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Unit notes and practice questions

Grade 12 Economics unit 7: Macroeconomic Reforms in Ethiopia

Everything here is for unit 7 of the Grade 12 Economics textbook: what the chapter covers, the short notes, practice questions with their answers, and the lesson video where one exists.

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5
Cards
10
Practice questions on unit 7
148–181
The textbook pages for unit 7

What unit 7 covers

  1. 1.National Development Objectives and Strategies- Historical Review
  2. 2.National Development Plan during the Imperial Period (1950-74)
  3. 3.National Development Plan under the Socialist Period (1974-1991)
  4. 4.National Development Plan under FDRE
  5. 5.National Development Plan after a Reform (2021-2030)
  6. 6.Overview of Home-grown Economic Reforms in Ethiopia
  7. 7.Macroeconomic Reforms
  8. 8.Fiscal Decentralization
  9. 9.Disadvantages and Advantages of Decentralized System

Short notes for unit 7

The cards filed under this chapter on the Grade 12 Economics page. Open one at a time.

PhasePeriodEconomic Characteristic
Phase I1974 to 1978Nationalization and economic dislocation
Phase II1978 to 1980Zemecha campaign and temporary GDP recovery
Phase III1980 to 1985Severe drought, input decline, and stagnation
Phase IV1985 to 1990Ten-Year Perspective Plan and state farms

When you use it

Use when reviewing the four distinct post-1974 socialist economic phases and their respective growth shocks.

Watch out

Phase II experienced temporary recovery due to the Zemecha campaign and good weather, not long-term structural industrialization.

Drafted from Grade 12 Economics, pages 149-182, then checked twice before it went up

When you use it

Use when classifying the structural components of the Home-Grown Economic Reform (HGER) program.

Watch out

HGER transitions the growth model from debt-financed public investments to private sector-led growth across macroeconomic, sectoral, and structural pillars.

Drafted from Grade 12 Economics, pages 149-182, then checked twice before it went up

PlanPeriodCore Strategic Focus
First Five-Year Plan1957 to 1961Infrastructure, communications, and processing industries
Second Five-Year Plan1962 to 1967Agro-industry and large-scale commercial farming
Third Five-Year Plan1968 to 1973Peasant agriculture and addressing food shortages

When you use it

Use when identifying the evolution of centralized planning under the Imperial regime from 1957 to 1973.

Watch out

The Third Plan shifted focus toward peasant agriculture due to food shortages, whereas the First and Second prioritized processing and commercial agriculture.

Drafted from Grade 12 Economics, pages 149-182, then checked twice before it went up

ProgramPeriodStrategic Foundation
ADLI1994 to presentAgriculture leading industrialization and food self-sufficiency
SDPRP2002/03 to 2004/05Poverty reduction, capacity building, and decentralization
PASDEP2005/06 to 2009/10MDGs attainment and commercialized agricultural growth
GTP I2010/11 to 2014/1511 percent growth target, MSE promotion, and infrastructure
GTP II2015/16 to 2019/20Structural transformation toward lower middle-income by 2025

When you use it

Use when tracing the succession of development plans implemented under the FDRE government.

Watch out

ADLI is the guiding umbrella strategy launched in 1994 that underpinned SDPRP, PASDEP, GTP I, and GTP II, rather than a short-term plan that ended.

Drafted from Grade 12 Economics, pages 149-182, then checked twice before it went up

When you use it

Use when analyzing macroeconomic imbalances and reasons behind the debt crisis during the GTP I and GTP II periods.

Watch out

Do not assume high GDP growth from 2010 to 2020 was driven by export expansion. It was driven by public infrastructure spending funded by external debt, which widened the trade deficit and fueled inflation.

Drafted from Grade 12 Economics, pages 149-182, then checked twice before it went up

Practice questions on unit 7

10 multiple-choice questions written against this chapter, each with its answer and the reason. Try one before you open the answer.

Question 1

Which group deposed Emperor Haile Selassie I in 1974?

  1. A.The EPRDF
  2. B.The Derg
  3. C.The Italian occupation forces
  4. D.The Agricultural Marketing Corporation
Show the answer and why

Answer: B The Derg

Why

The textbook says that in 1974 a military junta, the "Derg", deposed Emperor Haile Selassie I. The EPRDF toppled the Derg later, in 1991.

Question 2

In which year did the EPRDF rise to power and topple the Derg regime?

  1. A.1974
  2. B.1991
  3. C.1994
  4. D.1995
Show the answer and why

Answer: B 1991

Why

The chapter states that the regime was finally toppled in 1991 by a coalition of rebel forces, the Ethiopian People's Revolutionary Democratic Front (EPRDF). The year 1974 is when the Derg took power, and 1994 and 1995 are when the constitution and the first multiparty election came.

Question 3

In which year was the home-born Agricultural Development-Led Industrialization (ADLI) launched?

  1. A.1991
  2. B.1994
  3. C.2002
  4. D.2010
Show the answer and why

Answer: B 1994

Why

The textbook says that in 1994 the ADLI was launched as the foundation for national development. The year 2002 is when the SDPRP started, and 2010 is when GTP I started.

Question 4

What was the main objective of the ADLI?

  1. A.Attaining food self-sufficiency by increasing agricultural productivity and output
  2. B.Nationalizing all rural land and productive assets
  3. C.Ending all exports of agricultural products
  4. D.Abolishing the Agricultural Marketing Corporation
Show the answer and why

Answer: A Attaining food self-sufficiency by increasing agricultural productivity and output

Why

The chapter says the main objective of the ADLI was attaining food self-sufficiency by increasing agricultural productivity and output. Nationalizing land was a policy of the Derg, not the ADLI.

Question 5

During the First Five-Year Plan (1957-1961), coffee accounted for what share of foreign exchange earnings?

  1. A.30%
  2. B.50%
  3. C.70%
  4. D.80%
Show the answer and why

Answer: C 70%

Why

The textbook says the First Five-Year Plan promoted improved production of cash crops, including coffee, which accounted for 70% of foreign exchange earnings. The 80% figure in the chapter refers to small-scale subsistence farms and cereal production, not coffee.

Question 6

During the First Five-Year Plan, GNP was projected to grow at 3.7% a year, but it actually grew at 3.2% a year. By how many percentage points did the actual growth fall short of the projection?

  1. A.0.3 percentage points
  2. B.0.5 percentage points
  3. C.0.7 percentage points
  4. D.3.2 percentage points
Show the answer and why

Answer: B 0.5 percentage points

Why

The difference is 3.7% minus 3.2%, which equals 0.5 percentage points. Remember that percentage points are the simple difference between two percentages.

Question 7

Under the socialist period, in which phase did gross domestic product grow at an average annual rate of 5.7%?

  1. A.1974-1978
  2. B.1978-1980
  3. C.1980-1985
  4. D.1985-1990
Show the answer and why

Answer: B 1978-1980

Why

The chapter says that during 1978-1980 the economy began to recover, and gross domestic product grew at an average annual rate of 5.7%. In 1974-1978 GDP grew by only 0.4% a year, and in 1980-1985 the economy declined.

Question 8

The chapter says urban poverty rates fell from 25.7% in 2009/10 to 14.8% in the same period. By how many percentage points did the urban poverty rate fall?

  1. A.9.8 percentage points
  2. B.10.9 percentage points
  3. C.11.5 percentage points
  4. D.14.8 percentage points
Show the answer and why

Answer: B 10.9 percentage points

Why

The fall is 25.7% minus 14.8%, which equals 10.9 percentage points. Subtract the later figure from the earlier one to find how much the rate fell.

Question 9

The first GTP set a target of an average real GDP growth rate of 11% per year. Across GTP I and II, GDP actually grew by an average of 9.2% per year. How far below the target was the actual growth?

  1. A.0.8 percentage points
  2. B.1.8 percentage points
  3. C.2.2 percentage points
  4. D.9.2 percentage points
Show the answer and why

Answer: B 1.8 percentage points

Why

The chapter states that the actual performance was 9.2%, which is 1.8% short of the 11% target. You can check this by calculating 11 minus 9.2, which equals 1.8.

Question 10

A student in Addis Ababa reads that real GDP rose from Birr 828 billion in the 2009/10 fiscal year to Birr 1.99 trillion in the 2019/20 fiscal year. Roughly how many times larger was the 2019/20 figure than the 2009/10 figure? (Note: 1 trillion = 1,000 billion.)

  1. A.About 1.2 times
  2. B.About 2.4 times
  3. C.About 3.4 times
  4. D.About 5.0 times
Show the answer and why

Answer: B About 2.4 times

Why

First, change Birr 1.99 trillion into billions. It equals Birr 1,990 billion. Then divide 1,990 by 828, which gives about 2.4. So real GDP was roughly 2.4 times larger in 2019/20.

The app holds 12 questions on this unit, marked as you go. These are the first 10.

The textbook pages for unit 7

Unit 7 runs from page 148 to page 181 of the Ministry of Education edition.

Ministry of Education edition, English, 214 pages

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All Grade 12 Economics short notes

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