
Inflation can be analyzed using the following approaches.
Demands pull inflation.
Costs push inflation.
Structural inflation.
Demand pull inflation occurs due to too much money chasing few goods.
Financial expansion, Increase in government debts and increase in government expenditure
cause increase in demand.
Theory of demand inflation has two approaches called the quantity theory of money
analysis and Keynesian analysis.
Cost push inflation occurs due to the increase of the prices of goods and services followed
by the increase of cost of production with higher prices of inputs.
Price level increases with the increase of cost which is determined on the clashes between
groups to acquire the proportions of national income.
For example, rise in wages following trade union action can be presented.
Graphical presentations of demand pull and cost push inflation are possible.
Structural inflation occurs due to rigidity, limitations and inelasticities in the economic
structure.
Inflation brings about various economic effects.
Decline in the real value of money has adverse effects on fixed income earners, depositors
and creditors.
Variable income earners and debtors are benefited by inflation.
Real income can be calculated using the following formula.
-8-
Competency level: 7: Analyses the contribution of the monetary and banking system to the
economic process.
Competency level 7.1: Investigates money, types of money and functions of money.
Number of periods : 05
Learning outcomes :
Identifies the value of money and explains how the internal and external
value of money is determined.
There should be a double coincidence of wants when exchanging goods and services.
Acceptability
Durability
Uniformity
Divisibility
Portability
Stability of value
Discourages forgery
Money which is legally accepted for transactions within the country is Currency.
Electronic money is a method of transaction through software storing the value of physical
money electronically.
As a medium of exchange.
As a store of value.
As a unit of account.
Ability to express the value of a good or service in a common unit is called a unit of
account.
Ability to settle past debts at a future date more efficiently is called a medium of deferred
payment.
The value of money is the quantity of goods and services which can be purchased at a
given time period.
Value of money is divided into two parts called internal value and external value.
The Internal value of money is the quantity of goods and services that can be purchased by
a unit of money of that country.
The External value of money is the quantity of goods and services that can be purchased by
a one unit of money of that country from another country.
There is a positive relationship between the internal value and external value of money.
- 10 -
Competency level 7.2: Explains the factors related to the demand for money.
Number of periods : 05
Learning outcomes :
Explains the relationship between demand for money and the determinants of demand
for money using graphs.
Engagement
Inquire from the students the various reasons for the need for money.
People keep money to buy food and beverages, medicine for emergencies and
transportation.
The preference of people to keep money for these reasons is the demand for money.
- 11 -
Proposed instructions for learning :
Pay attention to the instance received by your group. Given below are some instances
where people need money. .
To buy rice.
List as many other instances for the need for money as possible.
Assume that you have a fixed monthly income, decide how much of that income will be
allocated for the relevant purpose received to your group.
Decide how much of that income will be allocated for the same purpose if the income
doubles.
By using the data above draw a graph to show the relationship between change of
income and allocation of money for that particular purpose.
(Use the horizontal axis for money allocated and the vertical axis for income.)
Using the above graph explain the relationship between the allocation of money relevant
to your purpose and income.
The preference of the people to keep money in the form of money at a given time can be
defined as demand for money.
Transaction motive.
Precautionary motive.
Speculative motive.
Since there is a gap between receiving income and spending the income by a person
holding money balances for transactions is called demand for money on transaction motive.
Demand for money on a transaction motive basically depends on the income level of
people.
.
- 12 -
There is a positive relationship between the income level and demand for money on
transaction motive.
Y = Income
Mtd =Demand for money caused by
Transaction motive
Mt d
Mtd = f (Y)
0 Y
Demand for money on a transaction motive is influenced by other factors except income.
Holding money balances to spend in unexpected situations is known as demand for money
on precautionary motive.
Demand for money on precautionary motive also depends on the income level of people.
There is a positive relationship between the income and the demand for money on
precautionary motive. It can be shown by a function and a graph as below.
Y = Income
Mpd =demand for money caused by
Precautionary motive
Mp d
Mpd = f (Y)
0 Y
- 13 -
Demand for money to earn profits in future from investments is called the demand for
money on speculative motive.
There is a negative (inverse) relationship between the demand for money on speculative
motive and interest rates.
Speculative motive
Msd = f(r)
r = Interrest rate of the market
Mtd = f (Y)
- 14 -
Competency level 7.3: Analytically examines the supply of money in Sri Lanka.
Number of periods : 06
Learning outcomes :
Defines money supply.
Explains the factors of money supply.
Analyses the monetary aggregate separately.
Analyses the relationship of Base money using the liabilities and assets of the Central
Bank.
Defines money multiplier and presents its determination through equations.
Guidelines to explain subject matter:
Various kinds of money transactions can happen among the public.
In these transactions money is circulated among the public.
The total money stock that circulates among the general public at a given period is called
money supply.
Money supply is a stock concept.
The items of monetary aggregates which are bank liabilities can be categorized as follows.
Base money / High powered money / Reserve money supply
Narrow money supply.
Broad money supply.
Broad money concept can be categorized again as
- 15 -
Consolidated broad money supply = Broad money supply +Deposits of non residence
foreign currency units + Deposits of foreign currency banking units.
Very broad money supply =Consolidated broad money supply + Time and savings
deposits of the public with licensed specialized banks + Deposits of residents with
registered financial institutions.
Money multiplier is the ratio between money supply and high powered money.
Therefore multiplication of high powered money and money multiplier is the money supply.
The relationship of money supply, high powered money, and money multiplier can be
shown by the following equations.
M Money supply
K= Money Multiplier }
H
Base of money
- 16 -
Categories of money multiplier
M1
Narrow money multiplier
H
M2
Broad money multiplier
H
M2 b
Consolidated broad money multiplier
H
M4
Very broad money multiplier
H
Factors that influence the money multiplier can be identified using the formula
below.
Factors that influence the money multiplier can be identified using the formula
below.
(C + E + R)
- 17 -
Commercial banks carry out their business activities to achieve two main
objectives below.
to maintain liquidity
to maintain profitability
There is a conflict between these two objectives
According to the instructions of the Central Bank commercial banks must maintain a
certain percentage of its deposits as a reseve. This ratio is known as statutory reserve rate.
Central Bank changes this ratio from time to time.
The statatory reserve of commercial banks are known as " excess reserves " and it can
be found as follows.
Excess reserve= Current money reserve-Statutory reserve
Surplus reserve is decided on the following factors
The demand for loans
Selection of commercial bank between liquidity and profitabillity.
Monetary policy of the Central Bank
Deposit multiplier is the number of times of extension of deposit or creation of credit
and bank deposit extensions multiplier shows how many times deposits are created
compared to the increase in reserves.
Deposit multiplier is equal to the difference of statutory reserve ratio
Bank deposit expansion multiflier=1/Statutory reserve ratio = 1/r
For example : Bank deposit multiplier (K) = 1/r
if r =10% deposit multiflier=1/10%=10
Profitability decreases when liquidity is maintained and liquidity decreases when
profitability is maintained
Since there is a conflict between the above mentioned aims, it is important to maintain
assets to ensure a balance between these aims.
Increasing deposits above the existing deposit by lending the surplus reserve of
commercial banks is called "creation of credit"
Though it is easy to create money when only one bank functions in monopoly,
it is imposible for a single bank in the banking system to create money.
The process of creation of money by banking system is based on the following
assumptions
- 18 -
Competency level: 7.4: Classifies the financial system of Sri Lanka.
Number of periods: 06
Learning outcomes:
Classifies the financial system of Sri Lanka according to the Central Bank report.
Describes financial institutions in brief.
Guidelines to explain subject matter:
Classifies the financial system of Sri Lanka as below.
Banking sector
Central Bank of Sri Lanka.
Licensed commercial banks
Licensed specialized banks
Other depository financial institutions
Registered financial companies
Co-operative rural banks
Thrift and Credit Co-op Societies.
Other special finance institutions
Special leasing companies
Primary dealers.
Merchant banks
Financial Brokers
Unit Trusts
Venture Capital Investment Companies
Credit Rating Institutions
Accorded savings institutions
Insurance companies
Employee provident funds
Employee trust funds
Other provident funds
Government services provident funds
- 19 -
Competency Level 7.5: Investigates the functions of commercial banks in the banking
system.
Number of periods: 06
Learning outcomes:
Explains the special function of credit creation of commercial banks using numerical
data.
The special, very strong and prominent monetary institutions that act as financial
intermediaries in the monetary system with profit motive are called commercial
banks.
Accepting deposits
Providing loans
Services as an agent
- 20 -
The left side of the balance sheet shows the liabilities and the right side of the balance
sheet shows the assets of the commercial bank.
The total of the liabilities should be equal to the total assets of the balance sheet of the
commercial bank.
(Help the students to know more about the combined commercial bank balance sheet
with reference to the Central Bank report.)
Commercial banks carry out their business activities to achieve the following objectives.
To maintain liquidity
To maintain profitability
According to the regulations of the Central Bank, commercial banks must maintain a
certain percentage of its deposits as a reserve. This ratio is known as the statutory reserve
ratio.
The amount of reserves exceeding the statutory requirement is called excess reserves. It
can be found as follows.
Deposit multiplier is the number of times of expansion of deposit or creation of credit with
a demand deposit.
- 21 -
Since there is a clash between the two objectives, mentioned above, assets should be
maintained in a balanced manner.
Generating more deposits than the existing deposits by lending the excess reserves of
commercial banks is called Credit creation.
Since only one bank functions in a monopolistic banking system, credit creation is possible.
But it is impossible for a single bank in a banking system to create money.
The credit creation of the commercial banking system is based on the following assumptions.
After making the initial deposit there is no inflow or outflow of money in the banking
system.
All the borrowers deposit their total amount of loans in another commercial bank.
When statutory reserve ratio (r) increases, deposit multiplier decreases and when
statutory reserve ratio(r) decreases, the deposit multiplier increases.
If people prefer to retain money with them, excess reserves of commercial banks
will decline.
- 22 -
Competency Level 7.6: Investigates the role of the Central bank as the apex financial
institution of Sri Lanka.
Number of periods: 05
Learning outcomes:
Lists the functions of the Central Bank of Sri Lanka on the objectives.
The independent body that was set-up to carry out the monetary policy of Sri Lanka
is the Central Bank Of Sri Lanka.
The mission of the Central Bank is to maintain economic and price stability and the
stability of the monetary system for sustainable economic development through policies,
supervision, commitment and excellence.
Creating an effective monitoring framework and strong and protective payment and
settlement system for depositors and investors are the infrastructure facilities needed to
materialize stability of the monetary system
- 23 -
Stability of monetary system is important for the following reasons.
The process of regulating monetary instruments to influence the interest rate and money
supply to reach the objectives of economic and price stability and the stability of
monetary policy is monetary policy.
- 24 -
Competency Level 7.7: Investigates the use of monetary policy instruments in
Sri Lanka.
Number of periods: 06
Learning outcomes:
Engagement
Obtain the ideas of students about the functions of the sluice of a tank.
The Sluice is used for water management in the tank and distribution of
water to required places and the control of the water supply is also affected
by the sluice.
The Central Bank of Sri Lanka uses various instruments to control the
money supply in the country just like a sluice which controls the water
supply of a tank..
Various instruments that are used by the Central Bank to control the money
supply are known as Monetary policy Instruments
Group the students, give suggested instructions for learning the specific areas
for each group and ask them to carry out the activity.
- 25 -
Proposed instructions for Learning:
The following are some actions taken by the Central Bank as monetary policy
instruments last year. Pay attention to the type of action assigned to your group.
Reducing interest rate on borrowing for rubber plantation from 12% to 10%
Sale of securities worth Rs. Five Million by the Central Bank in the open market
Discuss how it influences money supply and supply of loans in the economy
Explain the relationship between the point given to you and debt control.
Discuss how it influences money supply and supply of loans in the economy.
Explain the relationship between credit control and the action assigned to you.
Influencing the cost of debts and liquidity by changing interest rates and money
supply is called monetary policy.
Quantitative and qualitative monetary instruments are the two main instruments used to
operate the monetary policy.
Quantitative credit control instruments are the common methods of reducing the supply
of loans. The volume of loans and the direction of the flow of the loans are controlled
by the qualitative credit control instruments.
Quantitative monetary instruments are of three types such as Bank interest rate, statutory
reserve ratio and open market operations.
Repurchasing rate.
Reselling rate.
- 26 -
Among them repurchasing rate and reselling rate are used in the open market
operations.
Credit Ceilings
Moral suasion.
- 27 -
Competency Level 7.8 : Analyses the financial market in Sri Lanaka
Number of periods : 06
Learning outcomes :
Defines monetary policy.
Categorizes monetary market.
Defines the money market and explains the sub- markets that are
operating in the money market.
- 28 -
Competency Level 08 :Investigates the type of intervention of the government
to achieve macroeconomic objectives.
Competency Level 8.1 : Logically represents the reasons for market failure.
Number of periods : 06
Learning outcomes :
Externalities
Imperfect competition
Imperfect information
- 29 -
Creating a monopolistic situation due to the lack of competition in
the market system is known as imperfect competition.
Public goods are the goods and services which have not affected
the consumption of one person by the consumption of another person
and there is no competition in consumption in which the consumption
can not be avoided for non payment.
Quasi public goods are the goods and services from which non
payers of the price can be restricted though there is no competition
in consumption.
Under the market system quasi public goods are also provided by
the government since they are not provided at optimum level.
- 30 -
Merit goods are the goods in which social benefits are higher
than the private benefits.
Since the quasi public goods are not provided at an optimum level
under the market economy there is a lack of consumption.
The goods and services in which social benefit is lower than the
private benefit are demerit goods. They are socially undesirable.
- 31 -
Competency Level 8.2 : Examines the effects of externalities on market
failures.
Number of periods : 06
Learning outcomes :
Defines externalities
Engagement
Ask students' ideas related to favourable and unfavourable impacts shown by the
photographs.
spread of deceases such as dengui and Filaria due to clean water lying in King
coconut discards.
Society will not receive any compensation nor will they be penalized or they do not
bear any expenditure on this account..
In this way the benefits or losses borne by any external party that does not directly
participate in an economic activity are identified as externalities.
group students appropriately by providing necessary guidance for the activities below.
- 32 -
Proposed instructions for Learning:
Pay attention to the topic given to you from the topics below.
Externalities of production
Externalities of consumption
Develop a discussion to understand the topic given
Collect information relevant to your topic based on your experiences
List out externalities based on the information gathered and separate them according
to favourable and unfavourable externalities.
Identify the reasons and effects of externalities and ways of avoiding these.
Be ready to present your findings to the class.
Externalities are the non compensated benefits or losses borne by an external party
that is not participating in an economic activity.
educational T. V. programmes
- 33 -
Examples of positive externalities of consumption are;
educational T. V. programmes
collection of garbage
external benefits.
Social costs and social benefits are based on external costs and benefits.
private costs + external costs = Social costs
private benefits + external benefits = social benefits.
Only private costs and private benefits are taken into account in a market economy.
The decisions taken on the production and consumption of goods and services are not
optimum decisions as externalities are not taken into consideration.
MSC
A
MSB
MPB
Q0 Q1
Consumption
Fig. 1
MSC = Marginal Social Costs
MSB= Marginal Social Benefits
MPB = Marginal Private Benefits
- 34 -
According to fig 1 the equilibrium point (optimum point) is at point A where
MSC is equal to MPB. Equilibrium (optimum) quantity produced and
consumed is Q0.
But when the social benefits are taken into account optimum equilibrium point
is at point B where MSC is equal to MSB. Q1 is the equilibrium production
and consumption point.
MC
B MSC
MSB
0 Q0 Q1
Production
Fig. 2
MC = Marginal Costs
MSC= Marginal Social Costs
MSB = Marginal Private Benefits
- 35 -
When there is a positive externality of production and social benefits are taken
into account, optimum production exceeds the optimum market production.
Internalization
Rationing
Fines
Imposing regulations
Recycling of garbage.
- 36 -
Competency level 8.3 : Examines the role of the government in the market system.
Number of periods : 06
Learning outcomes :
Explains why a government fails to play its role successfully
via market economy.
Guidelines to explain subject matter:
The government has taken the following action to minimize inefficiency in the
market economy.
Production of public & welfare goods.
Prevention of imperfect competition.
Greater focus on the prevention of externalities like environmental pollution.
Ensuring the ownership of public resources.
- 37 -
The government takes following actions to ensure equity.
redistribution of income and wealth.
Land reforms.
facilities.
- 38 -
Competency level 8.4 : Investigates the use of Fiscal policy to achieve macro
economic objectives.
Number of periods : 06
Learning outcomes :
The level of macro - economic variable factors and how they change with
time are determined by internal & external factors.
- 39 -
When macro - economic variable factors do not change in a positive manner
the economy will not function well.
The problems arising as a result of the economic activities in the entire economy
are called macro economic problems.
eg. unemployment, increase in inflation, declining foreign exchange rates.
As the fiscal policy influences aggregate demand, fiscal and monetary policies
are known as demand management policy.
It is difficult to achieve all the macro economic objectives at the same time as
conflicts between these objectives may arise when different measures are
taken to achieve them . Therefore, attention has to be paid to minimize reasons
that lead to such problems.
T So it is important to put the fiscal policy in a way to ensure that these conflicts
are minimized. - 40 -
Competency level 8.5 : Examines the tax system as a main source of government
revenue.
Number of periods : 06
Learning outcomes :
Names and explains the main sources of government
revenue.
States the composition of government tax revenue.
Names and explains tax principles.
Classifies different types of taxes.
Points out the positive and negative effects of the tax system
on the economy.
Explains the structure of the government revenue of Sri
Lanka.
Explains the trends of government revenue of Sri Lanka.
- 41 -
Competency level 8.6
: Reveals recent changes in the composition of
government expenditure.
Number of periods : 06
Learning outcomes :
Defines government expenditure
Current Capital
expenditure expenditure
Government capital investments and net lending will generate a large amount
of benefits in the future are government investments.
There is a need for the production of some capital goods which are not
produced by the private sector in order to ensure economic growth.
Current Capital
expenditure expenditure
- 43 -
Provide facilities and services which are needed to create a conducive
environment for investments by the private sector.
Government capital expenditure and net lending were limited till recent times
due to,
increase in expenditure in defence.
- 44 -
Competency Level 8.7 : Analytically investigates economic effects of government
budget policies.
Number of periods : 06
Learning outcomes :
Defines the government budget and prepares its structure.
Classifies the budget as deficit, surplus and balanced
budget.
Describes the budget policies and examines the effects of
expansionary and contractible budget policies on the
economy.
Expresses the ideas about the importance of spending
according to income.
Suggests more appropriate budget proposals for an
economy.
Explains the structure of the government revenue of Sri
Lanka.
Explains the trends of the government revenue of Sri Lanka.
Learning and teaching process:
Engagement
Display the following news paper headline to the class Government budget proposals
to the parliament tomorrow
Elicit ideas of the students about the news paper headline.
Conduct a class discussion highlighting the following points
Budget proposals reveal information about the expected revenue
and expenditure of the government for the next year.
The government covers its expenditure with the revenue earned from various
sources.
The government has to take various steps to collect money in case it is unable
to earn adequate revenue to cover expenditure.
Group the students in an appropriate manner, give the suggested instructions
and assign the students to do the activity.
- 45 -
Proposed instruction for learning:
Country A
Revenue Rs. m.
Income tax 20
Goods and service tax 70
Tax on international trade 10
Non-tax revenue 50
Expenditure
Salaries and wages 70
Interest payments 10
Subsidies and transfers 18
Other goods and services 12
Capital expenditure 35
Other expenses 05
Country B
Revenue Rs. m.
Income tax 30
Goods and service tax 70
Tax on international trade 100
Non-tax revenue 100
Expenditure
Salaries and wages 100
Interest payments 50
Subsidies and transfers 80
Other goods and services 70
Capital expenditure 100
Other expenses 20
- 46 -
Country C
Revenue Rs. m.
Income tax 80
Goods and service tax 85
Tax on international trade 135
Non-tax revenue 100
Expenditure
Salaries and wages 100
Interest payments 30
Subsidies and transfers 70
Other goods and services 50
Capital expenditure 70
Other expenses 60
Study well the information on revenue and expenditure of the country assigned
to you.
Use a structure you know to match revenue and expenditure and obtain the
final result.
Explain the condition that may prevail in the country next year after matching
revenue and expenditure.
Suggest what activities the particular government should implement to face
such a situation.
Highlight through a class discussion how these activities affect the economy of
the country.
Be prepared to present your findings to the class effectively/creatively.
Guidelines to explain subject matter:
The government budget is the document/report of
proposals that contains the details of expected
government expenditure and how the government is
expected to collect revenue to meet expenditure for the
next year that is presented to the council and approved
by it.
There is a difference between an individual's budget and
a the government budget.
Total budget balanced is obtained by matching total
government revenue and expenditure.
- 47 -
Budget can be classified as deficit, surplus or balanced budget based on the
nature of the total budget balance.
Expansionary and contractible budget policies are used to settle budget deficit.
If the loans that are obtained to settle budget deficit increases the money
supply in the country, such loans are known as expansionary loans.
If the loans taken do not affect the supply of money in the economy, they are
known as contractible loans
- 48 -
Competency Level 8.8 : Investigates the government budget and its economic
effects
Number of periods : 06
Learning outcome :
Examples of factors that affected budget deficit in Sri Lanka in recent years.
Reduction in tax revenue due to tax relef
Various steps have been taken to settle the budget deficit in Sri Lanka.
Foreign grants.
- 49 -
Persistant budget deficit will have many effects on the economy of a country.
increase in inflation
- 50 -
Competency Level 8.9 : Discuss th composition of state loans and its trends
Number of periods : 06
Learning outcomes :
The loans that the government takes on the condition that its pays it back with
interest is known as state borrowings.
banks non-banks
The borrowings of the state from the monetary market and capital market are
known as market borrowing (loans)
- 51 -
Examples. A large part of government revenue has to be paid as
loans and interest on the loan.
Only a small part of the government revenue remains behind in order
to spend to achieve development objectives and for other needs.
increase in interest rates in the local market.
Decrease in external value of the local currency.
Reduction in resource allocation to the public sector reduce private investments
and it has a negative effect on economic development
Difficulty in state monetary system management and state debt management
causes inflaction.
Creation of inflation due to borrowings from banking sector.
Balance of payment problems arise as a result of increase in total expenditure.
Needs to face a crisis in international debt.
Decline in local savings rate.
Damaging international competition by the decrease in monetary value of foreign
exchange rates due to inflation in the economy.
Payment of loan instalments with interest on the total state borrowings is known
as debt service payment.
The loan instalments on the total borrowings of the government and the interest
to be paid on them can be shown as a percentage of domestic production. It
is known as debt service ratio.
Different types of debt service ratios can be calculated by using debt instalments
and interests, export revenue, government revenue and government
expenditure.
The debt service ratios are calculated in different ways an shown as debt
service index.
Examples of recent trends of borrowings of Sri Lanka are;
- 52 -
Continuous decrease in the debts that have not been settled as a
percentage of the gross domestic product.
Middle term and long term loans are greater than the short lerm loans
according maturity period.
Loans taken from non-banks are greater than the loan taken from banking
sector.
- 53 -
Competency Level 8.10 : Analyses the economic effects (effects on the economy) of
government supply development policies.
Number of periods : 06
Learning outcomes :
Defines supply development policy.
Explains various activities of supply development policy
with examples.
Analyses the economic effects of supply development
policies
Guidelines to explain subject matter:
Provision of facilities to encourage production is supply development policy.
Investments increase, costs of production decrease and increases the
productivity of factors of production when supply develop policy works.
Supply development policy can achieve expected level of macro economic
variables.
Various supply development policies can be used to encorage production
and such activities are given below.
Tax reforms
Privatisation
Monitoring
Reforms of labour market
Reforms of capital market
Making changes in tax system in order to increase production is known as tax
reforms.
Imposing taxes can affect the competetiveness of the market.
Optimum level of production, consumption, investments and savings will be
lost as a result of taxation.
Therefore it is important to be compassionate when imposing taxes in
order to minimise influence of taxes on competitivenets of the market.
Example - tax relief, tax exemption, reduction of taxes
- 54 -
When these concessions are given, cost of production will be reduced and
production will increased.
Making use of the private sector to manage the business activities under the
ownership of the government (business activities manged by the public sector)
is known as privatization.
Privatisation can cause both positive and negative effects on the economy.
- 55 -
Decrease in cost of production
Making relevant changes in order to retain the rigid nature of demand and
supply of labour in the labour market.
- 56 -
Example. Removing rigid/strict labour laws.
Taking actions not to recruit people who are not competent in certain
professions.
But it is important to know that attention is not paid to implement the reforms
within certain limits, it may have negative effects on the economy.
eg. It private firms are given freedom to recruit people for their firms it
may cause injustice to these worker. When they are removed from
service during the time there is not adequate work to be done.
Taking action to solve the problems of lack of capital that hinders increase in
production is known as Capital market reforms.
eg. Increase in productivity of capital
Encouraging direct foreign investments.
Obtaining foreign loans on favurable terms.
Taking steps to increase savings
- 57 -
Competency 9 : Analysis the effects of international trade and finance on the overall
economy of a country
Number of periods : 05
Engagement:
Inquire from the students the reasons, why Japan purchases apparels from Sri Lanka
and Sri Lanka purchases motor cars from Japan.
Japan is more efficient than Sri Lanka in the production of motor cars while Japan is
less efficient than Sri Lanka in the production of apparels.
Sri Lanka is more efficient than Japan in the production of apparels while Sri
Lanka is less efficient than Japan in the production of motor cars.
Hence, Sri Lanka produces more apparels and exports to Japan and purchases
motor cars from Japan.
Japan produces more motor cars and exports to Sri Lanka and purchases apparels
from Sri Lanka.
Group the students appropriately and give instructions for the proposed learning and
engage them in the activity.
- 58 -
Proposed instructions for learning:
Pay your attention to the table given to you from the given two tables which includes
production information for the following four countries.
Table 01
Production Sri Lanka USA
Apparels (units/per man hour) 12 02
Wheat flour (kilograms/per man hour) 08 10
(It is assumed that both countries have the same labour costs.)
Table 02
Production Japan Sri Lanka
Motor cars (units/per man hour) 06 01
Footwear (units/per man hour) 04 02
(It is assumed that both countries have the same labour cost)
Study the information related to the output of both goods of the two countries mentioned
in the table given to you throughly.
Identify the type of goods that can be produced more efficiently and less efficiently in
relation to the two countries according to the information given.
If one country expects to engage in international trade with some other country on the
basis of efficiency of the two goods above, explain which good is produced more to be
exported and which good is imported.
Calulate the opportunity cost of producing each type of goods in both countries.
According to the opportunity cost you calculated explain which type of goods has
advantage in greates production to both countries and which type of goods should be
imported.
List the advantages that countries can gain if import/export trade takes place between
countries.
- 59 -
Proposed instructions for learning:
Pay attention to the table given to you from the two tables given which includes
production information for the following four countries.
Table 01
(It is assumed that both countries have the same labour costs.)
Table 02
(It is assumed that both countries have the same labour cost)
Study carefully the information related to the output of both goods of the two countries
mentioned in the table given to you.
Identify the type of goods that can be produced more efficiently and less efficiently in
relation to the two countries according to the given information.
If one country expects to engage in international trade with some other country on the
basis of efficiency of the two goods above, explain which good is produced more to be
exported and which good is imported.
Calculate the opportunity cost of producing of each type of goods in both countries.
According to the opportunity cost you calculated explain which types of goods should be
produced more by each country and which type of goods should be imported.
List the advantages that countries can gain if import/export trade takes place between
countries.
- 60 -
Guidelines to explain the subject matter:
Exchange of goods and services by a country with other countries in the world is known
as international trade.
The Absolute advantage theory and the comparative advantage theory can be taken as
examples of the theories which describe international trade.
According to the economist Adam Smith (1776) who introduced the absolute advantage
theory to the world, the definition is,
If a country can produce a good with less cost of resources than its trading partner
that country can obtain the advantage by producing and exporting it and importing
the goods which need more cost of resources.
The theory of absolute advantage can be explained through the example given below.
According to the above example, since Sri Lanka can produce apparel with less resource
cost than USA Sri Lanka possesses the absolute advantage in the production of apparel
and USA has the absolute disadvantage in wheat flour production.
Since the USA can produce wheat flour with less resource cost than Sri Lanka, the
USA possesses the absolute advantage in the production of wheat flour and Sri Lanka
has absolute disadvantage in the production of wheat flour.
Hence Sri Lanka can gain more benefits by producing more apparel which has a greater
absolute advantage while selling the excess to USA and buying wheat flour from USA
which has an absolute disadvantage to Sri Lanka.
The USA can produce more wheat flour for which they have absolute advantage and
sell the excess to Sri Lanka to buy apparel from Sri Lanka, for which they have absolute
disadvantage.
- 61 -
Accordingly, international trade can occur between USA and SL on the basis of absolute
advantage.
The economist David Ricardo introduced the theory of comparative advantage to the
world (1817) citing the weaknesses of the absolute advantage theory.
Accordingly Japan has the comparative advantage over producing motor cars while India
has the comparative advantage over producing radios.
When both countries get involved in trading, Japan gets specialized in the production of
motor cars while India gets specialized in the production of radios and both countries can
gain benefits by exchanging the excess produced due to the specialization of the two
countries.
The Advantages a country can attain by involving in international trade can be divided
into two main parts as follows.
Advantages of specialization
Advantages of exchange
There are two parts of comparative advantage which leads a country towards international
trade.
Static advantage
Dynamic advantage
An advantage a country inherits naturally due to its production and consumption is known
as static benefit. The following factors cause static advantage to occur;
Resource endowment
The benefits that occur due to the creation of conditions such as technical improvement,
product differentiation, government policies, trade agreements etc. are known as
dynamic benefits.
The comparative advantage in the international trade can be explained via both production
possibility and production cost.
In a production possibility data schedule output units are indicated while input units are
indicated in a data schedule of production cost.
- 62 -
Accordingly Japan has the comparative advantage over producing motor cars while
India has the comparative advantage over producing radios.
When both countries get involved in trading, Japan gets specialized in the production of
motor cars while India gets specialized in the production of radios and both countries can
gain benefits by exchanging the excess produced due to the specialization of the two
countries.
The Advantages a country can attain by involving in international trade can be divided
into two main parts as follows.
Advantages of specialization
Advantages of exchange
There are two parts of comparative advantage which leads a country towards international
trade.
Static advantage
Dynamic advantage
An advantage a country inherits naturally due to its production and consumption is known
as static benefit. The following factors cause static advantage to occur;
Resource endowment
The benefits that occur due to the creation of conditions such as technical improvement,
product differentiation, government policies, trade agreements etc. are known as
dynamic benefits.
The comparative advantage in the international trade can be explained via both production
possibility and production cost.
In a production possibility data schedule output units are indicated while input units are
indicated in a data schedule of production cost.
- 63 -
Competency Level 9.2 : Analyses the impact of protectionist policies in international trade.
Number of Periods : 06
Allowing unrestricted mobility/ movement of goods, services and factors among countries
is known as free trade.
Any measure that limits the entry of foreign goods to the domestic market freely is
considered as protectionism. Protective measures can be divided into two parts.
Tariff measures
Non-tariff barriers
Rationing
Banning of import
Dumping
Establishment of Cartels
- 64 -
Advantages and disadvantages of protectionism can be divided as follows.
. Advantages Disadvantages
We can argue for and against, for the advantages and disadvantages mentioned above .
World Trade Organization (WTO) can be identified as a major institution that regulates
international trade.
The World Trade Organization has been formed with the objective of relaxing
protectionism.
The World Trade organization has been established on the basis of the following objectives.
Promoting free trade for investments which influence the agricultural trade in
the international trade and intellectual property.
- 65 -
Competency Level 9.3 : Investigates structure and trends of the international trade in Sri
Lanka.
Number of Periods : 05
Learning outcomes : Defines the export and import trade of Sri Lanka. .
Learning-teaching process:
Engagement
Question the students regarding goods with a higher foreign exchange earnings and the
goods with a higher foreign exchange payments.
Sri Lanka earn a higher amount of foreign exchange by selling apparel to the foreign
market. (According to 2009 CBSL report)
Sri Lanka spend a higher amount of foreign exchange to purchase petroleum from
the foreign market. (According to 2009 CBSL report)
In this manner Sri Lanka exports and imports a large amount of goods and services.
Involve students in the activity giving suggested instructions for learning after dividing
them into groups.
- 66 -
Proposed instruction for learning:
Focus on the topic given of your group out of the following topics.
Import trade.
Export trade
Present the changes of the contribution of the relevant components and the structure
during a particular period of time.
Prepare to present your findings to the class through graphs, tables and percentages.
Purchase of goods and services by a country from other countries in the world is import
trade.
Sale of goods and services by a country to other countries in the world is export trade.
Consumer goods
Intermediate goods
Investment goods
Unclassified export
- 67 -
The export structure of Sri Lanka is as follows.
Agricultural exports
Industrial exports
Mineral exports
Unclassified exports
(According to 2009 CBSL report)
Gems
Other investment exports
- 68 -
The above structure can be presented as a percentage
Miscellaneous - 1.2%
Petroleum
Fertilizer
Chemicals
Electrical equipments
Petroleum
Fertilizer
Chemicals
Transport equipment
Building materials
- 69 -
Changes in the import structure from 1977 to 2011 are as follows.
Others 1% .3%
Clothes 3% 11%
Fertilizer 1% 2%
Papers 1% 2%
(The above information has been presented according to the annual report of CBSL
2011. Give the necessary information to students, using the annual report of CBSL in the
most recent year)
Agricultural exports
Industrial exports
Mineral exports
Unclassified exports
- 70 -
The above export structure above can be presented as a percentage as follows
Petroleum products
Rubber products
Ceramic products
Gems
Other 7% 0.3%
- 71 -
Exports of industrial goods are given in detail.
High quality of Sri Lankan apparels and gaining of international confidence in them
world wide.
- 72 -
Competency Level 9.4 : Investigates economic impact of international trade using terms
of trade
Number of Periods : 06
The units of imported goods that can be bought from a unit of exported goods is known
as terms of trade.
The index prepared to measure the purchasing power or the import capacity of exports
is known as commodity terms of trade.
Commodity terms of trade can be calculated by dividing the export price index by import
price index and multiplying it by 100.
Commodity terms of trade do not perfectly reflect the import purchasing power of a
country.
The index prepared to measure the import purchasing power of export revenue is known
as income terms of trade.
- 73 -
Income terms of trade can be calculated by multiplying commodity terms of trades in a
country by its export volume index.
I = Px x Qx
Pm
Since, import of investment goods depends on income terms of trade, developing countries
must have a high income terms of trade at an increasing rate.
- 74 -
Competency Level 9.5 : Prepares a structure of balance of payments based on the contents
of balance of payments.
Number of periods : 06
Engagement
Inquire from the students about the sources of income of their homes and how income is
spent.
Wages of household
The following are the ways in which income received by a household is spent to
consume various goods and services.
For transportation
For payments such as electricity bills, water bills and telephone bills
The state of deficit or surplus can be found by comparing the income and the expenses
of a household.
- 75 -
Group the students in an appropriate way and give instructions for the proposed learning and
involve them in the activity.
Proposed instruction for learning:
The following is some of the information related to the foreign trade of Sri Lanka. Pay
attention to the information given to your group.
Group A
Coconut export 50
Group B
- 76 -
Group C
List the transactions from which Sri Lanka receives foreign exchange and calculate the
total amount of foreign exchange received according to the information given to your
group.
Prepare a list of transactions that costs foreign exchange to Sri Lanka and calculate the
total foreign exchange payments.
Calculate the final balance comparing receipts and payments of foreign exchange
calculated above.
The document that states a countrys total transactions with the rest of the world as
receipts and payments is known as balance of payment.
This is also known as balanced table of payments since it reflects a double entry book
keeping system.
Current account
- 77 -
Balance of Payment
Capital
Trade account services account Income account Current transfer ac-
transfer
(Good account) count
account
Long term short term
Direct investment Various investment
(Net)
- 78 -
Export Import Received Payment Received Payment Official Private Private long term
Private short term
received Payment (Net) (Net)
Government long
term (Net) Commercial bank
assets (Net)
Balance value Balance value Balance value Balance value
+ + + Commercial bank
liabilities (Net)
Government short
term (Net)
Bbalance value Balance value of Errors and omissions in
+ + calculation of special drawing
of current capital financial rights
acoount account
Total Balance
Current a/c is again divided into four main accounts.
The account that records information about the exports and imports of a country with
the rest of the world is known as goods account or trade account.
The balance of this account is known as balance of trade and it may take a positive or
a negative value.
The account that records income and expenditure on non-factor services of a country
with the rest of the world in international trade is known as the service account.
The account that records income and expenditure on factor services of a country with
the rest of the world in international trade is known as the income account.
It is important to mention that wages remitted by housemaids from abroad are not
included in this account.
The balance between receipts and payments of this account may take a positive or
negative value.
The wages sent by expatriates of a country to his relatives of friend are considered as
private transfers.
The sum of the four accounts above is the balance of the current account.
- 79 -
The Long term financial account consists of foreign direct investments (FDI), long term
private (Net) and long term official (Net)
Errors and omissions in the calculation of special drawing rights (SDR) are adjusted and
the overall balance of Bop can be prepared.
The wages sent by expatriates of a country to his relatives or friends are considered as
private transfers.
The sum of the four accounts above is the balance of the current account.
- 80 -
Competency Level 9.6 : Explains the influence of foreign transactions on the economy
using BOP table
Number of Periods : 06
Learning outcomes : Explains recent trends of BOP from CBSL annual report
A surplus or a deficit of the overall balance of BOP table is known as BOP imbalance.
Increase in the time for which foreign reserves are sufficient for imports
causing an inflation
Implementation of protectionism
Eg: Use of capital and financial a/c reserves to finance the current a/c deficit.
Import substitution
Export diversification
- 81 -
Competency Level 9.7 : Investigates the determination and impact of foreign exchange
rate.
Number of Periods : 06
The market where currencies of different countries are exchanged is the foreign exchange
market.
The ratio of which one unit of currency of a country is exchanged for a unit of another
countrys currency is exchange rate.
The following exchange rates have been used in SL during different periods.
Devaluation and over valuation is done under the fixed exchange rate system.
- 82 -
Depreciation of exchange rates is a fall in the number of foreign currency units that
should be paid to purchase a unit of devalued currency under a floating exchange rate or
an increase in the number of domestic currency units that should be paid to purchase a
unit of foreign currency.
Example
Increase in the buying price of a dollar from Rs. 100/- to Rs. 150/- or a fall in the buying
price of a Sri Lankan Rupee for US $ 0.01 to 0.0067
Increase in the value of the exchange rate is the opposite process of depreciation of
exchange rate.
Example
A fall in the buying price of a US $ from 150 to Rs. 100 or a rise in the buying price of
from US $ 0.0067 to 0.01
The Internal inflation rate of different countries considerably affects the exchange rates.
The Nominal exchange rate is the measurement of change in the external value of the
currency by expressing the rate of exchange of the domestic currency with different
foreign currencies separately.
The Real exchange rate is the nominal exchange rate adjusted for the changes in the
price levels of two countries.
The Nominal effective exchange rate is the exchange rate prepared giving weights after
considering the relative quantity of trade between countries.
Real effective exchange rate is the exchange rate prepared removing the rates of inflation
from the effective exchange rate.
The terms of trade and the current account of Bop improve by the devaluation of the
exchange rate.
- 83 -
Competency Level 9.9 : Investigates the importance of economic organization for economic
corporation.
Number of Periods : 06
The process of exchange of goods and services and factors of production without tariffs
or non tariff barriers between nations or different groups in a nation is called economic
integration..
competition
- 84 -
Different stages of economic integrations are as follows
Free Trade Agreement (FTA) are organization made by countries to trade without barriers
among member countries but to maintain trade barriers with non-member countries when
each country is engaged in trade with them.
- 85 -
Examples of FTAs are as follows
Customs unions are integration of some countries to maintain free trade among member
countries and to maintain common barriers among non-member countries
Common market is integration of countries to maintain free trade among member countries
and the common policy in trade among non-member countries.
Economic and monetary unions are integration of countries to maintain free trade among
member countries, This is an integration with member countries and non member
countries to follow a common policy on trade and free mobility of labour and capital
among member countries.
Full integration (FI) is integration of countries to maintain free trade among member
countries and non-member countries of goods and services and factor of production
and to maintain a unitary marketing policy, fiscal policy legislative, executive judiciary
and political policy.
- 86 -
Countries enter trade agreements as one step towards economic integration
Trade Agreements take two forms
Bilateral trade agreements are agreements created by two countries for trade and
monetary activities
The Indo - Sri Lanka Free Trade Agreement was signed by SL and India on 28/12/
1998 and its operation started on 31/03/2000.
- 87 -
In 1985 Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka established
the South Asian Association for regional Corporation or SARRC.
In 2001 South Asian free trade association (SAFTA) was established to improve
Free and fair trade in member countries after considering their economic levels and
their economic development patterns and distribution of benefits of trade among
them equally.
Institutional programme
Protective measures
- 88 -
NAFTA was signed by USA Canada and Mexico in 1993 and it started its operation
on 1994 .01. 01
Goods and services trade in the entire North America was free while their prices declined
and trade among them doubled due to NAFTA.
Asia Pacific Economic Co-operation was started in 1993 by 18 countries in Asia Pacific
region.
The members of this organization are Japan, China, South Korea, Thailand, Indonesia,
Philippine, Brunei, Papua New Guinea, Chilly, Australia, Canada, USA, Mexico and
New Zealand.
The main objectives of the operational plan according the second summit of APEC are
as follows
In 1985 Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri lanka estab-
lished the South Asian Association for regional Corporation or SARRC.
In 1995 South asian preferentioal trade agrement was establishe (SAFTA)
In 2001 South asian free trade association (SAFTA) was established to improve
economic corporation and to develop trade among SARRC countries.
The objectives of SAFTA are as follows.
Removing trade barriers and facilitating trade transaction occross the boundarries.
Free and fair trade in member countries after considering their economic levels and
their economic development patterns and distribution of benefits of trade among
them equally.
- 89 -
Creation of an effective mechanism to implement the agrement to appreciate its activi-
ties and to settle disputes among them.
Establishment of a regional cooperation programme to spread and increase the benefits
of the agreement in future.
The following six equipment are implemented under SAFTA
Free trade programme
Institutional programme
Counselling and dispute settlement mechanism
Protective measures
Other agreed equipments
The issues that arose in SAFTA
Lack of political comitment in the zone
Production of similar goods by most member countries.
Administrative and political barriers
Existence of high tariff ratios among the countries in the zone
NAFTA was signed by USA canada and Mexico in 1993 and it started its operation on
1994 .01. 01
The objectives of NAFTA are as follows.
Removed of tariff and non-tariff bariers
Removal of obstacles to investment mobility among member countries
Promotion of trade in the zone
Improvement of economic co-orporating among member countries.
Goods and services trade in the entire North America was free while prices of them
declined and trade among them double due to NAFTA.
Asia Pacific Economic Co-operation was started in 1993 by 18 countries in Asia Pa-
cific region.
The members of this orgamization are Japan, China, South Korea, Thailand, Indone-
sia, Philiphine, Brunai, Papua New Guinea, Chilie, Australia, Canada, USA, Mexico
and New Zealand.
The main objectives of the operational plan according the second summit of APEC are
as follows
Establisment of absolute free trade zone.
Regulasization and relaxation of customs.
Free trade using computers technology.
Upliftment of the welfare of the poor.
- 90 -
Competency Level 9.10 : Inquires about the international Monetary institutions
Number of Periods : 05
- 91 -
of limitations of exchange rates.
To provide funds to consolidate the confidence of member countries and to pro-
vide opportunities to correct unfavourable balance in BOP
To reduce BOP inbalances in member countries and to shorten the period of
exsitence of these inbalances.
The following types of loans are previded by IMF
Extended fund facilities
Structural adjustment facilities
External structural adjustment facilities
Compensatory and contengency financial facilities
Buffer stock financing facilites
Oil loan facilities
Systematic transformation facilities
World Bank was establishe on 01 march 1947 after Breton worlds conference held in
July 1944 in Brettonwood in USA with the participation of 42 countires long with USA
and Britain.
World Bank was established as a result of a decision taken by UN monetary and
financial summit to achieve objectives of renovation of war damaged Europe and to
prevent such areas and to create an economic revival.
The main objective of the World Bank is to provide assistance for long term develop-
ment in member countries.
There were 28 member couuntries in International Bank for reconstruction and devel-
opment (IBRD) or World Bank and its present membership is 177 countries.
The two afficiated institutions of the world bank are international Finance coropration
and international development association of these three institution IFC, IDA and world
bank are known as world bankd group
The objections of the world bank are as follows
Acceleration of economic development of member countries by providing invesment
facilities to produce.
When foreign capital can not be obtained by member countries by under cenient con-
ditions creation of opportunities and facilities to ecnourage foreig nprivate investments.
To provide longterm loans for effective production of member countries using funds of
the world bank, ther funds in additio to private investment
To provide industrial and technical instructional to member countries
- 92 -
Growth of production resource in member countries and balance growth of interna-
tional trade through the encanegement of international investment.
The services provided by the world bank to sl are as follows
Necessary foreign exchanges are procvided as loans under concesianary
conditions.
Patranage to develop technology industrial knowledge and technical methods
Co-operation to attract foreign investments
Providing the assistance of the world bank specialists to plan necessary projects
to accelerate development and to suporcise them.
- 93 -
Competency Level 9.11 : Investigates the impact of globalization on developing countries.
Number of Periods : 06
- 94 -
Driving forces of globalization are as follows.
Improving in the fields of transport
Improvement in technology
Deregulation of global financial markets
Change in comparative advantage among countries
Locating of various stage of production in various countries by multi national cor-
porations
Removing of protectionist policies
Economic integrations
Examples for advantages of globalization are as follows.
Increase in the capacity of word trade.
Increase in production and income.
Expansion of employment opportunities
Increase in foreign direct investments
Development of new technology
Various opportunities of consumption
Creating of quality products due to competitiveness in production
Efficiency in information flow
Examples for disadvantages of globalization are as follows.
Widening of international income inequality.
Environmental problems.
Creation of threats to the sovereignty of domestic economic systems.
Destroying of cultural diversity.
Creation of economic crisis due to instability of financial markets.
Decline in domestic productive fields and loss of employment opportunities.
International terrorism.
Health problems.
Depending on advantage and disadvantages of globalization there are pro and anti
arguments of globalization can be seen.
- 95 -
Competency 10 : Shares the interest in contributing towards sustainable develop-
ment by analyzing diversification of development comparatively.
Competency Level 10.1 : Analyses the factors affecting economic growth by evaluating
the significance of economic growth.
Number of Periods : 06
Continuous increase in real gross national production is called economic growth and it
shows long term expansion of production potential.
It illustrates quantitative changes in the production of goods and services in the economy.
There is a clear difference between Economic growth and Ratio of economic growth
Economic growth will also have a considerable influence, when determining the
different levels of income inequality, poverty and unemployment.
Factors which determine economic growth are as follows.
Increase in stock of resources/ factor endowment
Physical Capital
Human Capital
Natural Capital
Social Capital
Increase in productivity
Technology
Human Capital
- 96 -
Economic Stability
Political Stability
Good governance
- 97 -
Competency Level 10.2 : Analyses the characteristics of the economic development pro-
cess and its measures.
Number of Periods : 06
sectors
Per capita G.D.P
- 98 -
Per-capita Gross Domestic production can be used to measure the amount of
output per person from the total output of the country.
Per-capita income does not illustrate every aspect of development. Therefore to
measure economic development there should be a better dimension.
To measure both economic and social development a better measure has introduced
in recent years
Physical Quality of Life index has designed established in recent years to
measure development.
The following indicators are included in the above Physical Quality of Life Index
Life expectancy at age of 1 year
Mortality rate (Infant mortality rate)
Literacy rate
The Value of the Physical Quality of Life Index varies between 0 and 100, and
according to that value the countries.
The maximum value of PQLI is 100 and countries which have obtained closer to 100
has a high standard of living.
Countries which have obtained value of PQLI closer to Zero has a lower standard of
living.
Human development index (HDI) introduced in 1990 by the development programme
of United Nations.
Three indicators are included in this index which were more advanced than PQLI (Physi-
cal quality life index)
Life expectancy at birth
Literacy rate of adults and ratio of school admission
Per capita income.
Income criteria calculated according to adjusted per capita income.
(Per capita gross domestic production at parchasing power parity)
- 99 -
According to the human development, countries are divided in to following categories.
Countries which have very high level of Human development. HDI > 0.900 and
above.
The countries which have high level of human development.
0.800 < HDI < 0.899
The counttries which have intermidiate level of human development
0.500 < HDI < 0.799
The countries which have lower level human development
0.000 < HDI < 0.499
According to the Human Development Index Sri Lanka had 0.759 in 2009.
(Educate the student on current informations about indicators used to measure development.)
- 100 -
Competency Level 10.3 : Evaluates sustainable development by analysing , the
diversification of development comparatively.
Number of Periods : 06
- 101 -
Implementing different programmes internationally and locally to minimize the depre-
ciation of natural resources and harmful effects on the environment have been launched.
Examples of them are;
Restriction on the use of Chlorofluro Carbon that depletes the Ozone layer.
Limit the consumption of polythene.
Implementing laws to reduce the environmental damage caused by industries.
Controlling smoke and fumes emitted by mortar vehicles.
The optimum level of development that is attainable by the present generation not de-
priving the opportunities of future generations to utilize the resources just like the present
generation utilizes them is called sustainable development.
Future development of a country, and the quality of the peoples living standards are
determined by the quality of the nature.
The aim of the sustainable development concept is to maintain a balance between the
Economic development, increase in natural resources and Environment.
The importance of human development in sustainable development approach should
be emphasized.
follows.
Economic development
Social development
Protection of environment
- 102 -
Competency Level 10.4 : Examines the standard methods used in measuring inequality of
income.
Number of Periods : 06
Learning outcomes : Defines inequality of distribution of income
Presents the different forms of distribution of income
Explains measurements used to measure distribution of in-
come by using diagrams.
There is a class difference between low income class and high income class in any
society which has market system.
It is called inequality of income distribution.
Minimizing inequality of income distribution is considered as equity.
The distribution of aggregate production depends upon inequality of income distribu-
tion.
There are two types of inequality of income distribution.
Relative distribution of income
Absolute distribution of income
The way of total income has been distributed among the households is called the
relative distribution of income.
Inequality of income distribution can be determined according to the percentage of
lowest income earners and the percentage of highest income earners out of the total
number of households.
Nature of the relative income distribution can be illustrated by Lorenz curve.
Lorenz curve is illustrated as follows.
Income
distribution
x Percentage of households
y
- 103 -
The inequality of income distribution will be reduce a when the lorenz curve gets closer
to the equal distribution curve.
The inequality of income distribution will be increase when the lorenz curve is faraway
from equal distribution curve.
The amount of inequal distribution of income shown as lorenz curve can be measured
by the Gini coefficient.
Gini coefficient can be measured by using X / X+Y formula.
The inequality of income distribution increases when the Gini coefficient is closer to 1
The inequality of income distribution decreases when the Gini coefficient is closer to 0
(zero)
Gini coefficient is equal to 0 (zero) when there is no inequality of income
Absolute distribution of income is to divide the income of a country in to different
segments and calculate the percentages of population in each segment.
According to the absolute income distribution people who are below poverty line are
terms as poor people.
- 104 -
Competency Level 10.5 : Analyses poverty concept and illustrates how to measures
poverty.
Number of Periods : 05
- 105 -
There are two types of human poverty indices.
Human poverty index 1 (HPI -1)
Human poverty index 2 (HPI - 2)
Human poverty index 1 focuses on measuring the poverty in developing countries.
Human poverty index 2 focuses on measuring the poverty in developed countries.
Criteria of the above two indices are different.
Human poverty index measures the quantity of the absolute poverty.
(use current date relevant to poverty index)
- 106 -
Competency Level 10.6 : Evaluates the poverty in sri lanka and efforts taken to reduce
poverty.
Number of Periods : 06
- 107 -
Competency Level 10.7 : Analyses the relationship between economic growth and pov-
erty
Number of Periods : 06
Learning Outcomes : Explains the relationship between economic growth and pov-
erty.
Shows pro-poor growth programmes with examples.
Shows pro-poor growth policies which are beneficial to poor
people with examples.
Suggests steps which can be bring in progress to the poor.
Guidelines to explain the subject matter:
Process of economic growth which contribute efficiently to increase the income of poor
people and which changes income distribution in favour of poor people is called favor-
able economic growth for poor people.
The pro-poor growth can be measured in two ways.
Absolutely
Relatively
When measuring growth abosolutley, it is expected to have a process that influence
increase income of the poor absolutely.
When measuring growth relatively it is expected to have a process that can increase the
general income of the poor more than that of the non -poor.
Examples of the government action taken recently to help the poor reach a favourable
growth for they are in rural areas.
Increase in Samurdhi payment by 50% as a solution to poverty.
Operating Gamipubuduwa, Gamidiriya and Osu Gammana in order to start
entrepreneurial development projects.
Implementing Maganaguma, Gamanaguma, Gamipubudhuwa and starting rural
electrical projects to develop rural public activities.
Rajarata Navodhaya, Pubudamu Wellassa, Senkadagala Udanaya, North east devel-
opment projects are implements as regional development projects.
Giving Fertilizer subsidy, increasing the fixed price for paddy and starting Kirigammana.
- 108 -
Constructing 300 industries around country to develop macro, small and medium scale
industries, Lanka Puthra programme, Nanasal programme National Enterprises Bank
and operating micro services.
Establishing Science and Technology resource centers in rural areas, Uva wellassa
university, Marine University to reduce the inequalities in higher education facilities.
Economic policies and actions which can be practiced for the poor to achieves favourable
growth can be identified favour.
Policy Action
- 109 -
Competency Level 10.8 : Discusses the distribution of population in Sri Lanka and its
effects.
Number of Periods : 06
Learning Outcomes : Defines concept of population
Defines population growth rate and identifies the factors
affecting it.
Analyses changes in population distribution and its effect on
the economy.
Population
growth ratio
=
{ Natural
growth ratio
+ Net migration
ratio
} x 100
1000
The difference between crude birth and crude death in a particular year is called natural
growth.
- 110 -
No.of births - No.of deaths
National growth rate = x 100
Mid year population
When natural growth rate is positive there is an increase in population and when natural
growth rate is negative there is decrease in population.
The measure that measures the number of births in a country is known as crude birth
rate. If can be calculated with the following
No of Live births
Crude birth rate = x 1000
Mid year population
Crude death rate is calculated as the number of death per year per mid year
population. It is calculated as follows
.
The no of deaths per year
Crude death rate = x 1000
Mid year population
- 111 -
Changes in the population of Sri Lanka during the last 25 years are as follows .
Significant decrease in population growth rate.
Net migration is an important factor that effects population growth in recent
years.
Population increased by 5.2 millions from 1981 to 2007.
(1981=14.8 mill and 2007 =20.0 mill)
Differences can be seen in age structure.
Decrease in the percentage of child population.
Decrease in the working age of population.
Increase in aged population.
Decrease in infant mortality ratio.
Decrease in natural growth rate.
- 112 -
Population ageing Population Working age population
Dependency ratio
Adult dependency ratio
Youth dependency ratio
Natural growth ratio Natural increase + Net migration Net migration rate
- 113 -
Number of Periods : 06
Total number of people who between minimum a maximum age limits and who are
willing to after their labour during a particular period of time to produce goods and
services which have economics value expecting a salary/wage or an economic gain are
known as labour force.
Persons who are not included in labour force are as follows.
Housewives
Full time students
Totally disabled
Voluntarily idle
When calculating labour force in Sri Lanka only minimum age limit that is 10 years is
considered but maximum age limit is not taken to account.
All employed and unemployed people who are expecting a salary or an economic
benefit( it one week before counting) are included in the lobour force in Sri Lanka.
All the individuals who are above 10 years of the total population of Sri Lanka and who
are able to work are considered to be in working age population
Indicating labour force as a percentage of people who are able to work is labour force
partivipation rate.
Persons age 10 years and above from the total population of Sri Lanka are consider as
working age population
Indicating labour participation rate as a percentage of people who are able to work is
labour force.
- 114 -
Census and statistical department and CBSL supply information about the labour force
of Sri Lanka.
The factors which determine the labour force are as follows
Population size
International migration
Age structure
Male and female population
Civil status
Level of education
Social protection services
Urbanization
Health and neutrinos level
Social, cultural and religions concepts.
- 115 -
Competency Level 10.10: Explores quantitative and structural situations of employment and
unemployment in sri lanka.
Number of Periods : 06
- 116 -
lack of full time work or less working hour.
If workers marginal production is 0 even through workers work full or part time it is
called hidden unemployment
Economic costs of under employment are as follows.
Decrease in Economic production
Wastage of labour
Unequal income distribution
Decrease in labour productivity
Creation of poverty due to decrease in income of works.
Arising anti social activities.
There are different types of unemployment
Unemployment can be calculated as follows.
Un employed pupulation
Unmployment ratio = x 100
Labour force
Examples are of different -type of unemployment in Sri Lanka are given below.
Unemployment is decreasing in recent years.
Unemployment rate is high among the educated youth
Comparatively woman unemployment rate is high- rate of unemployment of women
is relatively high.
Unemployment rate in rural sectors is relatively high
- 117 -
Examples of actions which can be taken to reduce the unemployment in sri lanka are as
follows.
Achieving high economic growth
Increasing infrastructure facilities
Expanding industrial base
Establishing small scale industries in rural areas.
Providing professional training
Increase in foreign employment
Expanding the needs for self-employment.
- 118 -
Competency - 11 : Evaluates performance of Sri Lanka economy since
independent.
Competency Level 11.1 : Inquires into the sectoral composition of Gross Domestic
Product and employment in Sri Lanka.
Number of periods : 06
Learning outcomes Compares the contribution of public sector and private sector towards
Sri Lankas Gross Domestic Product
Examines the recent changes in Sri Lankas Gross Domestic Product
Compares the contribution of the public sector and the private sector
towards employment in Sri Lanka
Examines the recent changes in Sri Lankas employment and the reasons
for these changes
Mentions the fact that Sri Lankas Gross Domestic Product is categorized into 13
sectors by Census and Statistics Department
These sectors have been formed mainly following the fields of agriculture, industry and
services sectors
The sectoral contribution of the Gross Domestic Product comprises the fields of
agriculture, industry and services
After independence, during different time periods sectoral contribution shows gradual
changes. Examples are as follows.
The amount by which the countrys labour force consists of agricultural, industrial
- 119 -
Examples of sectoral composition of employment after independence are as follows.
With the expansion of industrial and services sectors, the contribution of labour force
towards these sectors also changes.
Following economic growth and with increased income the importance of the agricultural
sector moved towards the industrial and services sector.
When a country is developed more structural changes can be seen in industrial and
services sector than in the agricultural sector.
The contribution of public and private sectors also has an affect in this regard.
- 120 -
Competency level 11.2 : Analyses the pattern of economic growth since independence
in Sri Lanka.
Number of periods : 06
Learning outcomes :
Examines with examples the most important time periods relating to economic growth
after independence in Sri Lanka
Guidelines to explain subject matter:
Total resource in Sri Lanka comprises with stock of the country is constituted by
Gross Domestic Product and with imports of goods and services
After independence, the total resources of Sri Lanka have changed during different t
time following the changes in Gross Domestic Product and import structure. Examples
are as follows.
2005 2006 2009
Gross Domestic Product 64.3% 70.9% 78.2%
Imports of goods and services 35.7% 29.1% 21.8%
Economic policies and new strategies were used to increase the Gross Domestic Product
and then to increase the total amount of resources
Sri Lankas total resource utilization comprises consumption, investment and exports
of goods and services
After independence, during different time intervals the changes in total resource utilization
are as follows.
2005 2006 2009
Consumption 58% 58.8% 64.1%
Investment 20% 37.5% 19.2%
Exports of goods and services 22% 21.3% 16.7%
Foreign savings constitute net foreign factor income and net foreign private transfers.
- 121 -
The following examples give information relating to savings in Sri Lanka
2001 2006 2009
Domestic savings 15.8% 17.3% 18%
Foreign savings 4.5% 6.1% 5.9%
National savings 20.3% 23.4% 23.9%
To improve a countrys national savings the net foreign private transfers should improve
Improving domestic savings and foreign savings leads to increase investments which
contributes greatly to economic growth
After independence most important periods related to economic growth can be shown
in two periods as follows
During the period of 1948 to 1977 the government has contributed more towards
economic growth where it was a state dominated economy
Economic policies followed during this period of 1948 to 1977 in Sri Lanka towards
economic growth can be summarized as follows.
Within outward-looking economic policy governments role was limited and limitations
existed with foreign trade also omitted
- 122 -
Competency level 11.3 : Investigates the issues related to the agricultural sector in
Sri Lanka
Number of periods : 04
Learning outcomes :
Explains the importance of agricultural sector contribution towards economic
development process
Explains with examples the difference between domestic agriculture and
plantation agriculture
Lists out agro based industries
Describes overall performance and trends in agricultural sector
Describes differentials and problems in domestic and plantation agriculture
Proposes solutions for problems exist within domestic and plantation agriculture
Guidelines to explain subject matter:
- 123 -
Examples related to policy strategies taken in recent to improve domestic agricultural sector
are as follows
Protecting of resources
Examples relating to steps taken recently to improve plantation sector are as follows
Establish an active fund for the development of plantation crops of tea, rubber and
coconut
Copra production
Yogurt production
Curd production
Tire production
Metres production
- 124 -
Competency level 11.4 : Investigate the issues related to the industrial sector in
Sri Lanka
Number of periods : 08
Learning Outcomes :
Manufacturing
Constructions
More than 50% of industrial sector in Sri Lanka includes production industries. By
following international standardization of production industries the industries which are in
head can be list out in this way
- 125 -
Within overall performance in industrial sector during different time periods different
industrial policies were used and are used to develop industrial sector
Examples:
Examples for steps taken by government towards industrial sector development are as
follows
Provide public financial assistance to the private sector for the usage of advanced
technology
Establish local industrialization programmes which evolved from private and public
sector goal orientation
The objectives of 2006-2016 ten year industrial development plan in Sri Lanka are as
follows
Within foreign policy promote direct investments with cooperating among all countries
Micro entrepreneurs are the entrepreneurs who use family labour and who employs a
small amount of capital for a very small business
The contribution of micro entrepreneurs are very important for the development of i
ndustrial sector in Sri Lanka
Steps have taken to provide necessary public financial assistance and bank loans by
acknowledging micro entrepreneurs at local level
- 126 -
Competency level 11.5 : Investigates the issues related to the service sector in
Sri Lanka
Number of periods : 08
Learning Outcomes :
Service sector contribution which remained at 34% in1950 has grown up to 46% in
1977 and further grown up to 50% during 1991-2000 decade and recorded a value of
57.7% in2009.
- 127 -
Service sector contributes in reducing transaction costs
- 128 -
Competency level 11.6 : Investigates contemporary economic events
Number of periods : 06
Learning outcomes :
The contemporary social, political, economic and cultural changes takes place domestically
and globally affects a countrys economy
These contemporary economic events are mainly categorized as domestic and global
As an example for domestic contemporary economic event the tsunami disaster can be
shown
Domestic contemporary economic events affect Sri Lankan economy in favourable and
unfavouarable way and it can be explained with an example below
Global contemporary economic events affect Sri Lankan economy in favourable and
unfavouarable way and it can be explained with an example below
Increase in prices of crude oil in foreign market affected Sri Lankan economy in
an unfavourable way by increasing prices here
(By taking contemporary economic events as examples discuss with students how these
can be affected to Sri Lankan economy)
- 129 -
School Based Assessment
- 130 -
Introduction- School Based Assessment
Learning Teaching and Evaluation are three major components of the process of Education. It
is a fact that teachers should know that evaluation is used to assess the progress of learning
teaching process. Moreover, teachers should know that these components influence mutually
and develop each other .According to formative assessment (continuous assessment) fundamentals;
it should be done while teaching or it is an ongoing process. Formative assessment can be done
at the beginning, in the middle, at the end and at any instance of the learning teaching process.
Teachers who expect to assess the progress of learning of the students should use an organized
plan. School Based Assessment (SBA) process is not a mere examination method or a testing
method. This programme is known as the method of intervening to develop learning in students
and teaching of teachers. Furthermore, this process can be used to maximize the students
capacities by identifying their strengths and weaknesses closely.
When implementing SBA programmes, students are directed to exploratory process through
Learning Teaching activities and it is expected that teachers should be with the students facilitating,
directing and observing the task they are engaged in.
At this juncture students should be assessed continuously and the teacher should confirm whether
the skills of the students get developed up to expected level by assessing continuously. Learning
teaching process should not only provide proper experiences to the students but also check
whether the students have acquired them properly. For this, to happen proper guiding should be
given.
Teachers who are engaged in evaluation (assessment) would be able to supply guidance in two
ways. They are commonly known as feed-back and feed- forward. Teachers role should be
providing Feedback to avoid learning difficulties when the students weaknesses and inabilities
are revealed and provide feed-forward when the abilities and the strengths are identified, to
develop such strong skills of the students.
Student should be able to identify what objectives have achieved to which level, leads to Success
of the Learning Teaching process. Teachers are expected to judge the competency levels students
have reached through evaluation and they should communicate information about student progress
to parents and other relevant sectors. The best method that can be used to assess is the SBA that
provides the opportunity to assess student continuously.
Teachers who have got the above objective in mind will use effective learning, Teaching, evaluation
methods to make the Teaching process and learning process effective. Following are the types of
evaluation tools student and, teachers can use. These types were introduced to teachers by the
Department of Examination and National Institute of Education with the new reforms. Therefore,
we expect that the teachers in the system know about them well
- 131 -
Types of assessment tools:
Teachers are not expected to use above mentioned activities for all the units and for all the
subjects. Teachers should be able to pick and choose the suitable type for the relevant units and
for the relevant subjects to assess the progress of the students appropriately. The types of
assessment tools are mentioned in Teachers Instructional Manuals.
If the teachers try to avoid administering the relevant assessment tools in their classes there will
be lapses in exhibiting the growth of academic abilities, affective factors and psycho- motor skills
in the students
- 132 -
Learning-Teaching Evaluation Plans
- 133 -
Divide the students in the class into groups at the end of
competency leve6.4 .
Give the topics randomly and inform them to prepare the
assignment
Inform the student that the assignment should be creative.
Instructions to students : Choose a formal organization in the area with the agreement of
all the members in your group.
Engage in the group activity following the teacher's instructions.
Collect accurate data regarding the institute relevant to the
fields named by the teacher.
Compare the collected information with the theoretical subject
matter you had learnt.
Get every member of the group to participate in the process of
data collection and preparation of the report
Always work with the full co-operation in the group.
Submit the report to the teacher on the date he has an
announced
(7) Evaluation criteria : Perfect ness fullness(including all the relevant information to the
report)
Co-operation(working as a group in full co-operation)
Comparing the information collected with the theories
Following teacher instructions and finalizing during the
scheduled time.
Creativity of the report.
- 134 -
Learning-Teaching Evaluation Plans
- 135 -
Instructions to students : Choose a formal organization in the area with the agreement of
all the members in your group.
Engage in the group activity following the teacher's instructions.
Collect accurate data regarding the institute relevant to the
fields named by the teacher.
Compare the collected information with the theoretical subject
matter that has been.
Get every member of the group to participate in the process of
data collection and preparing the report
Always work with full co-operation of the group.
Submit the report to the teacher on the date he has an
announced
(7) Evaluation criteria : Perfect ness(including all the relevant information to the report)
co-operation(working as a group in full co-operation)
Comparing the information collected with the theories
Follow teacher instructions and finalize during the scheduled
time.
Creativity of the report.
- 136 -
Learning-Teaching Evaluation Plans
- 137 -
Instructions to students Do the activities according to the instructions and guidance given
by the teacher.
Collect information related to your topic.
Takes decisions on appointing the group leader, time given to
each member, number of opportunities etc, after discussing with
the teacher.
Work as a team to win.
Be conscious about the method of giving marks.
(7) Evaluation criteria : Presenting facts related to the topic and presenting the facts
in an organized way.
Presenting ideas creatively and rationally.
Appropriate body movement and time management.
Breaking the arguments of the opposite team.
Working as a team and acting with enthusiasm.
- 138 -
Learning-Teaching Evaluation Plans
(5) Objective of the plan : Constructs questions which have specific answers.
Works as a team.
Explains the different foreign exchange rates
Explains money devaluation and evaluation.
Explains the way of foreign investment
Knows about the Economic Integration and Trade
Agreements
Presents examples of the International Financial institutions
Explains the way of globalization
Explains economic growth
- 139 -
Tell each group to create a cross word puzzle on the relevant
topic according to the following conditions.
There should be 10 words down and 10 words across.
Can prepare the square net using the discretion.
Puzzle terms should be directly related to the topic as-
signed to the group.
Examine the puzzle terms and the puzzles of all the groups one
week before the puzzles are submitted.
Get each group to present their puzzles on a specified date
(through two periods)
Get the other groups to complete the puzzle.(Hold it as a
competition.)
Give marks using evaluation criteria to each group which
presents the puzzle.
Instructions to students : Do the activities according to the instructions and guidance given
by the teacher.
All the students of the group should create at least one term of
the puzzle.
Show them to the teacher the on the date informed by the teacher
and do the necessary adjustments.
Construct the puzzle creatively.
(7) Evaluation criteria : Answers of the puzzle should be related to the topic.
The puzzle should be constructed in order to achieve the
objectives.
Follow the teacher's instructions and complete the activity within
the given period.
Include the specified number of terms.
Creativity.
- 140 -
References:
- 141 -