Mathematical Literacy Level 3 Module 13

Mathematical Literacy NQF 3 Downloaded from hlayiso.com Maths Lit NQF Level 3

Inflation Module 13 Downloaded from hlayiso.com Maths Lit NQF Level 3

Overview 13.1 The concept of inflation 13.2 Comparing prices 13.3 The impact of inflation on individuals and businesses 13.4 Calculations relating to inflation 13.5 Graphical representation Downloaded from hlayiso.com Maths Lit NQF Level 3

The concept of inflation Unit 13.1 Downloaded from hlayiso.com Maths Lit NQF Level 3

The effect of inflation Unit 13.1 The graphs below show the effect of inflation on purchasing power This graph shows how This graph shows how prices purchasing power decreases increase over a period of time. over the same period of time. Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.1 page 250 Unit 18.1 This example illustrates how the inflation rate is calculated. For the purpose of our calculation, our basket of goods and services has only three items – a loaf of white bread, a litre of milk and 1 litre of petrol. 1. Study the table below, then answer the questions that follow. April 2016 April 2017 Loaf of white bread R10,99 R12,55 Litre of unleaded petrol R12,62 R13,30 1 litre of milk R12,99 R13,49 Total R36,60 R39,34 Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.1 page 250 continued ... Unit 18.1 a) Show that the level of inflation between April 2016 and April 2017 based on these three items is 7,5%. b) Explain how it affects your purchasing power when the inflation rate is 7,5%. Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.1 page 250 continued ... Unit 18.1 1. a) = 7,5% b) If the inflation rate in April 2017 is 7,5%, it means that on average you spend 7,5% more for your goods. For every R100 you spent in April 2016, you would spend R107,50 in April 2017. Downloaded from hlayiso.com Maths Lit NQF Level 3

Exercise 13.1 Unit 13.1 Complete Exercise 13.1 on page 250 of your Student’s Book Downloaded from hlayiso.com Maths Lit NQF Level 3

Comparing prices Unit 13.2 • Many items in the basket of goods and services used to measure inflation are groceries. • Customers compare prices in different supermarkets to get the best deals. Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.2 page 251 Unit 13.2 The table compares a selection of products at five supermarkets in April 2017. Answer the questions based on the table. Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.2 page 251 continued ... Unit 13.2 1. Which supermarket would you go to if you needed only: a) washing powder b) sugar 2. You need to buy milk, toothpaste and soap. Which supermarket would you go to? Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.2 page 251 continued ... Unit 13.2 3. Mr Murphy needs a new pair of sports shoes. He decides to compare products at two online shops: a) What does it mean to ‘shop online’? b) Name one advantage of shopping online. c) Name one disadvantage of shopping online. Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.2 page 251 continued ... Unit 13.2 d) Mr Murphy has a budget of R1 700. i) How many pairs can he choose from at Online Store A? ii) How many pairs can he choose from at Online Store B? e) What non-financial factors might influence Mr Murphy’s choice? Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.2 page 251 continued ... Unit 13.2 1. a) Supermarket D b) Supermarket B 2. I would go to Supermarket B. Super- Super- Super- Super- market A market B market C market D (R) (R) (R) (R) 29,95 19,99 27,99 22,99 Toothpaste 16,99 12,99 10,99 14,99 Soap 12,99 10,99 13,99 11,99 TOTAL R59,97 R43,97 R52,97 R49,97 Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.2 page 251 continued ... Unit 13.2 3. a) When you shop online, you compare products on the Internet, and place an order. Some online stores allow you to pay for the goods on delivery. Others expect you to pay via online banking. b) You can compare goods from different stores from the comfort of your home or office. You do not spend money on transport, and you do not have to waste time going from one shop to another or standing in queues. Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.2 page 251 continued ... Unit 13.2 a) You cannot hold the goods to examine them. You cannot try on clothing or shoes. The colour of an item might look different to the picture on the Internet. i. He can choose from 3 pairs of shoes at Online Store A. ii. He can choose from 4 pairs of shoes at Online Store B. b) Mr Murphy might prefer a particular brand, style, design or colour. Downloaded from hlayiso.com Maths Lit NQF Level 3

Exercise 13.2 Unit 13.2 Complete Exercise 13.2 on page 253 of your Student’s Book Downloaded from hlayiso.com Maths Lit NQF Level 3

The impact of inflation on individuals Unit 13.3 and businesses Inflation affects everyone in one or more of the following ways: • Prices for goods and services increase over time. • Salaries may increase with inflation but only annually. • If your receive a social grant or you have fixed savings, you may need to cut your budgets to afford expenses. Downloaded from hlayiso.com Maths Lit NQF Level 3

The impact of inflation on investments Unit 13.3 • Imagine that you won R1,75 million in 2013. You invested the money and earned interest of R10 210 per month. You use this interest for your monthly expenses. Your budget might have looked like this: Rent R1 800 Transport R1 300 Groceries R3 600 Medical Aid R900 Electricity R1000 Telephone R650 • The total budget would add up to R9 250 and there would be R960,00 left over for emergencies and entertainment. Downloaded from hlayiso.com Maths Lit NQF Level 3

The impact of inflation on investments Unit 13.3 • If you still lived off your interest by 2016, your budget would have looked like this: Rent R3 500 Transport R1 540 Groceries R4 270 Medical Aid R1 700 Electricity R1 650 Telephone R770 • The total budget would have added up to R13 430,00. Your money was then worth a lot less; in other words, R10 210 per month did not buy you what it used to. You would need an additional R4 180 per month to maintain the same lifestyle. Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.3 page 254 Unit 13.3 • In 2015 John invested R15 000 in a bank account. The interest earned over three years was R3 220,07. In 2018 his balance was R18 220,08. • In 2016 the inflation rate was 5,32%, in 2017 it was 5,18% and in 2018 it was 7,07%. How much was John’s money really worth? Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.3 page 254 Unit 13.3 Downloaded from hlayiso.com Maths Lit NQF Level 3

Purchasing power Unit 13.3 Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.4 page 255 Unit 13.3 Jane imports top-class braids from Brazil for use in her hairdresser. She budgets R15 000 to buy braids. The exchange rate affects the price of the braids. When the exchange rate increases by 12% Jane buys 12% fewer braids. This means her income will be reduced. 1. If Jane normally paid R100 per unit for braids, how many units could she buy for R15 000? 2. Jane charges customers R600 for a hair braid. Calculate her income based on the number of braids she would buy. 3. If she buys 12% fewer braids, how many would she get? 4. How much income would Jane lose as a result of her reduced purchasing power? Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.4 page 255 Unit 13.3 1. 15 000 ÷ 100 = 150 units 2. R600 × 150 = R90 000,00 3. 150 – (12% × 150) = 150 – 18 = 132 units 4. Reduced income = 132 × R600 = R79 200,00 R90 000 – R79 200 = R10 800,00 She would lose R10 800,00 in income. Downloaded from hlayiso.com Maths Lit NQF Level 3

The value of an item over a period of time Unit 13.3 No prices remain the same forever. There are various reasons why prices increase. Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.5 page 256 Unit 13.3 In 2013 the latest model of an Apple iPhone cost R8 499,00. In 2017 the latest model cost R13 999,00. A possible reason for the increase is supply and demand. In other words, there are more people wanting to buy this brand of cell phone. 1. How much more did the phone cost in 2017? 2. Why can suppliers put up their prices if there is greater demand? Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.5 page 256 Unit 13.3 1. R13 999 – R8 499 = R5 500,00 2. Suppliers know that there will be customers willing to pay the higher price. Downloaded from hlayiso.com Maths Lit NQF Level 3

Exercise 13.3 Unit 13.3 Complete Exercise 13.3 on page 256 of your Student’s Book Downloaded from hlayiso.com Maths Lit NQF Level 3

Calculations relating to inflation Unit 13.4 You need to be able to calculate the rate of price change to help you make good financial decisions. Examples: • Calculate the percentage of a price increase from R89,95 to R114,99 • Calculate the new price if R599,99 is increased by 15,3% Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.6 page 257 Unit 13.4 1. In 2014 a skateboard cost R350. In 2017 a similar skateboard cost R645. Calculate the percentage increase in the price. 645 − 350 ×100 350 295 = × 100 350 = 84,3% Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.6 page 257 Unit 13.4 2. In 2016 the price of a loaf of bread rose by 4,5%. If bread cost R11,49 before the increase, calculate the new price. • R11,49 + (4,9% of R11,49) = R11,49 + R0,56 = R12,05 OR • R11,49 × 1,049 = R12,05 Downloaded from hlayiso.com Maths Lit NQF Level 3

Exercise 13.4 Unit 13.4 Complete Exercise 13.4 on page 257 of your Student’s Book Downloaded from hlayiso.com Maths Lit NQF Level 3

Graphical representation Unit 13.5 • A graphical representation can show the behaviour of a change more clearly. • This graph shows the change in chicken prices over a few years. Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.7 page 258 Unit 13.5 The graph shows how the price of chicken has increased between 2012 and 2016. Source: https:// www.sapoultry. co.za/pdf-statistics/ broiler-industry-key- market-signals.pdf Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.7 page 258 Unit 13.5 1. Calculate the percentage increase in the price of whole chicken (fresh) between 2012 and 2016. 2. Show that the percentage increase for frozen chicken portions was lower than the percentage increase for fresh chicken portions. Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.7 page 258 continued ... Unit 13.5 1. 41,65 – 32,20 × 100 = 29,3% 32,20 2. Percentage increase on frozen chickens: = × 100 = × 100 = 19,3% Downloaded from hlayiso.com Maths Lit NQF Level 3

Example 13.7 page 258 Unit 13.5 Percentage increase on fresh chickens: = × 100 = × 100 = 27,0% The percentage increase for frozen chicken portions is 7,7% lower than for fresh chickens. Downloaded from hlayiso.com Maths Lit NQF Level 3

Exercise 13.5 Unit 13.5 Complete Exercise 13.5 on page 259 of your Student’s Book Downloaded from hlayiso.com Maths Lit NQF Level 3

VIDEO: Application in the workplace Downloaded from hlayiso.com Maths Lit NQF Level 3

Module assessment Module 13 Complete Module assessment on page 260 of your Student’s Book Downloaded from hlayiso.com Maths Lit NQF Level 3

TERMS AND CONDITIONS This PowerPoint Presentation has been developed by Macmillan Education South Africa (Pty) Ltd. All texts, images, videos, animations, audio and vector simulations contained in the slides are property of Macmillan South Africa. Reproducing, reselling and redistributing this material without the written permission of Macmillan South Africa is prohibited. Lecturers are granted permission to: (i) modify the slides by adding and removing content; (ii) print copies of the presentation; and (iii) download and save the slides to a computer or local server. Nothing in this copyright notice constitutes permission to assert or imply that your use of the materials is sponsored or endorsed by Macmillan South Africa. Downloaded from hlayiso.com Maths Lit NQF Level 3