HUMANITIES PACKAGE SELF STUDY MATERIALS - Ministry of Education and Sports

Ministry of Education and Sports

 SELF STUDY MATERIALS

HUMANITIES PACKAGE

ECONOMICS
Senior Five 4. Fixing price by treaty/agreement. This involves the
Topic: Price Theory
 buyer sitting with the seller to negotiate and fix the
By the end of this topic, you should be able to:
 price at which a good or service shall be sold and
1. explain the concept of price theory, price, demand the price remains fixed. The price agreed upon at
 and supply.
 the time of signing the agreement can be changed
2. describe the different ways of determining prices. or revived by amending the treaty. For example, hire
3. understand the types of prices and ways of purchase and deferred payments agreement, rental
 determining a reserve price.
 agreements and land purchase agreements.
4. evaluate the factors that influence the pricing of
 Figure 1
 goods and services.
 5. Price leadership. In the market where there are OPe is the equilibrium price.
5. understand why the demand curve slopes many producers of the same product, there is always OQe is Equilibrium quantity
 downwards from left to right.
 a leading firm which sets the price and other firms
6. understand the factors that influence demand. follow by charging the same price. This form of price 3. Normal price. This is the price attained /obtained
Price theory is a concept that involves the analysis
 determination is common in oligopolistic firms. when quantity demanded equals quantity
of how price influences demand and supply in the
 supplied in the long run. OR This is the long run
free market economy. In this section, you will study
 6. Price legislation/control/administration. This is equilibrium price that persists in the market when
the concepts of price, demand and supply and how
 where the government fixes the prices upon which supply and demand conditions have settled. It is
they influence each other. You therefore, need to pay
 commodities or services should be sold and offered an ideal price which may never be realized and
attention to this topic because most of what we do is
 in the market. This is done either to protect the the market price tends to oscillate around it.
largely determined by price, demand and supply.
 producer when the market price is very low by fixing
Price is the value of a commodity or service expressed in
 a minimum price or to protect consumers when the 4. Reserve price. This is the minimum price a
terms of money. For example, the price of a Bic pen is Shs
 market price if high by fixing a maximum price. Do seller is willing to accept in exchange of his/
1,000 and a hair cut in salon ‘A’ costs Shs 5,000.
 you remember in 2018 when there was too much her commodity below which he/she retains the
 maize on the market and the price was as low as Shs commodity. It is normally the minimum price
How prices are determined
 200 per kilogram? Government fixed the price to offered by a seller during auction.
Prices are usually determined in the following ways:
 Shs 500 per kilogram of maize. That was a minimum What determines a reserve price?
1. Through bargaining/haggling. You must have
 price. A reserve price can be determined through many ways
 been involved in a negotiation while buying a good
 or paying for a taxi/ bus fare. This is what is called including the following:
 7. Cartel arrangement/ collusion. Have you ever 10. Expected future demand for a commodity. A
 bargaining or haggling. Therefore, this involves the
 been keen on the prices of fuel at petrol stations, producer who expects demand for his commodities
 buyer negotiating with the seller until when they
 prices of soft drinks in the same category? In to increase in the nearby future sets a high reserve
 reach an agreeable price for a good or service. In this
 most cases, these prices are the same from one price to retain many goods or sell in the future when
 case, the seller starts with a higher price while the
 petrol station to the other, and from soft drink demand increases while a producer who expects
 buyer starts with offering a lower price. The seller
 manufacturer to the other. This happens when demand for his commodities to fall in the nearby
 keeps on reducing the price while the buyer keeps
 producers come together (collude) and agree on the future sets a low reserve price currently so as to sell
 on increasing until when they both agree on the
 price to charge the buyers. It is common when there off the commodity very fast before demand falls.
 same price.
 are few sellers who wish to reduce competition
2. Auctioning/bidding. Your parents/guardians
 among themselves through price wars. For example, 11. Expected future price of the commodity. A seller
 different bus operators can collude or agree to who expects the future price of the commodity
 could have bought an item through auctioning
 charge a uniform transport fare from passengers on to increase sets a high reserve price so as to retain
 or participated in bidding in order to sell some
 the same route along which their buses operate. many goods for sell at a higher price in the future.
 items or provide some services to an organisation.
 This is what is called auctioning or bidding. It However, sellers expecting reductions in future
 8. Resale price maintenance. Do you remember prices set low reserve prices such that they sell more
 involves prospective buyers competing to buy a
 some commodities you bought on which prices currently and avoid the lower prices in the future.
 commodity under auction through offering prices.
 The commodity is usually sold to the one who offers
 were indicated? Apart from newspapers, can you 12. Nature of the commodity. A seller dealing in
 remember others? This is what is called resale price durable goods sets a high reserve price because his
 the highest price. The buyer who offers the highest
 maintenance. This is therefore, a mechanism of goods are long lasting and can be stored for some
 price is called the highest bidder.
 price determination where manufacturers set the time. However, a seller who deals in perishable
This method is common during fundraising especially
 prices at which their commodities are to be sold goods sets a low reserve price to sell off the goods
 in churches, schools, wedding meetings, and when
 to the final consumers by writing the price on the before they go bad easily and cannot be stored.
 disposing of public assets. Note that the price arising
 commodity. Please find out the merits and demerits
 out of an auction does not reflect the true market
 value of the commodity.
 of resale price maintenance 13. Degree of necessity of the commodity. Sellers
3. Market forces of demand and supply. You must 9. Types of prices dealing in commodities with a high degree of
 have noticed that sometimes prices keep changing Types of prices include: necessity set high reserve prices because they know
 either due to high demand for some commodities, 1. Market price. This is the ruling/prevailing price that consumers cannot do without them. However,
 or due to high supply of some commodities. This in the market at a particular time determined by sellers dealing in commodities with a low degree of
 is particularly so with agricultural products whose buyers and sellers. This price changes from time to necessity set low reserve prices because they know
 supply is very high during the harvest season and time since it is determined by a number of factors. that consumers can do without them.
 very low during the planting season. In this case, 2. Equilibrium price. This is the price at which
 the price is determined at the point of intersection quantity demanded is equal to quantity supplied in 14. Size of transport (carriage) and storage charges.
 of the market forces of demand and supply in a free the market. High storage and transport charges lead to a low
 market economy. The price set under this approach The equilibrium quantity and price are got at the reserve price because the seller wishes to sell off
 is called the equilibrium price. point of intersection of the demand and supply. the commodity very fast before incurring more of
 these charges. However, low transport and storage

 2 ©National Curriculum Development Centre, 2020

charges lead to a high reserve price because the Task lighting, ironing, cooking, etc.
 seller is not scared of transporting or storing goods 1. From your experience, what takes place in a ii) Demand for water which can be used for cooking,
 for a long period of time. market? bathing, etc.
 2. What are the characteristics or features of iii) Demand for timber which can be used for
15. The length of the gestation period. A long market? construction, furniture making, etc.
 gestation period leads to a high reserve A market, therefore, is a mechanism in which buyers Activity 4
 price because the producer is aware of the and sellers come into contact and exchange goods and Write down 5 examples of composite demand other
 inconveniences he/she is going to go through to services. A place where goods and services are traded is than the ones given above.
 produce the next commodities. However, a short known as a commodity market. Do you have a maid at home, or has your family ever
 gestation period implies that the seller needs less 19. Features of a market hired a person to build a house, or dig for you? The truth
 time to produce the commodity and therefore he 1. There should be sellers and buyers is that that person was hired not because you wanted to
 sets a low reserve price. 2. There should be an interaction between sellers and give him/her money but for the work he/she was going
 buyers. to do. This is what is called derived demand. Derived
16. Level of liquidity preference of the seller. Sellers 3. There should be a product to be exchanged. demand is the demand for a commodity not for its
 with urgent need for cash (high liquidity preference) 4. There should be an established medium of own sake but for the sake of what it helps to produce.
 set low reserve prices to ensure that they actually exchange. Alternatively, it is the demand for a commodity due to
 sell the goods for the money they need. However, the demand for the commodity that it helps to produce.
 20. Theory of Demand
 sellers with no urgent need for cash (low liquidity Some examples of derived demand include;
 You have bought several goods for home use, for yourself
 preference) set high reserve prices.
 and for school. The items bought or not bought but i) Demand for labour
 were desired constitute a person’s demand. Demand is ii) Demand for land
17. The cost of production. Producers who incur Activity 5
 therefore, the desire backed by the ability to pay a given
 high costs of production set high reserve prices Write down 5 examples of derived demand other than
 amount of money for a particular commodity in a given
 because it is expensive for them to replace the sold the ones given above.
 period of time. OR Demand is the quantity of a good
 goods. However, producers who incur low costs of
 that a consumer is willing and able to buy at a given The demand schedule
 production set low reserve prices because it is cheap
 price in a given period of time. This is a table showing the amount of a commodity
 for them to replace the sold goods.
 Market demand is the aggregate demand for a demanded at various prices by a consumer or groups
Activity 1 commodity in the market by all consumers at a given of consumers during a particular period of time. This
Explain the factors that lead to a high reserve price. price in a given period of time. schedule can be compiled either for an individual or for
18. Factors that influence pricing of goods and Effective demand is the actual buying of goods and all individuals in the market.
 services services at a given time.
1. Forces of demand and supply. As supply exceeds 21. Types of demand Individual and market demand schedules
 demand, low prices are set due to a surplus of There are several types of demand. Let us look at them Price (in Shs Quantity de- Quantity Market de-
 commodities on the market. However, when one by one in detail. per kg) manded by demanded by mand (in kg)
 demand exceeds supply, high prices are set for You must have bought some commodities which consumer A consumer B
 commodities because they are scarce. are used together such that without one, the other is 5,000 40 20 60
 rendered useless. Name such commodities you know
2. Aim/objective of the producer. Where producers and write them down in your note book. 4,000 60 40 100
 aim at profit maximization, they restrict output, The demand for such commodities which are used 3,000 80 60 140
 charge a high price and where producers aim at together is called complementary demand or
 sales maximization, they charge relatively lower joint demand. In other words, these are goods that 2,000 100 80 180
 prices to encourage people to buy as much complement each other. Some examples of such 1,000 120 100 220
 quantities as possible. demand include: The market demand schedule is derived by horizontal
 i) Demand for cars and fuel summation of the quantities purchased at each price
3. Cost of production. High cost of production leads ii) Demand for books and pens by all the individuals/ consumers in the market. The
 to a high price set since producers aim at profit iii) Demand for mobile phones and airtime, etc. quantities in the market schedule are larger than those of
 maximization and low cost of production leads to a
 Activity 2 the individual’s demand schedule.
 low price set for the commodity.
 Basing on the above explanation, give 5 examples of One major characteristic of a demand schedule is that
4. Rate of taxation. Heavy taxes imposed on goods
 the higher the price, the lower the quantity demanded
 and services lead to high prices set since producers complementary demand other than the ones given
 above. and the lower the price, the higher the quantity
 tend to shift the burden of paying taxes to
 You must have experienced a situation when you demanded of the commodity in question, other factors
 consumers in form of increased prices. However, low
 sometimes go to buy some commodities and you start being constant.
 taxes imposed on goods and services lead to low
 debating within yourself whether to buy commodity The information tabulated in a demand schedule can be
 prices set.
 A or commodity B especially when they perform summarised or represented graphically on a curve.
5. Quality of the commodity. High quality goods are the same purpose. Such kind of goods have what is
 called competitive demand. This is the demand for The demand curve
 highly priced since producers incur high costs in The demand curve is a graphical representation of the
 producing them while low quality goods are lowly commodities which serve the same purpose. In other
 words, these are goods that are substitutes to one demand schedule. The demand curve is a locus of points
 priced as they are cheap to produce. showing the quantities demanded of a commodity at
 another. Write down 5 examples of such goods other
 than the ones given below. various prices in a given period of time.
6. Elasticity of demand for a commodity. Producers Price is represented on the vertical axis while quantity
 set high prices for commodities whose demand is i) Demand for tea and coffee
 ii) Demand for Close-up and Colgate demanded is on the horizontal axis. From the above
 price inelastic since people continue to buy even table, an individual demand curve (Consumer A) can be
 if prices increase and they set low prices for those iii) Demand for Coca Cola soda and Pepsi Cola, etc.
 Independent demand refers to demand for drawn as shown below.
 whose demand is price elastic since any slight
 increase in price results in a big fall in quantity commodities which are not related such that the
 demanded. demand for one commodity does not directly affect
 the demand for another commodity. Some examples of
Uses of price in a market economy independent demand include;
Research on the uses of price in the free market i) Demand for clothes and food
economy using a phone or computer at home. ii) Demand for a car and a pen, etc.
 Activity 3
The market concept Write in your note book 5 examples of independent
During your day to-day living, you may have visited a demand other than the ones given above.
market at one point or another or you may have seen Composite demand. This is the total demand for a
markets in your locality. commodity which has several uses. Such commodities
 can be used for more than one purpose. Some examples
 of composite demand include;
 i) Demand for electricity which can be used for
 ©National Curriculum Development Centre, 2020 3

A normal demand curve is downward sloping from higher price. afford to purchase the commodity.
 left to right, that is it has a negative slope meaning
 that there is an inverse relationship between price 6. Different uses of certain commodities. Some 8. Future price expectation. Expectations of a high
 and quantity demanded. (As the price increases, goods have more than one use e.g. water, electricity, price in the nearby future leads to high commodity
 quantity demanded decreases and vice versa). etc. such that when the price of the commodity demand currently because buyers stock more
 increases, consumers tend to use it for essential goods to avoid the higher prices in the future.
Features of a normal demand curve purposes only hence reducing on its demand. However, expectations of a low price in the nearby
 1. It must be downward sloping from left to right. On the other hand, when the price reduces, the future leads to low commodity demand currently
 2. It should not touch either of the axes. If it consumers put the commodity to many uses because the buyer reserves some money so as to
 touches the Y - axis, it implies that a consumer thereby increasing quantity demanded hence a buy more when the price falls.
 incurs a cost for a commodity which has not downward sloping curve.
 been obtained. (He pays a price at zero quantity). 9. Government policy on taxation. High level of
 If it touches the X-axis, it implies that the Factors influencing demand direct taxation leads to low commodity demand
 consumer is buying a commodity at zero price. Perhaps you have witnessed that sometimes demand because people have low disposable income
 for goods and services is high and sometimes it is low. A while low level of direct taxation leads to high
The law of demand number of factors have been developed to explain this commodity demand because people have high
The law of demand states that “the higher the price of a trend of affairs. These are: disposable income.
commodity, the lower the quantity demanded and the 1. Price of the commodity in question. Assuming
lower the price of a commodity, the higher the quantity you have Shs 1,000 and you go to the school 10. Seasonal factors. Certain commodities are
demanded” holding other factors constant (Ceteris canteen but find the price of a Samosa at Shs 500. demanded in particular seasons. Favourable
paribus). Probably you will buy 2 samosas and probably season leads to high commodity demand and
 some other students will not buy at all. But if you unfavourable season leads to low commodity
Reasons why the demand curve slopes downwards go with the same amount of money and you find demand. It is common to sell success cards during
from left to right that the price is Shs 250, you will buy 4 samosas examination periods, Christmas cards during
A normal demand curve is one that slopes downwards and many other students will be able to buy. This Christmas period and Easter cards during the Easter
from left to right following the law of demand. The shows that a high price leads to low demand period. However, outside those periods, one can
following reasons explain why the demand curve slopes because it scares away some buyers. However, a hardly find them on the market because no one is
downwards from left to right. low price attracts new buyers, hence high demand willing to purchase them.
1. The law of diminishing marginal utility. for the commodity.
 According to this law, when a consumer buys more 11. Level of advertising. A high level of advertising
 units of the commodity, the marginal utility of that 2. Price of substitutes. You have already been leads to high commodity demand because
 commodity continues to decline; and therefore the introduced to substitutes as goods that serve it results into high level of awareness of the
 consumer will buy more units of the commodity the same purpose. A high price of a substitute consumers about the availability of the commodity.
 only when the price reduces. When fewer units are commodity A leads to high demand of substitute On the other hand, low level of advertising leads
 available, utility will be high and the consumer will commodity B because commodity B appears to low commodity demand because it leads to
 be prepared to pay more for that commodity. This relatively cheaper. On the other hand, a low price low level of awareness of the consumers about the
 proves that demand will be low at a higher price of substitute commodity A leads to a low demand availability of the commodity.
 and vice versa and that is why the demand curve is of commodity B because B appears to be relatively
 downward sloping. expensive. 12. The prevailing economic conditions in an
 economy. Commodity demand tends to be high
2. The substitution effect of a price change. When 3. Price of complements. First, we are going to during periods of economic prosperity (boom)
 the price of the commodity falls, and the price of use two complements where one is a major and because during such times, people are employed
 substitutes remain the same, a consumer reduces the other is a minor. For example, a car is a major and earn fair incomes to purchase commodities.
 the quantities of other substitute goods whose compliment and fuel is a minor compliment. A However, commodity demand is low during
 prices now appear relatively high and increases high price of a major complement (car) leads to periods of economic depression because many
 the quantity of the commodity whose price has low demand for a minor compliment (fuel). This people have no jobs and thus have no income to
 fallen. When the price of the commodity under is because it is expensive to acquire a car and purchase the commodity.
 consideration increases, the consumer leaves the therefore there will be few cars to use fuel. On the
 commodity and buys the substitutes, given constant other hand, a low price of a major complement 13. Socio-economic factors. These include age, sex,
 prices of substitutes hence the downward sloping (car) leads to high demand for a minor compliment religion, culture, etc. One or a combination of these
 demand curve. (fuel) because it is cheap to get a car leading to factors to some extent influence demand for a
 many cars that use fuel. commodity. For instance, demand for pork is low in
3. The income effect of a price change. When an places where there are many Muslims as compared
 individual has a fixed income and the price of the 4. Level of consumer’s income. High level of to places where there are few or no Moslems.
 commodity reduces, his real income increases and consumer’s income leads to high purchasing
 hence he can buy more units of the commodity power hence high commodity demand. However, Activity 6
 with his fixed income. On the other hand, when low level of consumer’s income leads to low 1. Explain the factors that lead to high demand of a
 the price increases, the consumer’s real income purchasing power and low commodity demand. commodity.
 decreases and hence he buys less units of the 2. Explain the factors that lead to low demand of a
 commodity hence the downward sloping demand 5. Tastes and preferences of consumers. Favourable commodity.
 curve. tastes and preferences result into high commodity
 demand because they are able to raise the Change in demand
4. The total effect of a price change. This is the consumer’s interest in the commodity. However, A change in demand refers to an economic situation
 combination of the substitution and income effects. unfavourable tastes and preferences result into where more or less units of a commodity are demanded
 When the price of the commodity falls, the quantity low commodity demand because they make the at a constant price brought about by a change in other
 demanded increases because many new buyers consumer to develop bias against the commodity. factors affecting demand for that particular commodity.
 are attracted while an increase in price leads to a It is illustrated by a shift of the demand curve either to
 decrease in demand because it scares away buyers 6. Population size. A large population size creates the left or to the right holding the commodity price
 hence the inverse relationship between price and high commodity demand because it is associated constant.
 quantity demanded which produces a downward with many buyers. However, a small population size
 sloping demand curve. leads to low commodity demand because it has
 few buyers.
5. Behaviour of low income earners. The demand
 curve depends upon the behaviour of low income 7. Nature of income distribution. A fair distribution
 earners. They buy more when price reduces and of income leads to high commodity demand
 less when the price increases. This leads to a because many people can afford to purchase a
 downward sloping demand curve. The rich do not commodity. However, unfair income distribution
 have an effect on the demand curve because they between individuals leads to low commodity
 are capable of buying the same quantity even at a demand because there are few people who can Figure 2
 4 ©National Curriculum Development Centre, 2020

From the above figure, DO DO is the original demand movement along the demand curve either upward due
curve. to price increase or downward due to price fall.
D1D1 shows a shift of the demand curve inwards from
DODO representing a decrease in demand from Qo to Q1.
D2D2 shows a shift of the demand curve outwards from
DoDo representing an increase in demand from Qo to
Q2.
Activity 7
Explain the factors that cause a change in demand for a
commodity.
 Figure 3
Causes of a change in demand Activity 8
A change in demand can be an increase in demand or a Explain the factors that lead to an increase in demand for
decrease in demand. The factors that lead to a change in a commodity in your country. Figure 5
demand include: A fall in price from OPo to OP2 leads to an increase in
 i) A change in prices of substitutes. Decrease in demand quantity demanded from OQo to OQ2 as illustrated by
 ii) A change in prices of complements. This refers to a decline in quantity demanded of a the movement along the demand curve downwards
 iii) A change in the level of consumer’s income. commodity due to factors that influence demand from point a to b. A rise in price from OPo to OP1 leads to
 iv) A change in the population size. becoming unfavourable while holding price of the a decrease in quantity demanded from OQo to OQ1 as
 v) Expectation of a future change in the price of commodity (in question) constant. It is represented by illustrated by the movement along the demand curve
 the commodity. a total shift of the demand curve inwards to the left upwards from point a to c.
 vi) A change in government policy of taxation holding the commodity price constant.
 and subsidies.
 vii) A change in the level of advertisement. Increase in quantity demanded
 viii) A change in seasons. This refers to the demand for more units of a
 ix) A change in tastes and preferences commodity due to a fall in its price while holding
 x) A change in the quality of the other factors constant/ceteris paribus.
 commodity
 xi) A change in the economic conditions.
 xii) A change in the nature of distribution of
 income.

Increase in demand Figure 4
This is the demand for more quantities of a commodity
 Activity 9
due to conditions that influence demand becoming
 Account for a decrease in a commodity demanded in
(more) favourable while holding price of the commodity
 your country.
(in question) constant. It is represented by a total shift
of the demand curve outwards to the right, holding the
 Change in quantity demanded
commodity price constant.
 This is an economic situation where more or less units of
 a commodity are demanded due to change in its price
 when other factors affecting demand for that particular Figure 6
 commodity have not changed. OR A change in the
 quantity demanded refers to a rise or fall in the amount Decrease in quantity demanded
 of a commodity demanded due to changes in price This refers to the demand for lesser quantity of a
 levels of a commodity assuming other determinants commodity due to increase in its price ceteris paribus.
 of demand are held constant. It is illustrated by the

Senior Six they chose it over barter. Make sure the qualities and
 characteristics that make money a preferred medium of
 exchange over barter are highlighted.
 Approach, (2) Keynes’ Theory, (3) Tobin Portfolio Approach,
 (4) Boumol’s Inventory Approach, and (5) Friedman’s Theory.
 According to Irving Fisher, the general price level in an
Topic: Money and Banking
By the end of this topic, you should be able to: 3. Most of the countries across the globe are experiencing economy is determined by the quantity of money assuming
1. differentiate between money and barter as medium of a lockdown due to Covid-19. One would imagine that that the velocity of circulation of money (V) and the level of
 exchange. since movement of people is restricted, the amount transactions (T) are constant.
2. understand the functions of money in the Ugandan of money in supply may also be affected. In your view The theory is represented by the equation
 economy. as an economics student, and using your concept of = = / 
3. understand the qualities and characteristics of money supply, evaluate at least five determinants of money Where: M = Quantity of money
 as a medium of exchange. supply in an economy like Uganda. V = Velocity of circulation of money
4. evaluate the determinants of money supply in an NOTE: You will be expected to submit your write-ups P = General price level
 economy. to your teacher when the term reopens. T = Level of transactions
 A change in any of the variables will influence the price.
Introduction Follow-up Activity According to the theory, M and V vary directly while T
You have been provided with a study report on barter 1. We have all used money in our life at one point varies inversely with P. A change in any of the variables will
system in a modern Nigeria society, a case study of Bagana or another. As a student of Economics, prepare a influence the price. According to the theory, M and V vary
Barter Market in Omala Local Government area of Kogi state. presentation on the role of money in a modern directly while T varies inversely with P.
Read the report and answer the following questions. economy like Uganda. Explain the monetary measures Example
 that can be used by an economy to reduce money Given that the quantity of money in an economy is Shs
Activity 1 supply in a developing country like Uganda. 1,000,000, its velocity of circulation is 20 and the number of
1. As a student of Economics, guide the residents of 2. What are the causes of high interest rates in Uganda? transactions made are 250. Calculate the general price level
 Bagana Barter Market on making a choice between 3. The Ugandan economy has experienced fluctuating in an economy.
 money and barter as a medium of exchange, clearly interest rates, which is not good for an economy. As a Solution:
 citing the advantages and disadvantages of each. student of Economics, explain the measures that can Given that M = Shs 1,000,000 V = 10 T = 250 P =?
2. In majority of present day economies, Uganda be used to stabilize interest rates in Uganda. From = / = ℎ (1,000,000 × 10 /250)
 inclusive, money has been adopted as a medium of = Sℎ 40,000
 exchange as opposed to barter. Write a presentation Activity 2 Task:
 to the residents of Bagana Barter Market about the A number of theories of demand for money have been Using the quantity theory of money demand, answer the
 functions money would offer to their economy in case developed. Among them are (1) Fisher’s Transactions following:
 1. Given that the volume of money in an economy is
 ©National Curriculum Development Centre, 2020 5

£ 20 billion; total level of transactions is £ 250 and they were proposed based on conditions in the developed payments effected at a future date and in the process,
 the transactions velocity of money is 20; calculate world. These mostly do not apply to developing countries both the creditors and debtors do not stand to lose.
 the general price level in the economy. like Uganda. Therefore, to a larger extent, the theory does 4. Store of value. You notice that when properties like
 2. State Irving Fisher’s equation of exchange. not apply because of the following reasons; land or buildings are converted into monetary terms,
 i) There is no general price level but rather a series of the money can be stored. This is because it is neither
 3. How is the value of money determined in Fisher’s price levels. bulky nor perishable. Additionally, it can be kept for
 equation of exchange? ii) It ignores the influence of the rate of interest yet it is longer periods than other goods therefore being a
 vital in relation to money and its demand. store of value.
Keynesian theory of money demand iii) The theory does not take into account the demand 5. Measure of value. You have ever bought a
Keynes abandoned the classical view that velocity of for money (it only looks at money supply). commodity and you determined its relative value
circulation of money was constant and emphasized the iv) The theory only attempts to explain changes in the based on price. This means that money measures the
importance of interest rates. He postulated that there are value of money but does not show how the value of relative value of a commodity using the price.
three motives behind the demand for money namely; money is determined. 6. Money is used to transfer fixed assets. You could
1. Transactions demand for money: Money is a v) Sometimes an excessive money supply does not have interfaced with a person relocating to another
 medium of exchange and thus people hold money lead to inflation when marginal propensity to location but possessing fixed assets like land and
 for use in transactions. save (MPS) is high as this reduces the velocity of buildings that he cannot abandon. To avoid loss of
2. Precautionary motive: This refers to keeping circulation of money making prices to fall. those assets, they can be sold off and converted into
 some money balances at hand to meet unforeseen vi) Where a country has many unemployed resources, money thus making it possible to transfer them.
 circumstances such as car breakdown, illness and an increase in money supply to exploit them
 property damage. increases domestic output hence reducing scarcity Qualities or properties of good money
3. Speculative motive: This exists because people making prices to fall or not change at all. To regard something as money, it should possess the
 desire to hold part of their wealth in form of cash so vii) The theory ignores haggling/ bargaining between following qualities.
 as to take advantage of any opportunity that may buyers and sellers to reach an agreeable price. i) Acceptability - Money should be generally
 arise from the financial market. According to Keynes, viii) The theory does not consider government acceptable as a medium of exchange for goods and
 as interest rates fall, people wish to hold greater and intervention in the determination of price through services. You should have confidence in money to
 greater amounts of money in place of any other setting up minimum or maximum price. be willing to accept it in exchange for goods and
 financial asset. On the other hand, as interest rates rise, ix) The theory does not take into account other causes services. That confidence will make you willingly
 people will receive the best return by investing their of price increment like rising cost of production, accept it and then use it to meet your various financial
 money in bonds. natural calamities, excessive issuance of currency, etc. obligations.
 x) It is not a theory but just a truism. It only merely ii) Scarcity - You realize that whenever there is excessive
Activity 3 shows that M, V, P and T are related but it does not supply of money, it loses value just like all other items.
Before the anticipated COVID-19 lockdown, individuals were show how each variable relates or impacts on the This means that supply of money should be low
seen making a lot of last minute purchases. To what extent other. relative to its demand so that it maintains its value.
do you think the Keynesian theory of money demand xi) It ignores barter trade. It only considers exchange iii) Portability - When you look back at barter exchange,
may be applicable under the current circumstances of the through use of money. it was abandoned for bulkiness of commodities. This
COVID-19 infection, considering the effect it has had on the xii) It only considers the transactions motive of means that for money to be considered good, it must
demand for money? Make a write-up and you will present it holding money and ignores the speculative and be light in weight and easy to carry from one place to
to your teacher on reporting. precautionary motives of money demand. another.
 xiii) The four variables M, V, P and T are not independent iv) Divisibility - When you go to the shops, sometimes
Additional reading of one another as the theory assumes because a you are purchasing in small quantities that require
Assumptions of the quantity theory of money (Irving change in one induces change in others. small denominations. Therefore to make it possible
Fisher) xiv) The theory assumes that the velocity of circulation to carry out both large and small transactions, it is
Now that you can explain the quantity theory of money, you of money (V) and the level of transactions (T) are important to make money divisible.
equally need to understand the assumptions underlying its constant but this is not true in real life situation. v) Durability - You may have experienced washing
success. These include; money in your pockets at one time or after a heavy
i) Velocity of circulation of money is constant. Money down pour you find a note and despite the heavy
ii) It assumes that V is constant in the short run. Money refers to anything that is generally acceptable as a pour, it is not destroyed. That makes it good money.
iii) It assumes that T is constant in the short run. medium of exchange by the society for the settlement of Money should have the ability to last long, that
iv) It assumes that the interest rate has no role to play. debts or for the making of payments for goods and services. is, good money must not be easily destroyed or
v) It assumes that Velocity of circulation is constant. This implies that money is used for settlement of different changed into other shapes, sizes and colour.
vi) It assumes that the level of transactions is constant. financial obligations by people. vi) Homogeneity - All pieces of similar denominations
vii) It assumes that all business is carried out with use of As you may be aware, different countries use different should look alike i.e. they should have similar features.
 money. currencies or money. The currency of Uganda cannot be vii) Stability in value - Money should not lose its value
viii) All transactions take place using money as a medium used in Tanzania or Kenya just like Kenya currency cannot so easily but should be fairly stable so as to maintain
 of exchange. be used in Uganda or Tanzania. Because of this, money in its worth.
ix) Assumes the general price level which is directly a particular country is referred to as legal tender, meaning viii) Recognisable - The materials and colour of money
 proportional to the amount of money in circulation. that by law it has to be accepted as a means of settling should be easily recognised by the users so that
x) Assumes that money is only demanded for debts and for the exchange of goods and services within people can easily identify it.
 transactions motive. the country up to the denomination presented. ix) Difficult to forge or copy - The process of printing
xi) Assumes that the four variables M, V, P and T are You should also note that before money was invented, trade money should be complicated so as to make it
 independent of each other. was carried out through exchange of goods for goods or difficult for individuals to make counterfeit money.
xii) Assumes that excessive money supply is the only services for services. This was/ is referred to as Barter system
 cause of inflation. of exchange. Money supply
 Supply is not a new concept to you having been introduced
Relevancy of the theory Functions of money to it under price theory. However, this time we shall relate
1. You should realize that a theory is based on individual Money serves several functions as explained below: it to money. In circulation is money you use to buy goods
 opinion. You should therefore critique the opinion 1. Medium of exchange. You have bought or sold and services, additionally people make daily deposits in
 to see whether it can be applied to Uganda or not something in life and in exchange you offered or banks which is at their disposal for withdrawing at any time,
 following the assumptions. received money. This was made easy and possible implying that it is also more or less in circulation.
2. To a small extent, the theory is relevant to Uganda. because of using money as a medium of exchange. At this point therefore, you need to know the meaning of
 Price directly depends on the amount of money in 2. Unit of account. You have observed business men money supply.
 circulation i.e. an increase in the amount of money in carrying out book keeping in form of calculations and Money supply refers to the total amount of money both in
 circulation leads to an increase in price and vice versa. accounting. This is made possible by use of money. circulation and the bank demand deposits. Or it refers to the
3. Price directly depends on the velocity of circulation This is because it is used to express the relative value quantity of money which is in circulation in a given country
 of money i.e. an increase in velocity of circulation of of commodities making it easy to calculate profits, at a given time and the bank demand deposits.
 money leads to an increase in price and vice versa. losses, sales or purchases in a business. Note: Exogenous money supply is one that is determined
4. Price level is inversely related to the level of 3. Standard of deferred or future payments. Modern by the central bank or minting authority and is always fixed.
 transactions i.e. an increase in the level of transactions economics set up is based on credit and credit is paid Endogenous money supply on the other hand is one that
 leads to a decrease in the price level and vice versa. in terms of money only. You realise that sometimes depends on the level of economic activities.
 people do not have cash at hand but need certain
Limitations of the Quantity Theory of money goods and services immediately. Money makes it Determinants of money supply
When you critically look at the assumptions, you realize that possible for one to acquire the commodities but i) Government monetary policy; an expansionary
 6 ©National Curriculum Development Centre, 2020

monetary policy leads to increased money supply Interest and interest rate a low interest rate but low level of supply of liquid
 since government wants to increase money in Interest refers to the monetary reward/ payment to capital leads to high interest rate.
 circulation while a restrictive monetary policy reduces capital as a factor of production for its contribution in the vi) Period of loan repayment; the longer the period of
 money supply since government wants to reduce production process. loan repayment, the higher the interest rate but the
 money in circulation. On the other hand, Interest rate refers to the proportion shorter the period of loan repayment, the lower the
ii) Level of credit creation. of capital borrowed that must be paid to the lender in interest rate.
iii) Issuing policy of the central bank. addition to the principal as a reward to capital as a factor of vii) The money supply in the economy; increased
iv) Level of liquidity preference; an increase in the production. money supply leads to high interest rates while
 level of liquidity preference leads to greater supply of decrease in money supply leads to low interest rates.
 money while low levels of liquidity preference reduce Factors that influence interest rates in my country viii) The economic situation or rate of inflation; in
 money supply. i) The demand for loanable funds or investment periods of high rates of inflation, high interest rates
v) Level of monetisation of the economy; high level capital by the general public; a high demand for are charged while in period of a deflation, low
 of monetisation leads to greater money supply since loanable funds results into a high interest rate but interest rates are charged.
 a lot of money is needed to buy goods and services low demand for loanable funds by the public leads ix) The policy of the individual lender whether it is
 while a large subsistence sector leads to low money to low interest rate. liberal or hard; when the policy of the lender is
 supply since less financial transactions are carried out. ii) The level of liquidity preference; a high liquidity liberal, interest rates are low but when the policy of
vi) Interest rate; a high rate of interest discourages preference implies low savings in commercial banks the individual lender is hard, interest rates are high.
 borrowing thus leading to low money supply while a leading to charging of high interest rates while a
 low interest rate encourages borrowing and increases low liquidity preference implies that there are more Demand for money (Liquidity preference)
 money supply in the economy. savings in the banking system leading to charging of Liquidity preference is the desire by individuals to hold
vii) Level of economic activity; an increase in the level low interest rates. assets/ wealth in cash form or near cash form (rather than
 of economic activities results in greater money supply iii) The bank rate or the monetary policy of the investing it). The demand for money has been variously
 while a reduced level of economic activities leads to central bank; a restrictive monetary policy leads to explained by different economists hence the theories of
 low money supply. charging of high interest rates while an expansionary money demand.
viii) Balance of payments position (BOP); a surplus BOP monetary policy leads to charging of low interest
 position of a country results into increased money rates. Theories of demand for money
 supply while a deficit BOP position of a country results iv) The level of development of the banking sector; There are many theories of money demand as seen above
 in reduced money supply. high level of development of commercial banks but at this level two are considered namely;
ix) Level of foreign reserves held. leads to low interest rates due to competition while 1. The Quantity theory of money demand
x) Level of capital inflows and outflows (capital low level of development of the banking sector leads 2. Keynesian theory of money demand
 movements); an increase in the inflow of funds to high interest rates.
 from abroad leads to increased money supply while v) The supply of liquid or investment capital; a high
 increased outflow of capital reduces money supply. supply of loanable funds or liquid capital results into

 GEOGRAPHY
Senior Six 3.

 4.
 Write at least two paragraphs describing the weather in
 the area around your home.
 Explain what you understand by weather.
 Element of
 weather
 Description
LESSON1: Distinguishing Weather and Climate

Learning Outcomes Climate
By the end of this lesson, you should be able to: If you have lived in your home area for at least two years, you
 i) describe weather conditions of the local area. could have noticed how weather conditions change with
 ii) describe the elements of weather measured and months. You could also have identified the pattern of wind
 recorded at a weather station. movement, rainfall and temperature of the area. If you had Summary
 iii) distinguish weather and climate. chance to study this pattern for a long time, preferably 30 In this lesson you have learnt:
 years or more, you will be able to understand the climate of
Instructions your home area. • what weather and climate mean.
 • You will be studying one lesson each day. Try to do Activity 2: Relationship between climate and weather • the aspects which describe the weather of a
 all the activities programmed for each day. 1. Explain what you understand by the term climate. place.
 • Remember that some activities may take more than 2. Copy the table below in your notebook and fill in both • the relationship between weather and climate,
 one hour to complete. columns to distinguish between weather and climate, that is, both are described using the same
 • Read the instructions carefully before you begin taking into account: atmospheric conditions.
 doing each activity. o What it means. • that time is a very important aspect in
 • In case you find an activity difficult, ask an older o Instrument used to measure it. distinguishing between weather and climate.
 person around you to assist you. o Units in which it is measured. • that weather is described for a small area, for
 • You may consult your earlier notes on weather and o What the people who measure it are called. example, a village, while climate is described
 climate if you find it necessary. over large areas or regions; for example,
Materials you need: equatorial, savannah, semi-desert, and desert
 Weather Climate
 • notebook
 climates.
 • pen
 • pencil
 • rubber
 Follow-up Activity
 Activity 3: Table showing elements of weather 1. Using the knowledge you have gained from this lesson,
Introduction describe the weather which has been experienced in
In Senior One and Senior Four you learnt about weather and Copy the table below into your notebook showing
 the elements of weather measured and recorded your home area over the past seven days.
climate. In your notebook, write the definitions of weather 2. Explain the pattern of rainfall and temperature
and climate. Also outline the elements of weather. Which at a weather station. Fill in the table to bring the
 elements of weather and their description. For conditions in your home area over the last two years.
of the elements of weather you have outlined can you see 3. Predict whether the same pattern may be repeated this
outside now? each element take into account:
 o What it means. year and why?
 o Instrument used to measure it.
Weather o Units in which it is measured. LESSON 2: Solar Radiation
Activity 1: Describing weather conditions
1. Go outside and observe the atmosphere. Learning Outcomes
2. Identify the elements of weather in the area around By the end of this lesson, you should be able to:
 your home and write them in your notebook. i) distinguish between solar radiation and terrestrial
 ©National Curriculum Development Centre, 2020 7

radiation. paragraphs should include where energy is activities and ways of life.
 ii) explain the factors influencing the amount of solar transmitted from, the form in which it is transmitted,
 radiation received in an area. what time of the day it is received, what causes its Materials you need:
 variation, and the effect of each on temperature. • sharp knife/pair of scissors
Materials you need: 2. In your notebook, write six paragraphs explaining • transparent polythene sheet
 • notebook how latitude, season, length of day time, and • simple funnel/2 two-litre bottles
 • pen impurities in the atmosphere influence the amount • saucepan/small basin/small bucket
 • pencil of solar radiation received in an area. • permanent marker
 • rubber LESSON 3: Measuring and Recording Rainfall at a • masking tape/cello tape
 Weather Station • string
Introduction • foot ruler
In your Ordinary Level Geography and Physics, you learnt Learning Outcomes • notebook
about solar radiation and terrestrial radiation. In your By the end of this lesson, you should be able to: • pen
notebook, write the source of solar radiation and terrestrial i) describe the features of a rain gauge.
radiation. ii) draw a diagram to show the features of a rain Introduction
 gauge. Now that you know how to use a factory made rain gauge
 iii) explain how a rain gauge is used to measure to measure rainfall, you are going to carry out a project to
Activity 1
 rainfall. measure and record rainfall in your home area. This time you
In your notebook, draw a table similar to the one below and
 iv) record rainfall received in a local area. are going to make your own rain gauge and use it to measure
fill in the columns to differentiate between solar radiation
 v) explain the value of keeping rainfall records. rainfall. This project may take 6 months, or even a whole year.
and terrestrial radiation. This should be based on the
following:
 • Energy transmitted from where. Materials you need: Instructions
 • The form in which the energy is transmitted • notebook 1. Carefully cut into half a two-litre bottle with straight
 through the atmosphere. • pen sides and a flat bottom to make a funnel. Trim off any
 • The time of day during which the energy is • pencil sharp edges.
 received. • rubber 2. Place the cut bottle on the uncut bottle so that the
 • The causes of variation between the two. • diagram of a rain gauge spouts (“mouths”) are touching and in line.
 • The part of the Earth which each form of energy 3. Tightly fix the funnel onto the top of the bottle using the
 affects. Introduction masking tape or cello tape.
 You probably know that rainfall is measured using a rain 4. Place the transparent polythene sheet over the funnel
 Solar radiation Terrestrial radiation gauge. You also know the units in which rainfall is measured opening and press it slightly inwards. Fix it in place using
 and recorded. In your notebook, list at least two such units. a masking or cello tape.
 Do you remember how rainfall is recorded on a map? 5. Make a hole at the centre of the polythene sheet to
 Activity 1 direct water into the bottle.
 Study Figure 1 and do the following: 6. Mark a scale on the bottle from the bottom ½ cm
 1. Copy the diagram into your notebook and name all its apart upwards with the permanent marker. Each ½ cm
 parts. represents 500 millimetres.
 2. Write brief notes describing a rain gauge. Or for more accurate readings, tape a ruler, if you
 3. Describe the precautions taken when placing a rain have one, to the side of the bottle. Put the rain
 gauge, giving reasons for each. gauge in a basin/basin/bucket and place it outside
Activity 2 4. Explain how a rain gauge is used to measure rainfall, in an open place.
Now that you know that solar radiation is energy from pointing out the function of each of its components. 7. Once every 24 hours read and record in your notebook
the sun, in your notebook write at least two paragraphs 5. Explain how rainfall is recorded. the amount of rainfall received.
explaining how each of the following factors influences the NOTE: Whenever you are not at home request one of your
amount of solar radiation received in an area: friends or relatives to take the readings and record them.
 • Latitude 8. Using the data you have collected, calculate the:
 • Season i) monthly total rainfall.
 • Length of day and night ii) mean monthly rainfall.
 • Cloud cover iii) annual total rainfall (if you able to record
 • Time of the day for a whole year).
 • Impurities in the atmosphere iv) mean annual rainfall.
 9. Draw a graph to represent the data you have collected.
 Summary 10. Use information from the graph to describe the rainfall
 pattern for your home area.
 In this lesson, you have learnt that: 11. Explain how useful the data you have collected may be
 for planning farming and other human activities.
 • solar radiation is energy from the sun in form
 of magnetic waves, while terrestrial radiation
 is the energy given off by the earth in form of Summary
 magnetic waves. Figure1: Diagram of a Rain gauge
 • solar radiation is transferred to the earth in In this lesson you have learnt:
 form of a beam of short wave rays, while Activity 2
 terrestrial radiation is transferred from the 1. Explain what you understand by the term climate. • how rainfall is measured and recorded.
 earth in form of long wave radiation. 2. Copy the table below in your notebook and fill in both • the features of a rain gauge and the function
 • solar radiation being from the sun is received columns to distinguish between weather and climate, of each in measuring rainfall.
 during day time, while terrestrial radiation is taking into account the following aspects: • the characteristics of a suitable site for placing
 transferred all the time: day and night. o The length of time taken to determine it. a rain gauge.
 • solar radiation varies with time of the day—it o How one describes each aspect. • that rainfall records are read at regular
 is more at noon and, less in early morning o The names of people who study each aspect. intervals, once in 24 hours.
 and late evening. Terrestrial radiation varies LESSON 4: Project—Measuring Rainfall Using a Home-
 with the nature and size of the surface giving made Rain Gauge
 off the energy.
 • Solar radiation results in rise in temperature Learning Outcomes
 on the surface while terrestrial radiation By the end of this project, you should be able to:
 results in rise in atmospheric temperature. i) make a simple rain gauge from locally available
 low cost materials.
Follow-up Activity ii) record rainfall in the local area using a home-made
 1. In your notebook, write two paragraphs: one rain gauge.
 paragraph explaining solar radiation and another iii) use rainfall data to plan your activities and to give
 explaining terrestrial radiation. Each of these advice to other people about their economic

 8 ©National Curriculum Development Centre, 2020

HISTORY
Senior Five the undemocratic and archaic ancient system of voting
 by houses against the Third Estate interest of voting by
 de cachet’, and later Louis XIV issued over 14,000. All
 such ‘lettres de cachet’ amounted to death certificates
Subject: History of Modern Europe individual show of hands. This forced the Third Estate and the bones of those in respect of whom they were
 representatives to turn themselves into the National signed were found in the Bastille prison. Such despotism
Topic: French Revolution of 1789 Assembly and this was the beginning of the revolution. angered the masses.
LESSON 1: Long-term Causes of The 1789 French
Revolution The unfair modes of trial also contributed to the The regime left the provision of education in the hands
 outbreak of the revolution. There were no uniform of the Catholic Church. The regime also denied people
By the end of the lesson, you should be able to: codes of law and one could be tried as much as five freedom of worship and of the press.
 times for a single offence. By 1789, there existed different
 i) describe the long-term causes of the 1789 feudal codes of law in different parts of France, which Weaknesses in the character of King Louis XVI. Born
 French Revolution. created judicial confusion. Besides, there were two in 1754, King Louis XVI rose to power in 1774 and ruled
 ii) explain the extent to which long-term different modes of appeal, i.e. Roman law in the South up to 1793, when he was executed by the revolutionists.
 factors contributed to the outbreak of the and common law in the North. Worst of all, there was His weaknesses contributed to the French revolution in
 1789 French Revolution. no trial by jury and, in most cases, the nobles were the the following ways:
 accusers as well as judges against the peasants and the
Materials You Need
 middle class. The peasants and the middle class could He was a weak despot (dictator) and he was only a king
Pens; pencils; paper/ notebooks; Internet/Google; not expect a fair trial against the nobles and the clergy, in name but not in character, yet he had inherited a very
textbooks (if any) which led them to revolt. strong despotic state that required a strong despot. For
Instructions example, he had no interest in administration and spent
 most of his time on leisure. When one of his ministers
 i) This is a self-study lesson. The regime also lacked a working constitution. resigned, he remarked: ‘I wish I could also resign.’ This
 ii) Follow the instructions carefully. Apart from the chaotic judicial system, there was no implies that he had no interest in leadership. He was
 iii) Attempt all tasks given (in your notebook). constitution that could have guaranteed people’s rights quoted as saying at his coronation: ‘l can see the whole
 iv) If possible, consult an adult at home while and provided equality of opportunity. This also meant universe falling upon me, oh God, what a burden
 doing an activity. that there were no checks and balances to the king’s of mine yet l have been taught nothing.’ This implies
 v) Make use of the Internet/Google (if excessive powers and unfair policies. The Frenchmen,
 accessible) or any related study material that Louis was not ready for leadership and lacked the
 therefore, resorted to a revolution in a bid to have a despotic principles of kingship.
 near you.
 constitution to safeguard their rights and properties
 vi) You will present this work to your teacher
 against the king’s excessive powers. He was indecisive (poor at decision-making) and lacked
 when school resumes.
 the kind of wisdom needed by a sober leader to make
Introduction correct decisions and proper judgements. He would
 The regime was also characterised by irresponsible make decisions and change them suddenly. In most
The French Revolution broke out on 5 May 1789 when leaders. King Louis XVI paid much attention to leisure
King Louise XVI summoned the Estates General which cases, he depended on ill advice given by the queen
 activities like hunting instead of solving people’s and the clergy, who even advised him to dismiss the
failed. This was a result of disagreements on voting
 problems. reformist financial ministers and Mirabeau, the leader of
procedures and seating arrangements, which prompted
the Third Estate to storm out of the Estates General and the Third Estate. Mirabeau remarked that the king had
 The unfair judicial system of the ancient regime also only one man above him and that that was his wife. It
declared themselves the National Assembly. This was
to act as the Parliament of France, hence the Estates led to the revolution. France lacked an independent was against such a background that the revolution broke
General. judiciary because it was always manipulated by the out in 1789.
 king, the nobility and the clergy. For example, they
“Prior to the calling of the estates general, there were had their own special courts in which they had the King Louis XVI was inconsistent and would at times
long-term factors that were responsible for the outbreak power to choose judges in cases against peasants. This sympathise with the suffering French and felt like
of this revolution, and such were: the autocracy of the undermined justice and later sparked off the revolution. allowing them some freedom. However, he kept on
ancient regime, the role of the Catholic Church, the changing his mind about his good intentions and
influence of French political philosophers, the social class The regime left land in the hands of the minority and left ended up doing nothing. This is because he was always
system in France and the influence of the British political the peasants landless. The regime gave all the land to the influenced by his wife, ministers and the clergy, who
system”. First and Second Estates that paid virtually no taxes and were unsympathetic and anti-people, something that
 the majority peasants were left landless, renting small angered the Frenchmen. He was a conservative king and
Read the text below and attempt the tasks that will plots of land from the nobility. They were instead over-
follow: failed to attain the political standards and understand
 burdened with all kinds of responsibility. The biggest the situation existing at the time, which required change.
 burden was taxation, and this compelled them to stage Europe was now undergoing a wave of civilisation and
Long-term causes of the French Revolution: Political,
social and economic causes a revolution. it required leaders to undertake democratic reforms in
 order to safeguard their positions. Unfortunately, King
 1. Political Causes The regime supported slavery, which angered many Louis XVI insisted on continuing with the no-change
 Frenchmen. About 1 million of the peasants were still policy he had espoused all along up to the time he was
The regime had no functional Parliament in which serfs (slaves) by 1789 and were being bought and sold beheaded on 21 January 1793.
people’s problems could be heard. The Estates General whenever land changed ownership. The regime was
Meeting had taken a lapse of 175 years without sitting characterised by brutality, unrest and imprisonment King Louis XVI was extravagant and misused French
since 1614 on the regime of King Louis XIII. The provincial of people without trial. This was effected through citizens’ resources on luxurious living. For example, it
and district assemblies were replaced by royal assemblies the issuance of the infamous sealed letters known as became his hobby to organise banquets (parties) for the
known as intendants under the king. Therefore, the ‘lettre de cachet’. As H.L. Peacock put it in his Book of nobles and the clergy almost every day using taxpayers’
French had nowhere to forward and settle the social Modern Europe: ‘The strongest oppression of this money. The king had over 2,000 horses and around
evils, political discontent and the economic hardships power was lettre de cachet signed by a minister 2,000 carriages, in addition to 500 servants, who were
that marked their lives since there was no functional ordering the imprisonment…’ all paid. He also failed to control the extravagance of his
Parliament. The only way was to stage a revolution in wife, who changed 4–5 pairs of golden shoes a week.
1789. It should be stressed that it was the calling of This ‘lettre de cachet’ was a permit allowing the king It was such economic weaknesses that dragged France
the Estates General Meeting on 5 May 1789 and the to imprison anyone at his pleasure and many innocent into the revolution. The king was over-influenced by
vociferous disagreement over the seating arrangement French peasants were put in a national prison called his wife and he was also a coward who had no love for
that sparked off the revolution. Louis XVI insisted on The Bastille. King Louis XVI issued over 16,000 ‘lettres his country and lacked a forceful character. He would

 ©National Curriculum Development Centre, 2020 9