This question was attempted by most of the candidates. The question required candidates to define consumer goods, explain fixed, social and circulating capital with an example each and outline three reasons for the low level of savings in a country in the (a), (b) and (c) parts of the question respectively. Most candidates were able to define consumer goods in the (a) part, they could also explain fixed capital and circulating capital with examples but were unable to explain social capital and provide a correct example in the (b) part. Some of the candidates were able to state and expatiate on their points in the (c) part of the question. The performance of candidates in this question was above average.

Candidates were expected to answer thus to obtain maximum marks:

(a) Consumer goods are goods produced for the direct satisfaction of the wants of an individual.                                                                                           

(b)(i)  Fixed capital- These are long-term assets of a firm that are very durable and are not used up in the course of production. They do not change their form as well e.g. land, buildings, machinery,
equipment, tools, motor vehicles etc.

    (ii)  Social capital- This refers to capital that is collectively owned by society but is provided by government. It is also called social infrastructure e.g. roads, electricity, hospitals, schools, water, rail system etc.

(iii)  Circulating capital- This form of capital changes its form and are used up in the production process e.g. stock of partly-finished goods, fuel, raw materials, money for paying wages and salaries etc..

(c)(i)    The income level is generally low and so most people cannot afford to save.
(ii)    The dependency ratio is high because the working group is smaller compared to the youth and the aged.
(iii)   Most people have the tendency to consume rather than to save, engaging in prestigious but nonproductive ventures e.g. funerals, parties, weddings etc.
(iv)   There is little incentive to save since the interest rate on savings is low and also most institutions finally wind up, taking along customers’ savings with them.
(v)    The cost of living is high because prices of goods and services keep rising. People are therefore left with nothing to save.
(vi)   The demand by banks are sometimes cumbersome because large initial deposits are required and other information that clients cannot provide.
(vii)  Government tax policy; if the tax is high it reduces disposable income and makes savings low.
(viii)High levels of unemployment.
(ix)   Inadequate financial institutions, especially in the rural areas to mobilize savings.