Page 1

Title Page

• Economics Student Textbook Grade 12

• Federal Democratic Republic of Ethiopia

• Ministry of Education

Page 2

Care Instructions

• This textbook belongs to your school; handle it responsibly.

• Follow these 10 tips to maintain your textbook:

  1. Cover with protective material (plastic, newspapers)

  2. Store in a clean, dry place.

  3. Ensure hands are clean during use.

  4. No writing on cover or pages.

  5. Use bookmarks instead of folding pages.

  6. Never tear pages or images out.

  7. Repair torn pages with tape or paste.

  8. Pack carefully in your school bag.

  9. Handle carefully when passing to others.

  10. Open a new book gently, press lightly on the spine when turning pages.

Page 3

Acknowledgment of Contributors

• Writers:

  • Seyoum Yunkura Hameso (PhD)

  • Abate Yesigat Taye (PhD)

• Editors:

  • Chanyalew Degefa Merga (MSc)

  • Degela Ergano Done (PhD)

  • Taye Gebremariam Olamo (PhD)

• Illustrator:

  • Tadele Bayu Genet (MSc)

• Designer:

  • Amsalu Dinote Kuye (MSc)

• Evaluators:

  • Mekonnen Bersisa Gadisa (PhD)

  • Tariku Mulushewa Dessea (MSc)

  • Ararssa Hora Dabi (MSc)

Page 4

Publication Information

• Published: August 2023

• Supporting Entities: World Bank, UK DFID, Finnish Ministry for Foreign Affairs, etc.

• Copyright: © 2023, all rights reserved.

• Contact for copyright issues: Ministry of Education, Addis Ababa, Ethiopia.

• Printed by: Gravity Group IND, UAE

• ISBN: 978-99990-0-059-8

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Introduction to Economics

• Economics is increasingly recognized as crucial because of unique global challenges like poverty, unemployment, and inflation.

• The course aims to empower students with knowledge, skills, and values regarding economic, societal, and environmental issues, supporting their engagement in community affairs.

• The subject is compulsory in the Ethiopian General Education Curriculum Framework (GECF).

• The curriculum includes 8 units, covered in 87 hours and 45 minutes per year.

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Student Profile Outcomes

At the end of Grade 12, students should:

• Have comprehensive knowledge of economics principles and applications.

• Show cooperation, motivation, curiosity, and digital literacy.

• Exhibit effective communication skills (discussions, teamwork, presentations).

• Understand and participate in economic activities and sustainability in Ethiopia.

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Table of Contents Overview

1. Unit 1: Fundamental Concepts of Macroeconomics

2. Unit 2: Aggregate Demand and Aggregate Supply

3. Unit 3: Market Failure and Consumer Protection

4. Unit 4: Macroeconomic Policy Instruments

5. Unit 5: Tax Theory and Practice

6. Unit 6: Poverty and Inequality

7. Unit 7: Macroeconomic Reforms in Ethiopia

8. Unit 8: Economy, Environment, and Climate Change

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Continuation of Table of Contents Overview

• Unit 1 covers key macroeconomic definitions, focus areas, and challenges.

• Unit 2 discusses aggregate demand and supply with shifts, demand curve concepts.

• Unit 3 outlines market failures, public goods issues, and consumer protection measures.

• Unit 4 reviews fiscal, monetary, income policies.

• Unit 5 analyzes tax components and structures within Ethiopia.

• Unit 6 addresses poverty metrics, gender-unequal poverty scenarios, and indigenous approaches to poverty.

• Unit 7 discusses historical economic reforms and strategic objectives influenced by EPRDF.

• Unit 8 frames the interplay of economy, environment, and climate policy in Ethiopia.

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Introduction to Unit 1: Macroeconomics

• Focuses on the aggregate aspects of the economy, explaining different macroeconomic schools of thought.

• The unit aims to clarify the core differences between macro and microeconomics and to probe into macroeconomic variables.

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Concept of Macroeconomics Overview

• Macroeconomics: Study of the economy as a whole focusing on aggregated output, prices, and employment.

• Addresses vital questions about overall economic fluctuations and policies governments may adopt.

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Learning Outcomes for Unit 1

Students will be able to:

1. Define macroeconomics.

2. Distinguish focus areas of macroeconomics.

3. Analyze various macroeconomic challenges.

4. Understand classical and Keynesian economics significance.

5. Explore the contributions of modern schools of thought.

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Definitions and Focus Areas of Macroeconomics

• Key Concepts: Micro vs. Macroeconomics, Goals, GDP, Inflation, Unemployment, Business Cycles.

• Start-up Activities: Discuss definitions of macroeconomics and its importance.

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Macro Concepts and Definitions Continued

• Emphasizes the study of overall economic performance and its impact on employment, inflation, and trade.

• Introduced as a distinguished branch by economists like John Maynard Keynes.

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Focus Areas of Macroeconomics

• Central themes include:

  • Economic growth

  • Employment dynamics

  • Inflation causes and controls

  • Government policy impacts

• These themes delve into the health of the macroeconomy.

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Measurement Variables in Macroeconomics

• Discuss key macroeconomic variables such as GDP, GNP, inflation rate, trade balance, and employment statistics.

• Understanding GDP as a critical economic benchmarking tool.

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Key Challenges in Macroeconomics

• Analyze problems like economic growth limitations, inflation rates, unemployment patterns, and balance of trade issues.

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Economic Growth

• Defined as the capacity of the economy to produce goods/services increasing.

• Notable relation to government policy and institutional arrangements affecting productivity.

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Inflation

• Represents a sustained rise in general price levels impacting purchasing power negatively.

• Discusses causes approaching monetary supply and socio-economic conditions.

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Unemployment

• Defined based on the inability to find work, potential factors affecting rates monitored actively.

• Types of unemployment including frictional, structural, and cyclical.

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Inflation and Consumer Price Index

• Describes how inflation impacts day-to-day purchasing power.

• Methodologies for calculating CPI for price level changes.

Page 21

Economic Modeling and Business Cycle

• Explains business cycles and their distinct phases (expansion, peak, contraction).

Page 22

Institutional Framework Challenges

• Overview of factors influencing policy efficacy and deviations from expected results.

Page 23

Schools of Thought in Macroeconomic Analysis

• Discussion on Classical, Keynesian, Monetarist, and New Classical interpretations.

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Conclusion to Unit 1 and Review Questions

• Summary of macroeconomic focus areas, their relevance, and resultant strategic policies.

• Includes review questions evaluating understanding and application of macroeconomic principles.

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Introduction to Unit 2: Aggregate Demand & Supply

• Focuses on the concepts of aggregate demand and supply, equilibrium analysis.

• Includes learning outcomes to assess the relationship between demand and supply in economic contexts.

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Key Concepts: Aggregate Demand

• Discusses definitions, components (C + I + G + X - M), and the aggregate demand curve behavior.

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Factors Affecting Aggregate Demand

• Delve into impacts of consumer spending, government policy, and market trends on aggregate demand.

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Aggregate Supply in Economics

• Definition of Aggregate Supply, shift dynamics, and long run versus short run considerations.

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Review of Aggregate Supply Factors

• Pricing behavior related to shifts in supply alongside elucidation of elasticity within economic performance targets.

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Impact of Government Policies on Aggregate Supply

• Discussion on fiscal measures, wage considerations impacting overall stabilization efforts.

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Implications of Policy Changes on Supply & Demand

• Covers graphical representations while connecting macroeconomic principles to practical outcomes.

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Conclusion to Unit 2 and Review Questions

• Summarizes aggregate concepts, shifts within curves, and calculated economic impacts.

• Includes review questions to assess comprehension on aggregate determination fundamentals.

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Introduction to Unit 3: Market Failure

• Analysis of free markets, efficiency, and the need for government intervention.

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Market Failures Overview

• Defines types of market failures including externalities and public goods.

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Consumer Protection in Economics

• Discusses the socio-economic implications of consumer protection regimes.

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Review Questions and Outcomes for Unit 3

• Wraps up discussions pointing toward measures, policies, and review of consumer landscapes.

• Applies to localized examples to enhance student understanding.

Page 37

Introduction to Unit 4: Macroeconomic Policy Instruments

• Overview of fiscal and monetary policies targeted to address economic goals.

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Types of Policies and Impacts on Economy

• Discusses how macro policies are used to stabilize economies, counter cyclical movements.

Page 39

Fiscal Policy Page Analysis

• Tools of fiscal policy including government spending influences on GDP.

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Monetary Policy Instruments

• Covers tools including interest rates, inflation management through control means.

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Overview of Tax Policy Framework in Ethiopia

• Establishes groundwork for understanding tax system and implications.

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Challenges Associated with Taxation in Ethiopia

• Relays common struggles within the institutional tax framework; including evasion issues.

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Summary and Review Questions for Unit 5

• Encapsulates challenges, objectives, and strategic planning within tax frameworks.

• Review focused to ensure comprehension of key takeaway metrics.

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Introduction to Unit 6: Poverty and Inequality

• Offers framework on how these concepts interplay across socioeconomic touchpoints.

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Measurement of Poverty and Its Dimensions

• Identifies methods to quantify poverty, presenting models and statistics utilized globally.

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Overview of Women and Poverty Related Issues

• Discusses structural inequalities affecting women disproportionately within economic frameworks.

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Review Questions and Analysis for Unit 6

• Consolidates key learnings; shifts focus toward comprehensive evaluation of societal impact.

• Discussion on government's roles in addressing communal resources and poverty reduction strategies.

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Economic Reforms in Ethiopia Overview

• Historical context on reforms, targeting future objectives for growth and stability.

• Connecting present initiatives back towards impacts visible since pre-reform periods.

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Major Development Plans Analyzed

• Evaluates key objectives from historical structures observed under various regimes, focusing on present government strategies.

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Conclusion and Future Focus Areas

• Emphasis on goals assessing growth potential versus impediments via ongoing reform efforts, noting key objectives espoused for success going forward.