page 63
chapter 2.2
2.2 Land as a Factor of Production
Role play
Enjoy performing the role play given on p. 63 in your German textbook in English after you have performed it in German.
page 67
chapter 2.2.3
Group work
1. Describe what you see in the following pictures.
Discuss in your work group
2. What are the main sources of land, water and air pollution?
3. What can be done to prevent these types of pollution?
Here are some helpful expressions and ideas for your discussion in English:
Water Poll
u
tion
Water pollu
ti
La
the Eart h’s
c
­
of
hemical, b on is the introductio
n
tio
llu
po
is
n
io
n of
tio
er
logical an
m
llu
m
po
co
Land
rial,
into large
rface by indust tivities.
bodies of w d physical matter
ac
natural land su
l
at
q
ra
u
er
alit y of life
that ­deg ra
and ag ricultu
that lives
cial, domestic
it.
in it and co de the
nd pollution?
la
of
s
ce
nsumes
ur
so
land
What are the
What are
contributors to
n
ai
th
m
e
e
th
so
of
urces
Some
Some of th
e main con of water pollution
?
­pollution are:
ts
tr ibutors to
p
­
an
ol
pl
lu
r
ti
ea
on
cl
nu
ar
d
e:
water
Chemical an or ies
Factories
ct
Industrial fa
Refiner
ies
s
Oil refiner ie
Waste tr
e
ag
eatment fa
w
se
an
rs
um
ca
H
cilities
from
Mining
reeze leaking
Oil and antif
Pesticid
es
Mining
Human , herbicides and fert
sew
ilizers
Litter ing

Oil spills age
ls
d landfil
Overcrowde
Failing
se
n
Deforestatio
Soap fr ptic systems
br is
de
om
n
io
washing y
ct
ru
st
Con
Oil and
our car
an
Househ tifreeze leaking from
old chemic
cars
als
Animal
waste
nd Pollution
How to Prevent Land Pollution
The best way to prevent land pollution is to recycle. Here are a
few other ways you can reduce land pollution:
Reuse any items that you can
Buy biodegradable products
Store all liquid chemicals and waste in spill-proof containers
Eat organic food that is grown without pesticides
Don’t use pesticides
Use a drip tray to collect engine oil
Buy products that have little packaging
Don’t spill motor oil on the ground
30
How to Prevent Water Pollution
The best way to prevent water pollution
is to not throw trash or leak harmful
chemicals into our water supplies. Here
are a few more ways you can prevent
water pollution:
Wash your car far away from any
stormwater drains
Don’t throw trash, chemicals or
­solvents into sewer drains
Inspect your septic system every
3–5 years
Avoid using pesticides and fertilizers
that can run off into water systems
Sweep your driveway instead of
­hosing it down
Always pump your waste-holding
tanks on your boat
Use non-toxic cleaning materials
Clean up oil and other liquid spills
with kitty litter and sweep them up
Don’t wash paint brushes in the sink
Research air pollution and how to prevent it at the
following address:
http://www.greenstudentu.com/encyclopedia/pollution
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page 70
chapter 2.2.3
The Living Planet Index and a new concept of ecosystem services
Advanced tasks
1. Find out how to assess the state of biodiversity with the Living Planet Index. You will find a helpful article
from which all the diagrams were taken at the following address:
http://www.sos2006.jp/english/rsbs_summary_e/2-5-biodiversity.html
2. Write a text explaining the following diagram.
WWF “Living Planet Index“, 1970–2000
Population Index = 100 in 1970
120
The index currently incorporates data on
555 terrestrial species,
323 freshwater species, and
267 marine species around the world.
Terrestrial
species
100
Marine
species
80
60
Freshwater
species
The Living Planet Index is
an indicator of the state
of the world’s biodiversity.
All vertebrate species
(Living Planet Index)
40
1970
1975
1980
1985
1990
1995
2000 (year)
Source: Millennium Ecosystem Assessment
3. Explain ecosystem services and constituents of well-being with the help of the following chart.
ECOSYSTEM SERVICES
Provisioning
 Food
 Fresh Water
 Wood and Fiber
 Fuel
 Other
Supporting
 Nutrient Cycling
 Soil Fomation
 Primary Production
 Other
Regulating
 Climate Regulation
 Flood Regulation
 Disease Regulation
 Water Purification
 Other
Cultural
 Aesthetic
 Spiritual
 Educational
 Recreational
 Other
Constituents of well-being
Security
 Personal Safety
 Secure Resource Access
 Security from Disasters
Basic material for
good Life
 Adequate Livelihoods
 Sufficient Nutritious Food
 Shelter
 Access to Goods
Health
 Strength
 Feeling Well
 Access to Clean Air and
Water
Freedom of Choice
and Action
Opportunity to be Able
to Achieve What an
Individual Values Doing
and Being
Good Social Relations
 Social Cohesion
 Mutual Respect
 Ability to Help Others
Life on Earth – Biodiversity
4. Summarize the main aspects of the conditions of ecosystem services at the end of the 20th century.
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31
page 70
chapter 2.2.3
24 Ecosystem Services and their Condition at the End of the 20th Century
Livestock
Capture fisheries
Decline in productivity
Timber
Forests are declining in some areas, increasing in
others
Cotton, hemp, silk
+/–
Some fiber production has increased; some has
decreased
Decline in productivity
Unsustainable use of water for drinking, industrial
use, irrigation: The construction of dams has not
changed the amount of energy more available to
people
‘
The ability of the atmosphere to cleanse itself of
pollutants has declined
‘
Terrestrial ecosystems became a net sink sometime
around the middle of the last century
‘
More negative impacts than positive
Genetic resources
Fresh water
Air quality regulation
Global
Regional and local
Loss through extinction and genetic crops
Loss through species extinction and overharvesting
Water purification and waste
treatment
Disease regulation
Pest regulation
Pollination
Natural hazard regulation
+/–
Differs depending on ecosystem modifications
In many agricultural areas, pest control provided by
natural enemies has been replaced by the use of
pesticides
The number of allergy sufferers globally has clearly
grown
Natural buffer regions (wetlands, mangroves) are
being lost
Globally, water quality is declining
‘
There has been a decline in the numbers of sacred
groves and other such protected areas
Aesthetic values
‘
Spiritual and religious values
Soil degradation continues
‘
Erosion regulation
‘
Differs depending on ecosystem modification and
location
‘
Water regulation
‘ ‘
Regulating Services
Considerable increase in productivity
+/–
Biochemicals, natural medicines, and pharmaceuticals
Cultural Services
Productivity decrease resulting from overfishing
Considerable increase in productivity
Wild plant and animal products
Wood fuel
Climate regulation
Considerable increase in productivity
‘
Fiber
Notes
‘ ‘ ‘
Provisioning Services
Aquaculture
Trend
‘
Crops
‘ ‘
Sub-category
‘
Food
‘
Service
There has been a decline in the quality and quantity
of areas to meet demand for aesthetically pleasing
natural landscapes
Recreation and ecotourism
+/–
More areas are accessible, but the quality of these
areas is declining.
Source: Millennium Ecosystem Assessment
32
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page 79
chapter 2.2.4
Your task
What do you associate with the following picture concerning environmental
protection?
page 83
chapter 2.3.1
2.3 Capital as a Factor of Production
Group work
Environmental capital
Utilised environmental
capital
Financial
capital
Knowledge
capital
Community
well-being
Physical
capital
Social
capital
Human
capital
Psychological
capital
Different forms of capital underline human existence and community well-being. Each capital is ultimately
dependent on nature but often grows to the detriment of environmental capital. Physical capital growth drives
the amount of environmental capital that is utilised through land conversion from natural to farm to urban and
industrial; thereby contributing to declining biodiversity.
Source: http://ars.els-cdn.com/content/image/1-s2.0-S1462901112001037-gr3.jpg
1. Find examples for the different forms of capital shown in the chart above with the help of the Internet. (Divide
the task among the group members.)
2. Explain the different forms of capital to all group members by giving the examples you found on the Internet.
3. Work on a well-structured text explaining the chart above in detail.
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33
page 85
chapter 2.3.2
Your tasks
1. Translate the following text into German.
2. What is the link between religion and economy?
3. Read up on Puritanism, Civil Religion and the American Dream in the United
States.
Talking about economy, we must not forget that societies have been largely
influenced by religion and religious ideas, philosophy or ideology. The most
prominent link is between Calvinism, or Puritanism as it was called in the North
American settlements, and Capitalism. John Calvin (1509–1564) promoted the
belief that God chooses a few “elect” people, who he wishes to save. These “elect”
people should hold the power on earth, and naturally also be in a better economic
position.
The Puritan settlers in the North American colonies, which would later become the United States of America,
believed that if a person lived uprightly and according to God’s laws, they would be rewarded. Puritan work ethic
was therefore one of the central ideas that shaped this new society, meaning that God would reward those who
worked hard and lead a life abstinent of pleasure.
Calvinists in Europe and Puritans in North America often supported the idea that a society must take care of the
poor and unfortunate as well. Others claimed that God had chosen them to be poor and therefore they should
not be helped. This kind of conflict is still reflected in today’s politics.
Capitalism, of course, is based on a similar concept: those who work hard will be rewarded. The question
remains what to do with those who do not want to, or cannot work hard. Europe has mainly followed the idea
that everyone should be embedded in a system of social security that provides everyone with the fulfilment of
the most basic needs. The USA is still struggling with this concept, ignoring the fact that the American Dream
can rarely be achieved by mere hard work. Nonetheless, many US Americans believe that everyone is responsible
for themselves – an idea that certainly also can be found in political discussions in Europe.
page 89
chapter 2.3.3
Your tasks
1. Describe what you see in the cartoon.
2. Translate what is said in the cartoon into
German.
3. What is the message of the cartoon
concerning capital-intensive production
processes?
34
333134
page 94
chapter 2.5
Your task
1. Summarize the following text in German.
Group work
2. Discuss the four questions given in the second paragraph of the text, take notes and present the results to
the whole class.
What is Human Capital?
Just as a country can turn physical resources like land into physical
capital like factories, similarly, it can also turn human resources like
students into human capital like engineers and doctors. Societies
need sufficient human capital in the first place – in the form of
competent people who themselves have been educated and trained
as professors and other professionals. In other words, we need
good human capital to produce other human capital (say, doctors,
engineers …). This means that we need investment in human capital
to produce more human capital out of human resources. Let us
understand a little more of what human capital means by posing
the following questions:
(i) What are the sources of human capital?
(ii) Is there any relation between human capital and economic growth of a country?
(iii) Is the formation of human capital linked to man’s all-round development or, as it is now called, human
development?
(iv) Which role can the government play in human capital formation in India?
Investment in education is considered as one of the main sources of human capital. There are several other
sources as well. Investments in health, on-the-job training, migration and information are the other sources
of human capital formation. Spending on education by individuals is similar to spending on capital goods by
companies with the objective of increasing future profits over a period of time. Likewise, individuals invest in
education with the objective of increasing their future income. Like education, health is also considered as an
important input for the development of a nation as much as it is important for the development of an individual.
Who can work better – a sick person or a person with sound health? A sick labourer without access to medical
facilities is compelled to abstain from work and there is loss of productivity. Hence, expenditure on health is an
important source of human capital formation.
Source: http://malkeetsingh9.blogspot.de/2012/07/what-is-human-capital.html
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35
page 101
chapter 3.1.1
Chapter 3: The Circular Flow of Economic Activities
and Measuring National Income and Output
Understanding the Economic World by Use of Models
Everyone is familiar with the idea of a model. As children many of us played with paper airplanes, which
are models of real airplanes. In chemistry at school, we studied molecules and atoms, which are models of
what matter is made of. Models are a simplified representation of something in the real world, and are used
extensively by scientists and social scientists in their efforts to understand and explain real-world situations.
Models represent only the important aspects of the real world that is being investigated, ignoring unnecessary
details, thereby allowing scientists and social scientists to focus on important relationships.
Whereas sciences like biology, chemistry and physics offer the possibility to construct three-dimensional models
(as with molecules and atoms), this cannot be done in the social sciences, because these are concerned with
human society and social relationships. In economics, models are often illustrated by use of diagrams showing
the relationships between key variables. In more advanced economics (beyond the scope of this course), models
are illustrated by use of mathematical equations. To construct a model, economists select particular variables
and make assumptions about how these are interrelated. Different models illustrate different aspects of the
economic world. Some models may be better than others in their ability to explain economic phenomena, and as
we will see in later chapters, economists sometimes disagree about which model can offer a better explanation
of some aspect of the real world.
Models are very closely related to theories. A theory is a generalization or simplification about the real world
that shows how particular variables are interrelated, and attempts to explain real-world phenomena. Models are
sometimes built on the basis of well-established theories. In some contexts, economists use the terms ‘model’
and ‘theory’ interchangeably.
Source: E. Tragakes. Economics for the IB Diploma. Cambridge 2011, p. 5 f.
Group work
1. Read the text “Understanding the economic world by use of models”.
Note: aeroplanes (BE), airplanes (AE)
2.
Then discuss the following questions in your work group while taking notes.
a. Why is a paper aeroplane a model?
b. Which other models did you use as toys?
c. Why have “match box cars” become so famous?
d. What are the characteristics of models?
e. What is the basic difference between models in natural and social sciences?
f. What do you learn from the text about models in economics?
g. Is there a difference between models and theories?
3. Write a coherent text about the results of the discussion in your group according to the notes you took.
4.
36
Translate the following sentences.
a. As children many of us played with paper airplanes, which are models of real airplanes.
b. In chemistry at school, we studied molecules and atoms, which are models of what matter is made of.
c. Models are a simplified representation of something in the real world.
d. Models are used extensively by scientists and social scientists in their efforts to understand and explain
real-world situations.
e. Models represent only the important aspects of the real world that is being investigated, ignoring
unnecessary details.
f. Models allow scientists and social scientists to focus on important relationships.
g. To construct a model, economists select particular variables and make assumptions about how these are
interrelated.
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page 101
chapter 3.1.1
Your tasks
1. Complete the following box.
Basic economic terms
in English:
in German:
a model
simplified representations
the real world
scientists
social scientists
economic relationships
social sciences
human society
social relationships
Volkswirtschaftslehre
key variables
advanced economics
mathematical equations
to construct a model
.
the economic world
economic phenomena
theory
a generalization about the real world
real-world phenomena
well-established theories
2. Illustrate the relationship between models and theories in economics by giving examples.
3. Write an essay about the function of models in social sciences for a primary school textbook.
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37
page 103
chapter 3.1.3
3.1 The Circular Flow Model
The circular flow model is a very simple model that illustrates a number of economic concepts and relationships.
The simplest version of this model is shown in the diagram in Figure 1. The model assumes that households (or
consumers) and firms (or businesses) are the main decision-makers in the economy; both are shown in square
boxes. Households and firms are linked together through two kinds of markets, shown in diamonds. A market,
in economics, is any arrangement that allows buyers and sellers to conduct their buying and selling activities.
la
Source: E. Tragakes: Economics for the IB Diploma. Cambridge 2011, p. 6.
nd
bo
, la
c
ur,
ap
t re
, en
i ta l
land, labou
ur ship
prene
in come
resource
markets
eho l d
ho u s
wages,
(rent, profit)
st ,
intere
r, cap
costs of
ital,
prod
ent
ucti
rep
ren
eu
rsh
ip
on
households
(consumers)
firms
(businesses)
hous
ehold
ex p e
nditu
re
goo
ds
and
r eve n
ues
product
­ arkets
m
ser v
ices
good
s an
d
vic
ser
es
Figure 1: The simple circular flow model
Your tasks
1. Write down the rest of the text in correct order with the help of figure 1.
T h e p ay m
e
buy goo nts that househ
ds and s
olds ma
ke to
er v
expendit
ures (or ices are househ
old
s
imply ho
consum
er spend
usehold
or
ing).
of
the factors
Fir ms buy
markets
e
rc
u
o
in res
n
o
ti
c
u
d
ro
p
uce goods
em to prod
th
e
s
u
d
n
a
es.
and servic
In the counter clockwise direction,
there is a flow of money used as
payments for sales and purchases.
We therefore see a flow
in the
clockwise direction of fac
tors of
production from househo
lds to
firms, and of goods and
ser vices
from firms to households
.
Households or consumers are owners
of the factors of production (land, labour, capital and
entrepreneurship), …
rkets.
duct ma
o
r
p
in
s
r
onsume
ices to c
v
r
e
e
s
th
d
te
n
a
tu
... and th
e goods
ents consti
e pa
n sell th
e
These paym seholds.
th
y
e
th
h
T
ey receiv yments
hou
income of
goods a e by selling
nd
When households sell their
their rev ser vices are
enues.
factors of production to firms,
…
whi
The payments that firms
they receive payments taking the
i n r e c h t h ey s
make to buy factors of
sour
form of rent (for land), wages (for
ce m ell to fir m
production represent
arke
s labour), interest (for capital) and
ts.
their costs, …
profit (for entrepreneurship).
38
333138
page 103
chapter 3.1.3
2. Copy and label the following diagram.
to label – beschriften
Circular Flow
Money
3. Translate the following text into German.
The circular flow model provides a visual representation of some key aspects of an economy relying on
markets. It shows how production of goods and services and consumption of these are linked together
through the economic decisions made by households and firms. These decisions involve choices,
necessitated by the condition of scarcity.
4. Continue the following text.
“A useful way of seeing the economic interactions among the four sectors in the economy is a circular flow
diagram, which shows the income received and payments made by each. A simple circular flow diagram is
pictured in the figure below.
Let’s walk through the circular flow step by step. Households work for firms and the government, and they
receive wages for their work. Households also receive …”
Rest of the
World
Purchases of
domestically made
goods and services
by foreigners
(exports)
Purchases of goods
and services
Taxes
Purchases of goods
and services
Government
Firms
Purchases of
foreign-made
goods and services
(imports)
Taxes
Wages, ­interest,
transfer
­payments
Households
Wages, interest, dividends,
profits, and rent
Figure 2: The Circular Flow of Payments
Source: Karl E. Case, Ray C. Fair. Principles of Economics. New Jersey 1999, p. 504 f.
Help: transfer payments = cash payments made by the government to people who do not supply goods, services,
or labour in exchange for these payments. They include social security benefits, veterans' benefits, and welfare
payments.
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39
page 110
chapter 3.2
3.2 Gross Domestic Product
The British Economy
Breakdown of Britain's gross domestic
product (GDP)
GDP changes compared with the previous year
2009
2010
2011*
2012*
Public administration,
services and private
+1.8 %
budgets
+0.7 %
+0.6 %
Percentage by sector (2010)
Banks. insurance,
real estate
33.7
Construction,
agriculture
and fisheries 6.8
Industry
15839
%
15.7
Economic growth
23.2
20.6
Trade, hospitality,
traffic
-4.4 %
Source: Trade & Invest, EU Commission
*Estimate
Your tasks
1. Write a text about the most important facts and figures of the British economy according to the statistics
given above.
page 120
2.
chapter 3.2.4
Read the text definitions of Gross Domestic Product, and
a. mark all basic economic terms.
b. Make a list of the basic economic terms you marked and translate them into correct German.
c. Translate the texts into German.
d. Learn the new basic economic terms.
gross domestic product: the annual value of goods sold and services paid for inside a country.
Abbreviation GDP.
Source: Linda Carson. Dictionary of Economics. Kindle edition. Loc. 2104
Definition of ‘Gross Domestic Product - GDP’
The monetary value of all the finished goods and services produced within a country’s borders in a specific time
period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption,
government outlays, investments and exports less imports that occur within a defined territory. […]
GDP is commonly used as an indicator of the economic health of a country, as well as to gauge a country’s
standard of living. Critics of using GDP as an economic measure say the statistic does not take into account
the underground economy - transactions that, for whatever reason, are not reported to the government. Others
say that GDP is not intended to gauge material well-being, but serves as a measure of a nation’s productivity,
which is unrelated.
Source: http://www.investopedia.com/terms/g/gdp.asp
40
333140