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2021 ECON GRD 11 Final LB T1-4 Final FEB 2022

Economics (Queensburgh Girls' High School)

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Economics
REMOTE LEARNING ACTIVITY BOOKLET

(RELAB)

SUBJECT: ECONOMICS

GRADE: 11

2021

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A. INTRODUCTION AND PURPOSE OF THE RELAB

The COVID-19 pandemic has created the largest disruption of education systems in human history,
affecting over a billion learners in more than 200 countries. Closures of schools, institutions and other
learning spaces have impacted on the majority of the world’s student population. This has brought far-
reaching changes in all aspects of our lives. Social distancing and restrictive movement policies have
significantly disturbed traditional educational practices.
To control the coronavirus spread, most countries have been working to encourage parents and
schools to help students continue to learn at home through distance learning. In South Africa, the
implementation of a rotational timetable for non-matric learners has left a void in curriculum completion.
The Gauteng Department of Education (GDE) has therefore embarked on an innovative initiative to
develop learning activities to assist learners to continue their studies while at home through the Remote
Learning Activity Booklet, also known as RELAB. This is in keeping with its Strategic Goal 2 which
aims to promote quality education across all classrooms and schools.
The RELAB is underpinned by the following policies:
a) The Department of Basic Education (DBE) Circular S13 of 2020 which requires the GDE
to support the implementation of the Recovery Annual Teaching Plan (RATP); and
b) GDE Circular 11 of 2020 which requires districts to issue learning activity packs to support
schools for lockdown learning.

This is based on the premise that there are learning constraints at home whereby the majority
of learners do not have access to devices or data to use for online learning. Many households
are dependent on schools to provide them with learning resources packs.

RELAB is designed in a study guide format, where the content is explained briefly with related
concepts as revision in the form of e.g. notes, mind-maps and content progression from the
previous grade/s followed by exemplar exercises and practice exercises. The exercises are
pitched at different cognitive levels to expose Grade 10 and 11 learners to the different cog-
nitive levels of questioning as outlined in the Curriculum and Assessment Policy State-
ment(CAPS).

The RELAB is intended to ensure that learners work on exercises based on topics or skills
taught while at school. These exercises must then be completed at home and feedback will
be provided by educators. Educators will then diagnose learner responses, remediate where
necessary and plan further intervention.

Educators are encouraged to create WhatsApp groups to remind learners of what is expected
of them in a particular week. The prudent use of the RELAB will help alleviate the backlog in
curriculum coverage and prepare learners for formal assessment.

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B. TABLE OF CONTENTS

TERM WEEK TOPIC SUBTOPIC/SECTION PAGE

1-2 FACTORS OF PRODUCTION 5

ECONOMICS
MACRO-
3-5 CIRCULAR FLOW AND QUANTITATIVE ELE- 24
TERM 1

MENTS ECONOMIC GOODS AND SERVICES

6-7 ECONOMIC SYSTEMS 42
8-9 ECONOMIC STRUCTURES 57
1-2 RELATIONSHIPS BETWEEN MARKETS 71
ECONOMICS
MICRO-

3-4 COSTS AND REVENUES 82

TERM 2

5-6 PRICE ELASTICITIES 103

7 -9 ECONOMIC GROWTH 123

CONTEMPORARY ECON PUR-
SUITS

1-3 ECONOMIC DEVELOPMENT 144

4-6 MONEY & BANKING 160

TERM 3

ECON ISSUES

7-8 GLOBALISATION (NORTH/SOUTH DIVIDE) 171

9 - 10 ECONOMIC REDRESS ENVIRONMEMTAL 184

DETERIORATION

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MACROECONOMICS -CONTENT PROGRESSION

TOPIC GRD 10 GRD 11 GRD 12

BASIC CONCEPTS Economics, its methods and setting within Principles, processes and practices of the
the field and its relationship with other sci- economy. Factors of production and their
ences remuneration. Community participation Ac-
cessibility of the economically marginalised
groups.
THE ECONOMIC Problems that all economies try to solve re- Analysis of the economic structure of SA:
PROBLEM garding the basic processes of production, Sectors, infrastructure and exclusion and
consumption and exchange, highlighting discrimination in service provision and ac-
the promotion or violation of human rights cess to economic opportunity.
and the environment.
CIRCULAR FLOW Participants, markets, monetary and real Analysis of the uses of economic goods Presentation of the circular flow model as a
flows in an open economy. and services in relation to GDP/GNI and the macroeconomic model: Deducing and ana-
main aggregates: GVA, GNE and GNI. lysing the national account aggregates: de-
rive and apply the multiplier.
BUSINESS CYCLES Reasons for business cycles. Explanation Analysis and explanation of business cycles
and illustration of their composition and not- and how they are used in forecasting.
ing their impact on the vulnerable
ECONOMIC SYSTEMS Characteristics and foundations of South
Africa’s mixed economy and assessing its
efficiency in terms of socio-economic ser-
vices.

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MACROECONOMICS
TOPIC 1: FACTORS OF PRODUCTION
(WEEK 1 -2)

FACTORS OF PRODUCTION
Analysis of the factors of
production and their
remuneration

Investigation of community
participation in local economic
planning and activities

Accessibility of the
economically
marginalised groups

MACROECONOMICS

1. TOPIC 1: ECONOMICS – FACTORS OF PRODUCTION

INTRODUCTORY NOTES
• In macroeconomics we study the economy as whole.
• Economists represent the economy in the form of a circular flow model to show how the dif-
ferent participants (consumers, enterprises, the government and the foreign sector) in the
economy interact with one another.
• They all use scarce resources (factors of production) and try to solve the scarcity problem
(economic problem).
• It also studies aggregate (total) indicators such as the national income, national spending
and national production, total employment, general prices of goods and services and the
total money stock.

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KEY CONCEPTS:

KEY CONCEPTS DESCRIPTIONS/DEFINITIONS

Break-even point The point at which expenses are equal to income
Capital The money invested in machines and equipment that will be
used in the production process.
Capital deepening Occurs when the amount of capital per worker is increased.
Capital formation An increase in a country’s stock of capital.
Capital widening Occurs when the capital stock is increased to
accommodate an increasing labour force.
Depreciation The decrease in the monetary value of assets over time
Economic goods Resources that are scarce and that people are willing to pay for.
Empowerment A management practice of sharing information, rewards, and
power with people so that they can take initiative and make deci-
sions to solve problems and improve service and performance
Entrepreneur The person who organises or employs natural resources, capital
and labour into a profitable business to produce useful goods
and services
Entrepreneurship The process of bringing together natural resources, capital and
labour into a profitable business to produce useful goods and
services
Factors of production Basic inputs that are used to produce goods and services.
Free goods Those natural resources that are freely available in nature.
Geographical mobility The movement of factors of production from one location to an-
other location
Gross profit The difference between sales and the cost of sales.
In-service training Training that takes place while a person is already employed
and doing a job.
Interest The payment made for the use of capital in the process of pro-
duction.
Investment The creation of capital goods in the production of other goods
and services.
Labour Includes all the work done by people whether they are skilled or
unskilled and whether they provide physical or mental work.
Marginalised people People who are less able to find a job or to satisfy their needs.

Natural resources All means made available by nature to be used as inputs in the
production.
Nominal wage The amount that a worker receives each day, week or at the end
of the month.

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KEY CONCEPTS DESCRIPTIONS/DEFINITIONS

Non-renewable re- Resources that do not grow or develop as fast as they are used
sources such as minerals and fossil fuels.
Occupational mobility The movement of factors of production from one type of produc-
tive activity to another type of productive activity
Preferential Is used to create opportunities for the marginalised such as
Procurement black-owned and women-owned enterprises by giving them pref-
erences during the awarding of tenders.
Procurement The acquisition of goods and services
Procurement Policy It is part of the BEE Act and it concerns awarding government
tenders to firms which comply with the BEE Act.
Profit The remuneration that an entrepreneur receives for taking the
risk to run a business
Real wage The amount of goods and services that a person can buy with
the nominal wage
Renewable resources Resources that are replaced by natural processes such as
plants and animals
Rent The payment for the owners of the natural resources for the use
of the natural resources in the production of goods and services.
Wages and salaries The basic amount, excluding any benefit or allowances that are
paid in return for the use of labour in production.

FACTORS OF PRODUCTION & THEIR REMUNERATIONS

The factors of production are the basic inputs that are used to produce goods and
services. There are essentially four factors of production – natural resources, labour, capital
and entrepreneurship. Technological inventions form part of capital. The characteristics, im-
portance and remunerations of the four factors of production are discussed below:

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Natural Resources Labour Capital Entrepreneurship

All means made available by nature Includes all the work done by peo- The money invested in ma- The process of bringing together
to be used as inputs in the production ple whether they are skilled or un- chines and equipment that will natural resources, capital and la-
process. skilled and whether they provide be used in the production pro- bour into a profitable business to
Definitions physical or mental work. cess. produce useful goods and services

• Resources are not evenly distrib- • Labour cannot separated from the • Capital may be tangible or in- • They take initiatives
uted worker tangible
• They organise production
• The supply is fixed/limited • It cannot be stored or hoarded • Capital is consumed
• They are innovative & prepared to
• They are gifts of nature • It varies in quality and quantity • Capital increases production take risks
Characteristics efficiency
• Resources can be renewable or • The supply cannot be suddenly in- • They have leadership and man-
non-renewable creased. • Capital is expensive agement ability
• They have to be transformed • Income as a goal • Capital goods get worn out/de- • Combines the other factors of pro-
preciate duction

• Serve as a source of food • It is vital for economic develop- • Makes mass production possi- • Combines the other factors of pro-
ment ble duction
• Serve as inputs for production of
goods and services • The remuneration for labour ac- • Improves the quality of prod- • Ensuring competitiveness
counts for more than 50% of the ucts
• Provide opportunities for interna- GDP. • Encourage economic growth
tional trade • Makes standardisation possi-
• Labour is complementary to other ble • Create employment opportunities
Importance • Sustain economic activities factors of production. • Create new wealth
• Makes selling on credit possi-
ble

Remunerations Rent Wages/Salaries Interest Profit

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INVESTIGATION OF COMMUNITY PARTICIPATION IN LOCAL ECONOMIC PLANNING

AND ACTIVITIES:

One of the goals of a modern community is to establish local economies that are economically
viable, environmentally sound and socially responsible. Achieving this goal requires participa-
tion from all sectors of the community, both to determine community needs and to identify and
implement innovative and appropriate solutions.

As stated in the Constitution of the Republic of South Africa, the local government has
the following objectives:
• To provide democratic and accountable government for local communities;
• To ensure the provision of services to communities in a sustainable manner;
• To promote social and economic development;
• To promote a safe and healthy environment.
Participation:
• Guarantees that a felt need is involved.
• Ensures things are done the right way.
• Uses valuable indigenous knowledge.
• Frees people from dependence on others’ skills.
• Makes people more conscious of the causes of their poverty and what they can do about it.

ACCESSIBILITY OF THE ECONOMICALLY MARGINALISED GROUPS

Marginalisation is the process whereby something or someone is pushed to the edge of a

group and accorded lesser importance.

Marginalisation can also be defined as those processes by which individuals and groups are
ignored or relegated to the side lines of political debate, social negotiation, and economic bar-
gaining and kept there.

Conditions that should prevail as to be categorised in the economically marginalised

groups of South Africa:

• Racial and gender discrimination

• Physical and mentally handicapped persons
• People from rural areas as well as school leavers
• Refugees and most poor people with language and education barriers.

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Marginal groups consist of people who do not form part of, or who are excluded from, the eco-
nomic mainstream.
• These people often do not have a job, housing, education opportunities or access to medical
and other facilities.
• Examples will be the elderly, school-leaving youths, refugees, the disabled and the poor.

How does the government intervene as to improve the situation of economically margin-
alised groups?

• Through empowerment and procurement.

• Empowerment gives somebody the power or authority to access resources and opportuni-
ties.
• Procurement is the acquisition (purchase) of goods and/or services.

The following are some of the strategies that the government implement to address socio-eco-
nomic inequality and alleviate the difficulties of economically marginalised groups;

The Expanded Public Works:

• Programme is the largest job-creating initiative undertaken.
The National Youth Agency:
• Aims to help people between the ages of 16 and 25 who want to continue their education by
providing them with part-time jobs.
• Entrepreneurship grants and skills development through 27 SETA’s
The Broad Based Black Economic Empowerment Policy:
• Provides a basis for transforming the South African economy to eradicate inequality.
Human Resource Development Strategy:
• Was implemented to reduce the levels of poverty, unemployment and inequality.
The Integrated Sustainable Rural Development Strategy:
• Is designed to realize a vision that will attain socially cohesive and stable rural communities
with viable institutions, sustainable economies and universal access to social amenities, able
to attract and retain skilled and knowledgeable people, who are equipped to contribute to
growth and development.
Anti-poverty initiates and programmes:
Such as a well-developed social grants system and better service delivery to the poor.

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QUESTIONS

SECTION A: TYPICAL EXAM QUESTIONS

FACTORS OF PRODUCTION

QUESTION 1: Section A – Short Questions

TIP: When answering Section A – short question, it is important not to rush but to
read the questions carefully and to make sure you understand what the question is
asking. Always remember one alternative is completely wrong, one is nearly correct
and one is totally correct. It is easy to eliminate the completely wrong answer, but if
you do not read the question carefully the nearly correct answer will also appear cor-
rect. The answer will NEVER be two options. Only ONE option is correct. Your an-
swer will immediately be marked incorrect if you write TWO options.

1.1 Various options are provided as possible answers to the following

questions.
Choose the answer and write only the letter (A–D) next to the question
number.

1.1.1 Factors of production are:

A inputs into the production process.
B weather, social, political conditions that affect, production.
C the physical relationships between economic inputs and outputs.
D the ownership of the factors of production is not important for households.

1.1.2 The remuneration or payment made for the use of factors of production which
are limited in supply is called …
A economic rent.
B rent.
C commercial rent.
D interest.

1.1.3 Resources are called ... in the production process.

A inputs
B outputs
C intermediate goods
D final goods

1.1.4 The supply of land is …

A. elastic
B. inelastic
C. mobile
D. sufficient

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1.1.5 Fauna and Flora are examples of ... resources.

A renewable
B non-renewable
C fixed
D limited

1.1.6 The ... combines all other factors of production to produce goods and
services to satisfy the needs of the consumers.

A labourer
B entrepreneur
C government
D minister

1.1.7 The South African labour force is characterised by ...

A skilled labour.
B unskilled labour.
C highly skilled labour.
D unemployed labour

1.1.8 Factory buildings are examples of … capital.

A floating
B working
C fixed
D variable

1.1.9 The amount that a resource could earn from its next best use is known to as …
A economic rent.
B transfer earnings.
C economic profit.
D commercial profit.

1.1.10 The most important asset of a country is its … resources.

A capital
B human
C natural
D free

1.1.11 The greatest threat to workers’ health in South Africa is …

A pneumonia.
B tuberculosis.
C HIV and Aids.
D low wages.

1.1.12 Purchasing from BEE-qualifying businesses, small businesses and

black owned businesses is known as….
A ownership.
B preferential procurement.
C management.
D empowerment.
(12 x 2) (24)

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1.2 Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the letter (A-L) next to the question number (1.2.1 – 1.2.11) in the
ANSWER BOOK.

COLUMN A COLUMN B
1.2.1 Goods and A The process whereby something or someone is pushed
services to the edge of a group and accorded lesser importance,
this is predominantly a social phenomenon by which a
minority or sub-group is excluded, and their needs or
desires ignored.
B is made possible by the availability of natural
1.2.2 Factors of
resources.
production
C dividing the process of production into distinct and several
1.2.3 Land
component processes and assigning each component in
the hands of a labourer or a set of labourers, who are
specialists in that particular process.
1.2.4 Economic activity D The quantity of labour depends on the size of the
population and the proportion of the population that is able
and willing to work.
E All man-made physical assets like plant and machinery,
1.2.5 economic rent
tools, buildings, roads, dams and communication, etc.,
are the various forms of physical capital.
F Refer to those goods and services which help in the
1.2.6 economically
production process.
active population
1.2.7 Division of G Any and all particular geographical locations, mineral
Labour deposits, forests, water, arable land, sun-shine, fish stocks,
atmospheric quality etc.
H They cannot be produced without any human input.
1.2.8 Physical capital
1.2.9 wages and I. The remuneration received from the sale of a factor of
salaries production which is scarce.
K. The investment that is made in the form of money or
1.2.10 money capital
monetary instruments is called.
L The remuneration received for the supply of labour by
1.2.11 Marginalisation
households.
(11 x 1) (11)

1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number. No abbreviations,
acronyms or examples will be accepted.

HINT: Learners must know their concepts well, as this will assist in a better
understanding of the content in general. Leaners are encouraged to revise
with these type of questions, that are found in Section A of the paper

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1.3.1 The driving force behind production in a market economy.

1.3.2 Gross profit plus all other income minus all expenses the business has to pay to keep
it running.
1.3.3 The society’s understanding of the best ways to produce goods and services.
1.3.4 Accumulation of more and more physical capital.
1.3.5 The amount that a worker receives each day, week or at the end of the month.
1.3.6 The decrease in the monetary value of assets over time.
1.3.7 They have the ability to recognise new business opportunities, invent new methods of
production, successfully establish new markets and initiate growth by providing new job
opportunities.
1.3.8 The resources that are scarce and that people are willing to pay for.
1.3.9 Training that takes place while a person is already employed and doing a job.
1.3.10 Those processes by which individuals and groups are ignored or relegated to the side
lines of political debate, social negotiation, and economic bargaining and kept there.
1.3.11 The payment for the owners of natural resources for the use of the natural resources
in the production of goods and services.
(11 x 1) (11)

SECTION B

SECTION B: TYPICAL EXAM QUESTIONS

QUESTION 2:

HUNT: When the question requires you to “list” or “name”, you need not write a sen-
tence but merely few words or a phrase. This MUST be done in bullet form. This
types of questions are applicable for 2.1.1, 3.1.1 and 4.1.1

2.1 List any TWO examples of non-renewable resources. (2 x 1) (2)

2.2 Name any two main economic activities in modern society (2 x 1) (2)
2.3 Name any TWO broad categories of labour (2 x 1) (2)
2.4 Name TWO examples of capital goods. (2 x 1) (2)
2.5 Name TWO factors which must be present to enable a country to make use
of its natural resources. (2 x 1) (2)
2.6 Name any TWO components of capital (2 x 1) (2)
2.7 Name TWO factors that influence the labour force participation rate (2 x 1) (2)
2.8 List any TWO forces that determine interest rates. (2 x 1) (2)
2.9 Name any TWO strategies that the government implement to address
socio-economic inequality. (2 x 1) (2)
2.10 Name TWO factors that influence the labour force participation rate. (2 x 1) (2)

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QUESTION 3:

These types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2.
Answers must be provided in full sentences; learners must ensure that
their answer addresses the question asked

3.1 Why is the supply of land fixed? (1 x 2) (2)

3.2 Why is it important for government to use the procurement system? (1 x 2) (2)
3.3 What will happen to the rent on land that is situated far from the market, if the
government builds a railway line to connect the farmer to the market? (1 x 2) (2)
3.4 What do we mean when we say that labour is heterogeneous? (1 x 2) (2)
3.5 Why is the quality of labour more important than the quantity of labour? (1 x 2) (2)
3.6 Since natural resources are scarce, what would be your suggestion as to
how they should be used? (1 x 2) (2)
3.7 Why is it that land and labour are referred to as primary factors of production?
(1 x 2) (2)
3.8 How does the government use procurement to distribute wealth? (1 x 2) (2)
3.9 How does a high level of education influence the ability of an individual
to get employed? (1 x 2) (2)
3.10 What effect will HIV/Aids have on supply of labour? (1 x 2) (2)
3.11 What impact does the Expanded Public Works Programme have on your
local community? (1 x 2) (2)
3.12 How effective is local government in promoting the role of community participation?
(1 x 2) (2)

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DATA RESPONSE

All section B questions have TWO data interpretation questions –

each total 10 marks. Section B consist of Questions 2-4 not as num-
bered in this document.

QUESTION 4

4.1 Study the cartoon below and answer the questions that follow

4.1.1 What is depicted by the cartoon above? (1)

4.1.2 Which factor above requires the willingness and ability to combine the other
three factors for production to take place? (1)
4.1.3 Describe the term entrepreneur. (2)
4.1.4 How does the market reward an entrepreneur and punish an entrepreneur? (2)
4.1.5 Why do we need entrepreneurs in the economy of South Africa? (2 x 2) (4)
[10]

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4.2 Study the information below and answer the questions that follow.

4.2.1 What factor of production is represented in the above extract? (1)

4.2.2 Who is the current Minister of Water and Sanitation? (1)
4.2.3 Describe the term natural resources. (2)
4.2.4 What was the aim of the 2016 Water Week? (2)
4.2.5 What is the impact of scarcity on renewable and non-renewable resources? (2 x 2) (4)
[10]

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4.3 Study the graph below and answer the questions that follow.

4.3.1 List ONE factor that can influence rent. (1)

4.3.2 What do we call the rent charged for the exploitation of mines? (1)
4.3.3 Briefly describe the term economic rent. (2)
4.3.4 Explain why the supply of land is fixed. (2)
4.3.5 Calculate the economic rent according to the graph? SHOW ALL CALCULATIONS.
(4)
[10]
4.4 Study the image given below and answer the questions that follow.

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4.4.1 According to the above image, what is the demand of the workers? (1)
4.4.2 Mention any ONE characteristics of labour (1)
4.4.3 Describe the term labour. (2)
4.4.4 What is the difference between nominal wages and real wages? (2)
4.4.5 How can the productivity of labour be improved? (2 x 2) (4)
            [10]

4.5 Study the table below and answer the questions that follow.

[Source: Statistics South Africa]

4.5.1 Which institution is responsible to publish the information depicted on the table
above? (1)
4.5.2 In which year was employment at its highest? (1)
4.5.3 What trend do you observe in the working age population from the table? (2)
4.5.4 Explain the term Not Economically Active (2)
4.5.5 Calculate the unemployment rate for 2011 (Show ALL calculations). (2 x 2) (4)
[10]

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4.6 Study the graph below and answer the questions that follow.

4.6.1 Identify the market equilibrium for labour in the graph. (1)
4.6.2 According to the above graph, how are wages determined in the labour
market? (1)
4.6.3 Briefly describe the term labour? (2)
4.6.4 Explain how HIV and AIDS affect the quality of labour. (2)
4.6.5 How does the National Development Plan propose to increase employment
and economic growth? (2 X 2) (4)
[10]

4.7 Study the illustration below and answer the questions that follow.

4.7.1 Classify the type of labour that is performed by person B. (1)

4.7.2 Under which of the categories above (A, B or C) would you classify the bulk of
South Africa’s labour force? (1)
4.7.3 Describe the term specialisation of labour. (2)
4.7.4 Briefly explain any ONE characteristic of labour. (2)
4.7.5 Why would you regard labour as an important factor of production? (2 x 2) (4)
[10]
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All section B questions have TWO 8 marks questions. One is a Middle

order paragraph, the other is a Higher order paragraph

QUESTION 5 Paragraph type questions – Middle Cognitive

TYPICAL EXAM QUESTIONS

5.1 Briefly explain the availability and use of factors of production as methods of growing the
economy. (8)
5.2 Discuss the economic significance of land. (8)
5.3 Differentiate between ‘capital widening’ and ‘capital deepening’ as importance of capital.
(8)
5.4 Briefly explain any TWO factors that influence the profit of an entrepreneur. (8)
5.5 Explain uneven distribution and the fixed supply as characteristics of natural resources.
(8)
5.6 Discuss FOUR characteristics of capital. (8)
5.7 Discuss the entrepreneur as a creator of employment and ensuring competition. (8)

QUESTION 6 Paragraph type questions – Higher cognitive

TYPICAL EXAM QUESTION: THESE HIGHER ORDER QUES-

TIONS REQUIRE THE LEARNERS TO USE HER/ HIS CRITICAL
THINIKING SKILLS.
Higher order questions are grounded in the content. These types of questions
test critical thinking, where candidates should be able to apply their knowledge, through logical rea-
soning and also have an awareness of their current economic climate. Content (covered by dis-
cuss/examine/describe/ analyse/explain/evaluate/compare/assess/justify/construct/calculate) can be as-
sessed as higher-order questions. Answers will not necessarily be found in textbooks.

6.1 Why is capital formation important to the South African economy? (8)
6.2 Why is it difficult to change the real capital? (8)
6.3 How do the natural resources enrich our lives? (8)
6.4 How can community participation impact on the entrepreneur? (8)
6.5 Analyse the government's effort to assist the economically marginalised groups in
South Africa. (8)
6.6 How successful has the government been in creating opportunities for previously
disadvantaged individuals through empowerment? (8)

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SECTION C ESSAY TYPE QUESTIONS

TYPICAL EXAM QUESTIONS

All section C questions have TWO questions 5 & 6 NOT like in this document. In
the examination you will need to answer only one Essay.

ESSAY STRUCTURE

: Section C – the essay question, must be answered in FOUR sections: Introduction

(definition), Body (headings and full sentences in bullets) additional part and conclusion
(summarising). The mark allocations for Section C is as follows:
MARK ALLO-
STRUCTURE OF ESSAY:
CATION:
Introduction Max 2
The introduction is a lower-order response.
• A good starting point would be to the main concept related to the
question topic
• Do not include any part of the question in your introduction.
• Do not repeat any part of the introduction in the body
• Avoid saying in the introduction what you are going to discuss in the
body
Body:
Main part: Discuss in detail/ In-depth discussion/ Examine/ Critically Max 26
discuss/ Analyse / Compare/ Distinguish/ Differentiate/ Explain/ Evaluate
Additional part: Critically discuss/ Evaluate/ Critically evaluate/ Calcu-
late/ Deduce/ Compare/ Explain Distinguish / Interpret/ Briefly debate/
How/ Suggest/ Construct a graph Max 10
Conclusion
Any Higher or conclusion include: Max 2
• A brief summary of what has been discussed without repeating facts
already mentioned in the body
• Any opinion or value judgement on the facts discussed
• Additional support information to strengthen the discussion/analysis
• A contradictory viewpoint with motivation, if required
• Recommendations
TOTAL 40

QUESTION 7
• Discuss in detail the characteristics of capital. (26)
• Examine the positive effects of capital deepening. (10)

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QUESTION 8
• Discuss the economic importance of entrepreneurship. (26)
• Critically evaluate how the South African government promotes entrepreneurship (10)

QUESTION 9

• Discuss the characteristics of labour. (26)

• With the aid of a graph, show how an increase in demand will affect rent for land.(10)

QUESTION 10
• Discuss land as one of the four factors of production with special reference to:
- Characteristics
- Economic significance
- Remuneration. (26)
• Examine how the government can use empowerment as a strategy that the government
implement to address socio-economic inequality and alleviate the difficulties of
economically marginalised groups. (10)

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MACROECONOMICS
TOPIC 2: CIRCULAR FLOW AND QUANTITATIVE
ELEMENTS ECONOMIC GOODS AND SERVICES
(WEEKS 3 -5)

INTRODUCTORY NOTES

A circular flow model is a model that shows how participants (households, businesses,
government and foreign sector) in an economy interact. Our model equation is therefore:
C + G + I + (X – M).
Now each of the components on our equation are going to be discussed in depth for
clearer understanding.

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KEY CONCEPTS

KEY CONCEPTS DESCRIPTIONS/DEFINITIONS

Intermediate goods Goods that are not directly consumed but that are used to
manufacture other goods
Final goods and services All manufactured goods that are ready to satisfy the con-
sumers’ needs and wants
Economic goods Resources that are scarce and that people are willing to pay
for.
Free goods Those natural resources which are freely available in na-
ture.
Gross domestic product Total value of final output of goods and services produced
within the borders of a country in a year.
Gross National product Total value of final output of goods and services produced
by the permanent residents of a country in a year.
Gross fixed capital for- Takes place when there is an increase in the country’s capi-
mation tal stock.
Gross Value Added The value added by each firm during the production pro-
cess.
Market price The current price at which a good or service may be bought
or sold
Basic price The price of a good or service minus subsidies
Factor cost The total cost of all the factors of production consumed or
used in producing of a good or service
Tax on products Any tax that is levied per unit of the good or service and in-
cludes VAT, import duties, taxes on imports & exports etc.
Tax on production Any tax on production not linked to a specific good or ser-
vices and includes payroll taxes, business licenses, and
taxes on land and buildings etc.
Subsidies on products These are direct subsidies that are made per unit of the
good or services and are linked to a specific product e.g.
government subsidy on bread
Subsidies on production These are subsidies that are not linked to a specific goods
or services e.g. subsidy made on employment.
Residual item Refers to errors and omissions incurred in the calculation of
GDP
Inventory The merchandise, raw materials, finished and unfinished
products which have not yet been sold
Transfer payments Payments made by the government to people who have not
used their factors of production to produce output such as
welfare grants.
Semi-durable goods Goods that can be used repeatedly or continuously over a
period longer than a year their expected lifetime of use,
though longer than a year, is often significantly shorter and
that its purchasers’ price is substantially less
GDP at Factor cost: Money value of the cost of employment, entrepreneurship
and the depreciation of capital in South Africa, without
counting Government’s role in it

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DEFINITION OF FINAL CONSUMPTION EXPENDITURE (C)

Consumption expenditure (spending) is the amount of money spent by households in

an economy.

The spending includes durables, such as washing machines, semi-durables and non-
durables, such as food. In other words, it is the purchasing of goods and services by
individual households.

It is the largest part of aggregate demand at the macroeconomic level.

The total spending of all households on consumer goods and services is called total or
aggregate consumption expenditure, or simply total consumption

There are two components of consumption in the basic model: induced consumption
(which is affected by the level of income) and autonomous consumption (which is not;
in other words, it is expenditure that occurs when income levels are zero).

Autonomous consumption contrasts with induced consumption, in that it does not

systematically fluctuate with income, whereas induced consumption does.

The two are related, for all households, through the consumption function:
• C = c0 + c1 yd where
• C is total consumption,
• C0 is autonomous consumption (c0 > 0),
• C1 is the marginal propensity to consume
• YD is disposable income.

Household final consumption expenditure includes the following components:

• households' purchases of durable goods
• households' purchases of non-durable goods
• households' purchase of semi-durable goods
• households’ expenditure on services rendered to them

CONSUMPTION EXPENDITURE BY GOVERNMENT (G)

The primary function of government is to establish the framework within which the
economy operates. Government also participates in the circular flow of production, in-
come and spending. It purchases factors of production (primarily labour) from households
on the factor market and also purchases goods and services from firms on the product
(goods) market. In return, government provides households and firms with public goods
and services such as defense, law and order, education, health services, roads and
much more. This spending by government is usually denoted by the symbol G.

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Composition / Classification of Government Spending

Economic affairs
• Economic infrastructure and network regulation
• Industrial development, trade and innovation
• Employment, labour affairs and social security funds

Debt service costs

General public services
• General public administration and fiscal affairs
• Executive and legislative organs
• Home affairs
• External affairs and foreign aid.

Education
• Basic education
• University transfers
• Skills development and adult education
• Education administration
• National student financial aid scheme.

Health
• District health services
• Provincial hospital services
• Other health services
• Central hospital services
• Facilities management and maintenance

Local development and social infrastructure

• Municipal equitable share and infrastructure grant
• Human settlements, water and electrification programmes
• Public transport
• Other local development and social infrastructure
• Rural development and land reform

Social protection
• Old-age grant
• Child support grant
• Disability grant
• Provincial social development
• Other grants
• Policy oversight and grant administration.

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IMPORTANCE OF GOVERNMENT SPENDING (G):

Government expenditure plays an important role in determining the changes in the
level of national income; providing the right needs for potential output and sustaining the
welfare of the economy.
the circular flow of income helps identify the key relationship of government expendi-
ture towards household and domestic firms, which is when income rises, spending
rises, and when spending rises, output rises which [then again] gives rises to incomes -
providing growth in national income.

Households, firms, and foreign sectors (on exports) pay taxes with their incomes,
which generate overall revenue for government expenditure.

FLOW OF INCOME

Figure 1.1 Circular flow diagram

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IMPORTANCE OF GOVERNMENT SPENDING

Government spending is autonomous, and therefore will spend regardless of the size of
revenue, emphasising potential leakages in the circular flow of income and the changing
pace of economic growth. For example, tax revenues do not equal government spending
in public goods. Some revenue may be set aside for savings or used to pay back bonds
to reduce national debt.

This presents a leakage in the circular flow, as incomes generated do not finance current
goods and services. Furthermore, taxes reduce the disposable incomes in households
and profit in firms presenting a withdrawal (leakage)in the flow.

When leakages are greater than injections, the national output will fall to a new
equilibrium, as there will be less income circulating and change the pace of economic
growth.
On the other hand, when government injections rise, national output will move to a new
equilibrium. Therefore, injections must equal leakages for an economy to be in equilib-
rium, emphasising the different positions of equilibrium growth and the varying conditions

COMPOSITION OF THE CIRCULAR FLOW

Intermediate goods are goods that are not directly consumed but that are used to man-
ufacture other goods.
Final goods are all manufactured goods that are ready to satisfy the consumers’ needs
and wants.
Final consumption expenditure by households is the total spending of all households
on final goods and services for a specific period usually one year.
Consumption expenditure by government is the amount spent on goods and services
to meet the needs and wants of as many people as possible in a country.
Gross fixed capital formation refers to goods that are bought by firms and government
to produce other goods and services.

Gross Domestic Product

The GDP is the total value of final goods and services produced within a country in a cer-
tain period of time, which is usually a year.

The national accounts are useful for:

• Indicating the economic activity within a country
• Measuring economic growth from one year to the next
• Determining the standard of living in a country
• Comparing prosperity levels among the country

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GDE - Gross Domestic Expenditure

GDE is the total expenditure of all sectors of an economy of a country on final goods
and services produced in that country.
Consumers and the government spend money on Consumer goods and services.

Firms and the government spend money on capital goods. The formula for calculating
GDE is GDE = C + I + G.

C = represents consumer expenditure

I = represent investments (spending by businesses)
G = represents government spending

Gross National Product (GNP)

Gross National Product (GNP) is the total market value of the final output of the factors of
production owned by the citizens of a country irrespective of where they are located for a
certain period of time (usually a year).

Conversion of GDP figures to GNI figures:

GDP at market prices

Plus: Factor income earned abroad by South Afri-
cans
Less: Factor income earned in South Africa by
foreigners
= GNI at market prices

Theoretically, national production, national expenditure and national income should all be
equal. This allows GDP to be calculated by using any of the following methods:

Income Method/GDP (I):

This method calculated GDP using the total income received by the owners of the factors
of production that were used to produce products. GDP (I) = W + R + I + P

W = represents wages and salaries

R = represents rent income
I = represents interests
P = represents Profits

Expenditure Method/ GDP (E): uses the amount of money domestic businesses receive
for their production to calculate the value of final output. The expenditure method uses
the following formula to calculate GDP:
GDP (E) = C + I + G + (X – M)

C = represents consumer expenditure

I = investments (spending by businesses)
G= represents government spending
X = represents exports (spending by people in other countries on local products)
M = represents imports (spending by the local people on foreign products)

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Take note: M must be subtracted as these finals goods and services or output was pro-
duced in a foreign country and can therefore not be added to local GDP.

Production Method/ GDP (P): This method calculates GDP by adding the value of the
final goods and services produced in each sector of the economy (primary, secondary
and tertiary).

It is also known as the value added method or GVA (Gross Value Added) as the value
of a product while being produced has to be added at each stage of the production pro-
cess until the final product is reached.

EXPENDITURE METHOD PRODUCTION METHOD INCOME METHOD

consumption expenditure value added by the primary compensation to employees
by households (C) sector
gross capital formation (I) value added by the second- consumption of fixed capital
ary sector
consumption expenditure value added by the tertiary operating surpluses
by general government (G) sector
Gross domestic expendi- GDP at basic prices GDP at factor cost
ture
plus: exports (X) plus: taxes on products plus: taxes on production
less: imports (M) less: subsidies on products less: subsidies on production
Expenditure on GDP at Gross domestic product GDP at basic prices
market prices at market prices
plus: taxes on products
less: subsidies on products
Gross Domestic Product at
market
plus: primary income from the
rest of the world
less: primary income to the
rest of the world
Gross National Income at
market prices

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QUESTIONS

SECTION A: TYPICAL EXAM QUESTIONS

QUESTION 1: Section A – Short Questions

: When answering Section A – short question, it is important not to rush but

to read the questions carefully and to make sure you understand what the
question is asking. Always remember one alternative is completely wrong,
one is nearly correct and one is totally correct. It is easy to eliminate the completely
wrong answer, but if you do not read the question carefully the nearly correct answer
will also appear correct. The answer will NEVER be two options. Only ONE option is
correct. Your answer will immediately be marked incorrect if you write TWO options.

1.1 Various options are provided as possible answers to the following

questions.
Choose the answer and write only the letter (A–D) next to the question num-
ber.

1.1.1 The total value of remuneration that the owners of factors of production receive
for their share in the production process for a specific period of time:
A GDP
B GNI
C GNP
D GNE

1.1.2 Double counting is a problem that occurs when the … method of calculating GDP
is used.
A production
B income
C expenditure
D domestic

1.1.3 Consumption of fixed capital means …

A depreciation.
B gross salaries and wages.
C investment.
D capital.

1.1.4 … includes all possible errors that could have been made in the calculation of the
expenditure items.

A Constant prices
B Gross capital formation
C Residual items
D Market prices

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1.1.5 An alternative concept for gross value added is gross …

A national product.
B domestic product.
C national income.
D national expenditure.

1.1.6 Spending on education and housing by the government is classified under the …
division of government expenditure.
A functional
B administrative
C financial
D classification

1.1.7 Double counting is a problem that occurs when the … method of calculating GDP
is used.
A production
B income
C expenditure
D domestic

1.1.8 To convert basic prices to market prices, taxes on products must be …

A deducted.
B multiplied.
C added.
D divided

1.1.10 In South Africa’s national accounts final consumption expenditure refers to

expenditure by…
A tourists.
B households.
C business.
D foreigners. (10 x 2) (20)

1.2 Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the letter (A-K) next to the question number (1.2.1 – 1.2.10) in the
ANSWER BOOK.

CONCEPT DESCRIPTION
1.2.1 Gross value added A Takes the form of social security such as pensions
at basic prices and disability grants.
1.2.2 Capital deepening B Takes place when firms build up their stock of
finished products
1.2.3 Transfer payments C Expenditure which is not affected by level of income
1.2.4 Durable goods D Goods and services whose provision has
benefits for the user and society
1.2.5 Autonomous con- E The flow of goods and services between the
sumption participants in the circular flow

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1.2.6 Inventory invest- F The total market value of all final goods and
ment services produced between the borders of a
country over a specific period of time.
1.2.7 Merit goods G Goods that derive their name from the fact that they
last in value for a relatively long
1.2.8 Gross Domestic H Transfer payments by the state to support the
Product elderly
1.2.9 Old age-pensions I Increases at a rate of increase of the work force.
1.2.10 Real flow J GDP at basic prices, plus taxes on products, minus
subsidies on products.
K The total domestic and foreign income claimed by
citizens of a country

(10 x 1) (10)
1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number. No abbreviations,
acronyms or examples will be accepted.

1.3.1 Counting the contribution of a factor of production more than once.

1.3.2 Total market value of all final goods and services produced by the permanent
citizens of a country for a specific period.
1.3.3 A method whereby we determine the GDP at market prices by adding the
spending of the four main sectors.
1.3.4 Total market value of all final goods and services produced within the borders of a
country for a specific period which took into consideration the effects of price
changes/inflation.
1.3.5 Goods which can be consumed only once, and they cease to exist after being
used.
1.3.6 Cannot be used to measure real economic growth due to the effect of inflation.
1.3.7 Subsidies that are linked to specific goods or services e.g. government subsidy on
bread.
1.3.8 The total market value of all final goods and services produced within the borders
of a country over a specific period of time.
1.3.9 The services sector of an economy.
1.3.10 Goods which can be used more than once but they last for a shorter period of time
e.g. clothing.
1.3.11 Takes place when firms build up their stock of finished products.
1.3.12 Compulsory payments made by private individuals or businesses to the
government sector with no direct benefit.
1.3.13 subsidies that are not linked to specific goods or services e.g. subsidy made on
employment.
1.3.14 Taxes that are linked to specific goods or services.
(14 x 1) (14)

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SECTION B

QUESTION 2:

: When the question requires you to “list” or “name”, you need not write a
sentence but merely the word or a phrase. This MUST be done in bullet
form. This types of questions are applicable for 2.1.1, 3.1.1 and 4.1.1

2.1 Name TWO economic participants that are responsible for gross fixed capital
formation. (2 x 1) (2)
2.2 List TWO main economic sectors when calculating GDP (P). (2 x 1) (2)
2.3 Name any TWO participants in a closed economy. (2 x 1) (2)
2.4 Name any TWO examples of taxes on products. (2 x 1) (2)
2.5 Name any two main categories of final consumption expenditure by government.
(2 x 1) (2)
2.6 List any TWO main economic activities in modern society (2 x 1) (2)
2.7 Name any TWO methods of calculating GDP. (2 x 1) (2)
2.8 List any TWO economic leakages (2 x 1) (2)
2.9 Name TWO types of assets into which Gross fixed capital investment is
divided into. (2 x 1) (2)

QUESTION 3:

TIP:
These types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2.
Answers must be provided in full sentences; learners must ensure that their answer ad-
dresses the question asked

3.1 Why do national accountants use the value-added method to calculate GDP?
(1 x 2) (2)
3.2 Why is the households the ones who get paid for land, labour, capital and
entrepreneurship and not government or firms? (1 x 2) (2)
3.3 What happens to household spending on final goods and services during an
economic recession? (1 x 2) (2)
3.4 Why is the gross domestic product of South Africa always greater than the gross
national product? (1 x 2) (2)
3.5 Why do National accountants convert Nominal GDP to GDP at constant prices?
(1 x 2) (2)
3.6 Why is the spending of households on final goods and services important?
(1 x 2) (2)
3.7 Why are capital goods regarded as final goods? (1 x 2) (2)
3.8 Why are imports not included in domestic expenditure? (1 x 2) (2)
3.9 Why is fixed capital formation important? (1 x 2) (2)
3.10 Explain how consumption stimulates employment. (1 x 2) (2)

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DATA RESPONSE

: All section B questions have TWO data interpretation questions – each to-
tal 10 marks. Section B consist of Questions 2-4 not as numbered in this document

QUESTION 4

4.1 Study the table below and answer the questions that follow.

4.1.1 Give an example of a primary income from the rest of the world. (1)
4.1.2 Do we add a subsidy to the basic prices or subtract it? (1)
4.1.3 Briefly describe the concept Gross Domestic Product. (2)
4.1.4 Explain the difference between current prices and constant prices. (2)
4.1.5 Calculate the value of A in the table. (Show all calculations) (4)

4.2 Study the table below and answer the questions that follow:

Consumption expenditure
Item Amount (000)
Consumption expenditure by households 150 000

Government expenditure 130 000

Gross capital formation 80 000
Gross domestic expenditure 360 000
Exports on goods and services 45 000
Imports on goods and services 65 000
GDP at market prices A

4.2.1 What method of calculating the GDP is depicted by the table above? (1)
4.2.2 Name any other method that can be used to calculate the GDP at market
prices. (1)
4.2.3 Briefly describe the term Gross domestic expenditure. (2)

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4.2.4 Explain the following components: GDE = C+ G+ I (2)

4.2.5 Calculate the GDP at market prices (A). Show all calculations (4)

4.3 Study the table below and answer the questions that follow

4.3.1 Identify ONE major participant in the circular flow. (1)

4.3.2 Give ONE examples of non-durable goods. (1)
4.3.3 Describe the term consumption expenditure by households. (2)
4.3.4 What do you think determines the final consumption expenditure of
households? (2)
4.3.5 With reference to the table above, analyse South African households spending
from 2014 to 2015? (2 x 2) (4)

4.4 Study the table below and answer the questions that follow.

4.4.1 Which publication would carry this information? (1)

4.4.2 Complete the item represented by A in the table. (1)
4.4.3 Describe the term Gross Domestic Product. (2)
4.4.4 What is the purpose of the residual item? (2)
4.4.5 Calculate expenditure on GDP at market prices (B). (4)

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4.5 Study the following cartoon and answer the questions that follow.

4.5.1 What economic message is conveyed in the above cartoon? (1)

4.5.2 What would indicate that social services are not delivered efficiently? (1)
4.5.3 Briefly describe the term national budget. (2)
4.5.4 Explain how consumers spend their income in the national economy? (2)
4.5.5 How can corruption be eliminated? (2 x 2) (4)

4.6 Study the table below and answer the questions that follow.

4.6.1 Name the other classification of consumption expenditure by government. (1)

4.6.2 What does compensation of employees consist of? (1)
4.6.3 Briefly describe the term final consumption expenditure by government. (2)
4.6.4 Explain the importance of final consumption expenditure by households. (2)
4.6.5 How can the South African government achieve the reductions estimated
in the table above? (2 x 2) (4)

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4.7 Study the table below and answer the questions that follow.

NATIONAL PRODUCTION ACCOUNTS OF SOUTH AFRICA

GROSS VALUE ADDED BY KIND (GVA at current (GVA at constant

OF ECONOMIC ACTIVITY prices) 2015 prices)
2019 (Rm) 2019 (Rm)
Primary Sector 472 062 295 203
Secondary Sector 943 771 552 601
Tertiary Sector 3 107 747 2 017 745
Gross value added at basic prices 4 523 580 2 865 548
Source: SARB September 2020 Quarterly Bulletin

4.7.1 Identify the base year used by SARB above. (1)

4.7.2 Which sector above contributed the most towards the GDP of South Africa?
(1)
4.7.3 Briefly explain the term gross value added at basic prices. (2)
4.7.4 Why are GVA figures at constant prices lower than GVA figures at current
prices? (2)
4.7.5 How will an increase in taxes on products affect the economy? (2 x 2) (4)

4.8 Study the table and answer the questions that follow

4.8.1 Name the government expenditure classification used in the above table. (1)
4.8.2 Indicate the service in which the government allocates most of the resources.
(1)
4.8.3 Briefly describe the concept final consumption expenditure by the government.
(2)
4.8.4 Why does government spend more on education? (2)
4.8.5 Calculate the total health expenditure in the above table. Show all
calculations. (4)

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4.9 Study the table below and answer the questions that follow.

National income accounts of South Africa at current prices

2019
Compensation of employees 2 418 544
Net operating surplus 1 296 696
Consumption of fixed capital 713 078
A 4 428 317
Other taxes on production 105 061
Other subsidies on production 9 798
Gross value added at basic prices 4 523 580
Taxes on products 564 866
Subsidies on products 10 821
Gross domestic product at market prices 5 077 625

Source: SARB September 2020 Quarterly Bulletin

4.9.1 Provide the missing term for A. (1)

4.9.2 Name ONE example of taxes on production. (1)
4.9.3 What does the term gross domestic product entail? (2)
4.9.4 What is the advantage of subsidies on production to the businesses? (2)
4.9.5 Calculate net operating surplus as a percentage of GDP. Show ALL calculations.
(4)

QUESTION 5 Paragraph type questions – Middle Cognitive

All section B questions have TWO 8 marks questions. One is a Middle

order paragraph, the other is a Higher order paragraph

5.1. Briefly discuss classification of final consumption expenditure by households.

(8)
5.2 Differentiate between durable and non-durable goods. (8)
5.3 Distinguish between taxes on products and taxes on production. (8)
5.4 Differentiate between Gross Domestic Product (GDP) and Gross National
Product (GNP) as main aggregates in the economy. (8)
5.5 Briefly explain final consumption expenditure by government. (8)
5.6 Explain the difference between final goods and intermediate goods. (8)
5.7 Tabulate the differences between capital (intermediate) and consumer goods.
(8)

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QUESTION 6 Paragraph type questions – Higher cognitive

TYPICAL EXAM QUESTION: THESE HIGHER ORDER QUESTIONS REQUIRE

THE LEARNERS TO USE HER/ HIS CRITICAL THINIKING SKILLS.
Higher order questions are grounded in the content. These types of questions
test critical thinking, where candidates should be able to apply their knowledge,
through logical reasoning and also have an awareness of their current eco-
nomic climate. Content (covered by dis-cuss/examine/describe/ analyse/ex-
plain/evaluate/compare/assess/justify/construct/calculate) can be assessed as
higher-order questions. Answers will not necessarily be found in textbooks.

6.1 Why are capital goods and services important for producers of goods and
services? (8)
6.2 How can the final consumption expenditure by government improve the standard
of living? (8)
6.3 How will an increase in investment spending influence the economy? (8)
6.4 Why does the government charge taxes? (8)
6.5 How does the South African government use progressive taxes to address
economic equity through its national budget? (8)
6.6 Analyse consumption expenditure by the South African households during the
2020 lockdown. (8)

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MACROECONOMICS
TOPIC 3: ECONOMIC SYSTEMS
WEEK 6-7

ECONOMIC SYSTEMS

FREE MARKET ECONOMY

CENTRALLY PLANNED ECONOMY

MIXED ECONOMY

EFFICIENCY IN DELIVERING SOCIO-ECONOMIC SERVICES

INTRODUCTORY NOTES

Economics is the science of making choice under conditions of scarcity. What are the
basic issues about which choices are to be made? Any society must make choices about
three important problems. They are:
❖ What to produce and in what quantities? Food or weapons; if so, in what quanti-
ties? Is it more food and less weapons or vice versa?
❖ How shall goods be produced? Electricity from thermal power or from hydro
power?
❖ For whom shall the goods be produced? A few rich and many poor or most people
in modest comfort?

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Market, centrally planned and SA’s mixed economy

KEY CONCEPTS DESCRIPTIONS/DEFINITIONS

Black market A market that develops for a good in short supply, at a higher than
normal price.
Centrally planned An economic system in which the factors of production are viewed
economy as communal property
Economic services An economic activity where an immaterial exchange of value oc-
curs, e.g. when a service like labour is performed, the buyer does
not take exclusive ownership of that which is purchased, unless
agreed upon by buyer and seller.
Economic systems The methods used by countries to allocate their resources.
Exchange rate The price of one currency, in terms of another currency.
Inflation A persistent increase in the general level of prices.
Market econ- The economy that uses supply and demand to answer the ques-
omy/capitalism tions of what, how and for whom to produce goods and services/It
is a market system whereby production factors are privately
owned.
Market failure When the output produced is not available in the required quantity
or quality to maximise the satisfaction of the people of the country.
Mixed economic An economic system that combines the advantages of both eco-
system nomic systems
National budget The planned income and expenditure by the state for a given year.
Nationalisation The transfer of ownership of a business from the private sector to
the state.
Privatisation The transfer of ownership of a business from the state to the pri-
vate sector.
Public order and A department which has the primary goal of protecting the public
safety and keeping them safe.
Public sector Is made up of state – run activities or business.
Social protection Consists of policies and programs designed to reduce poverty and
vulnerability by promoting efficient labour markets, diminishing peo-
ple’s exposure to risks, and enhancing their capacity to manage
economic and social risks, such as unemployment, exclusion, sick-
ness, disability and old age.
Social services Government services provide for the benefit of the community,
such as education, medical care, and housing.
Socio-economic Relating to society and the economy
Subsidies Incomes given by the state to individuals or businesses for a spe-
cific purpose.

An economic system refers to how the different economic elements will solve the
central problems of an economy: what, how and for whom to produce.

It is important to remember that the Market Economy and Centrally planned economic
systems do not exist in the real life but only as a theoretical concept. All countries use a
mixture of the Market Economic system and Centrally Planned Economic system.

Definition: An economic system is the way that goods and services are produced and
resources distributed. In essences, it is the method that a country uses its resources to
satisfy the needs and wants of the population.

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The most general economic systems are:

• The market economy.
• Centrally planned economy
• Mixed economy

Market economy:
• An economic system in which economic decisions and the pricing of goods and ser-
vices are guided solely by the aggregate interactions of a country's citizens and busi-
nesses and there is little government intervention or central planning.
• The Market Economic system is also known as Market Capitalism or the Free Market
System.

Economic characteristics of a market economy:

• Individuals have the right to buy and own property.
• Profit is the only motive for the functioning of capitalism.
• Producers have the freedom to decide.
• Market forces like demand, supply and price are the signals to direct the system.
• As most of the basic economic problems are expected to be solved by market forces,
the government has minimal role in the economy.

Advantages of the market economy:

• Producers increases the productivity to meet his own self-interest.
• Welfare is maximised
• Operates automatically through the price mechanism.
• The State has a minimum role to play.
• Have full freedom and therefore it leads to production of quality products at low costs
and prices.
• Technological improvement

Disadvantages of the market economy:

• Capitalism creates extreme inequalities in income and wealth.
• Inequality leads to monopoly
• There is over-production of goods due to heavy competition.
• Capitalism encourages mechanisation and automation.
• Under capitalism, private enterprises produce luxury goods which give higher profits
and ignore the basic goods required which give less profit.
• Stringent labour laws are enacted for the exclusive profit-motive of capitalists.
• The economic questions of what should be produced, how it should be produced and
who it should be produced for are all answered through the market forces of demand
and supply.

Centrally planned economy:

• An economic system in which economic decisions are made by the state or govern-
ment rather than by the interaction between consumers and businesses.

Economic characteristics of a centrally planned economy:

• Economies, social or collective welfare will be the prime motive.
• The right to private property is limited.
• Most of the economic policy decisions will be taken by a centralized planning authority.

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Advantages of the centrally planned economy:

• The resources are utilized efficiently to produce socially useful goods without taking
the profit margin into account.
• Economy is free from business fluctuations.
• All citizens work for the welfare of the State.
• The elements of corporation and monopoly are eliminated since there is absence of
private ownership.
• In socialist economies, basic human needs like water, education, health, social secu-
rity, etc., are provided.
• As social welfare is the ultimate goal, there is no concentration of wealth.
• A socialist economy is operated under a centralized command and control system.
• There is no freedom of occupation.
• Work is monotonous and no freedom is given.
• Absence of competition makes the system inefficient.

Mixed Economic System

• The Mixed Economic system is a mixture of the Market Economic system and Cen-
trally Planned Economic system. It aims to combine the advantages of each system
into one economic system: state intervention ensures equality while private business
allow for higher economic growth rates and economic efficiencies.

Economic characteristics of a mixed economy:

• In a mixed economy, both the public and the private sectors initiatives will be there
• As seen above, both capitalism and socialism have merits and demerits, mixed econ-
omy is expected to retain only the merits of the two systems.
• Planning will direct the relative roles of public and private sectors and their respective
jurisdictions.

Advantages of a mixed economy:

• The resources are utilized efficiently as good features of both capitalism and socialism
coexist.
• In the case of goods which are scarce, the prices are administered by the government
and such goods are also rationed.
• In a mixed economy, planning is centralized and there is overall welfare.

Disadvantages of a mixed economy:

• The coordination between the public and private sectors is poor in a mixed economy.
• There is too much of red-tape and corruption leading to delays in decision-making and
project implementation.
• The mixed economies experience economic fluctuations.
• All economies around the world use the Mixed Economic system. However, some
economies have stronger traits of the Market economic system (such as the USA and
South Africa) while other economies have stronger traits of a Centrally Planned Econ-
omy (such as North Korea and Cuba).

Efficiency in delivering socio-economic services

• In terms of its structure, South African local government is sub-divided into three basic
categories; metropolitan municipalities, district municipalities and local municipalities.
• The district municipalities are divided into a total of 234 local municipalities. In general,
a local municipality includes one or more towns and the surrounding villages and rural
areas.

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• A local municipality exercises all the municipal functions not carried out by the district
municipality within which it lies. Local municipalities' councils are elected in the same
way as those of metropolitan municipalities: half from wards and half by proportional
representation.

Social services

• One of the main duties of the state in a mixed economy is to provide social services to
improve welfare especially for the marginalised.
• Socio-economic services are mainly supplied by the government in an attempt to uplift
previously disadvantaged communities.
• The government also has to make sure that the economy can operate efficiently.

Some of the examples of social services are:

• Education and training
• Health care
• Housing and community amenities
• Social protection (welfare services & social grants)
• Public order and safety

Economic services
• Economic services are associated with regulating and operating the economy and the
business sector more efficiently.
• Some of the government functions are:
• Using monetary and fiscal policies to ensure economic stability.
Maintaining economic order by ensuring free competition, positive international trade
relations and properly regulated labour relations legislation.
Providing and maintaining infrastructure.

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QUESTIONS

SECTION A: TYPICAL EXAM QUESTIONS

ECONOMIC SYSTEMS

QUESTION 1: Section A – Short Questions

: When answering Section A – short question, it is important not to rush but

to read the questions carefully and to make sure you understand what the question is
asking. Always remember one alternative is completely wrong, one is nearly correct
and one is totally correct. It is easy to eliminate the completely wrong answer, but if
you do not read the question carefully the nearly correct answer will also appear cor-
rect. The answer will NEVER be two options. Only ONE option is correct. Your an-
swer will immediately be marked incorrect if you write TWO options.

1.1 Various options are provided as possible answers to the following

questions.
Choose the answer and write only the letter (A–D) next to the question num-
ber.

1.1.1 An economic system is a way of answering the following basic economic

questions.
A what, how and where?
B what, how and for whom?
C where, how and for whom?
D where, what, and how?

1.1.2 The … is an economic system in which economic decisions are solely made by
market forces of demand and supply.
A market economy
B centrally planned economic system
C mixed economy
D capitalist economy

1.1.3 Decision-making within the market economy is…

A concentrated.
B decentralised.
C autocratic.
D centralised.

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1.1.4 South Africa's PAYE taxation system is …

A proportional.
B progressive.
C regressive.
D constant.

1.1.5 An advantage of the centrally controlled economy is …

A choice.
B innovation.
C risk.
D full employment.

1.1.6 In South Africa ,SABC, ESKOM and SAA are known as:
A corporates
B enterprises
C parastatals
D entities

1.1.7 There is less poverty among the people in communist countries because …
A the profit motive leads to self-interest.
B there is full employment.
C the government plays a very small role in the economy.
D there is a shortage of consumer goods.

1.1.8 A mixed economy is one that consists of …

A large and small firms.
B farms and factories.
C goods and services.
D public and a private sector.

1.1.9 An economic system where individuals are free to perform activities according to
their abilities is known as a …
A mixed economic system.
B market economy.
C centrally planned system.
D socialist system.

1.1.10 The economy failed in countries that applied central planning because …
A there was a lack of incentive to work hard.
B of a shortage of consumer goods.
C there was full employment.
D the state owned all the resources.
(10 x 2) (20)

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1.2. Choose a description from COLUMN B that matches the item in COLUMN
A. Write only the letter (A-M) next to the question number (1.2.1 – 1.2.12)
in the ANSWER BOOK.

COLUMN A COLUMN B
1.2.1 Capitalism A. The process of creating new technologies and
using them in the economy.
1.2.2 Social services
B. Individuals are free to perform their
1.2.3 Centrally planned professions, trade without state intervention
economy
C. Excessive bureaucracy or adherence to
1.2.4 Economic systems official rules and formalities

1.2.5 Economic freedom D. The flagship of the South African government

to relief poverty
1.2.6 Mixed economy
E. Methods used by countries to allocate their
1.2.7 Dual economy resources

F. The government owns all the factors of

1.2.8 Red tape
productions
1.2.9 Innovation
G. It includes education, health, social security
and welfare, housing and community services
1.2.10 Social grants
include protection, sanitation and water
1.2.11 Economic freedom H. Means of production are controlled by private
owners
1.2.12 Bureaucracy
I. Resolves basic economic problems through market
forces

J The existence of two different economic sectors within

one country, divided by different levels of development,
technology and different patterns of demand

K An economic system that features characteristics

of both market economy and centrally planned economy

L The government buying assets which are owned by the

private sector.

M Systems and procedures which are designed to main-

tain uniformity and control within an organization.

(12 x 1) (12)

1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number.
No abbreviations, acronyms or examples will be accepted.

1.3.1 Excessive complicated administration procedures.

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1.3.2 They work on the assumption that market forces of supply and demand, are
the best determinants of what is right for a nation's well-being.
1.3.3 A business enterprise where the government or state has significant control
through full, majority, or significant minority ownership.
1.3.4 A way of determining how the different elements will solve the central
problems of an economy.
1.3.5 Consist of policies and programs designed to reduce poverty and
vulnerability by promoting efficient labour markets diminishing people’s
exposure to risk.
1.3.6 The government introduced this new macroeconomic strategy in 1996.
1.3.7 An economic system that combines the advantages of a centrally planned
and a free market economy.
1.3.8 Motivation or reward offered for increased productivity.
1.3.9 economic system where all economic decisions are made by the
government.
1.3.10 A focus on the needs or desires of one's self. (10 x 1) (10)

SECTION B

QUESTION 2

: When the question requires you to “list” or “name”, you need not write a
sentence but merely the word or a phrase. This MUST be done in bullet
form. These types of questions are applicable for 2.1.1, 3.1.1 and 4.1.1

2.1 Name any TWO characteristics of a command (centrally planned) economic

system. (2 x 1) (2)
2.2 List any TWO state owned enterprises in South Africa. (2 x 1) (2)
2.3 Mention any TWO levels of government. (2 x 1) (2)
2.4 Name any TWO examples of social services which are provided by the South
African government. (2 x 1) (2)
2.5 List any TWO disadvantages of market economy. (2 x 1) (2)
2.6 List TWO types of economic systems. (2 x 1) (2)

QUESTION 3

: This types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2. Answers
must be provided in full sentences

3.1 Why is South Africa regarded as a mixed economy? (1 x 2) (2)

3.2 How is the government funding its expenditure? (1 x 2) (2)
3.3 Why do you think the RDP policy was not successful? (1 x 2) (2)
3.4 Why might the businessman or woman be happier in a free market system?
(1 x 2) (2)
3.5 Why might the poor be happier in a command system? (1 x 2) (2)
3.6 How does the market economy solve the central problem in an economy?
(1 x 2) (2)
3.7 What ensures flexibility in a market economy? (1 x 2) (2)

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SECTION B

QUESTION 4

: All section B questions have TWO data interpretation questions – each to-
tal 10 marks. Section B consist of Questions 2-4 not as numbered in this document

DATA RESPONSE

4.1 Study the cartoon below and answer the questions that follow.

4.1.1 Which economic system is based on the principle of ‘invisible hand’? (1)
4.1.2 Who allocates the resources in the system above? (1)
4.1.3 Briefly describe the term economic system. (2)
4.1.4 Explain ONE advantage of the economic system depicted in the data above.
(2)
4.1.5 How is self- interest beneficial for an economy? (2 X 2) (4)

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4.2 Study the extract below and answer the questions that follow:

If there is no shop in a rural area, the state will tell one of the inhabitants to
start a spaza shop. By doing this, the state will decide what, how, and when
to produce in order to uplift the society.

4.2.1 What type of economic system is referred to in the above extract? (1)
4.2.2 Who allocates the resources in the above extract? (1)
4.2.3 Briefly describe the term economic system. (2)
4.2.4 Explain how service delivery can be improved in South Africa. (2)
4.2.5 Why is South Africa regarded as a mixed economy? (2 x 2) (4)

4.3 Study the cartoon below and answer the questions that follow:

4.3.1 Who is being burdened in the cartoon above? (1)

4.3.2 What motivates consumers and producers in a pure market economy? (1)
4.3.3 Briefly describe the term free market economy. (2)
4.3.4 How does the market economy benefit the society? (2)
4.3.5 Why would you not recommend capitalism as an economic system? (2 x 2) (4)

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4.4 Study the cartoon below and answer the questions that follow.

4.4.1 Which type of economic system does South Africa use? (1)
4.4.2 Who allocates the resources in the above economic system? (1)
4.4.3 Briefly explain the term mixed economic system. (2)
4.4.4 What role is played by the government in this mixed economic system? (2)
4.4.5 How efficient is the South African government at delivering social services?
(2 x 2) (4)

4.5 Study the information and answer the questions that follow

4.5.1 Identify a country using the above-mentioned economic system. (1)

4.5.2 List ONE advantage of a free market economy. (1)
4.5.3 Briefly explain the term capitalism. (2)
4.5.4 How is the market economy “self-regulating”? Motivate. (2)
4.5.5 Why is capitalism not beneficial to all countries and consumers? (2 x 2) (4)

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QUESTION 5 Paragraph type questions – Middle Cognitive

All section B questions have TWO 8 marks questions. One is a Middle

order paragraph, the other is a Higher order paragraph

5.1 Outline arguments for privatisation. (8)

5.2 Discuss arguments for nationalisation. (8)
5.3 Briefly explain the advantages of a market economy. (8)
5.4 Discuss the disadvantages of a mixed economy. (8)
5.5 Compare the ownership and motivation of centrally planned and mixed as
economic characteristic in a tabular form. (8)
5.6 Tabulate the advantages of a market economy and a centrally planned
economy. (8)
5.7 Discuss social welfare and resource utilisation as advantages of a mixed
economy. (8)
5.8 Discuss the characteristics of a mixed economic system. (8)

QUESTION 6 Paragraph type questions – Higher cognitive

TYPICAL EXAM QUESTION: THESE HIGHER ORDER QUES-

TIONS REQUIRE THE LEARNERS TO USE HER/ HIS CRITICAL
THINIKING SKILLS.

Higher order questions are grounded in the content. These types of questions test critical thinking,
where candidates should be able to apply their knowledge, through logical reasoning and also have
an awareness of their current economic climate. Content (covered by discuss/examine/describe/ ana-
lyse/explain/evaluate/compare/assess/justify/construct/calculate) can be assessed as higher-order
questions. Answers will not necessarily be found in textbooks.

6.1 Why is South Africa regarded as a mixed economy? (8)

6.2 How can the South African economy benefit from a mixed economic system?
(8)
6.3 How effective is the delivery of social services in South Africa? (8)
6.4 Evaluate South African government’s involvement in increasing access to
economic opportunities. (8)
6.5 How efficient is the state in addressing the disadvantages of the market
system? (8)

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SECTION C

TYPICAL EXAM QUESTIONS

ESSAY STRUCTURE

: All section C questions have TWO questions 5 & 6 NOT like in this docu-
ment. In the examination you will need to answer only one.

HINT: Section C – the long question, must be answered in FOUR sections: Introduc-
tion (definition), Body (headings and full sentences in bullets) additional part and
conclusion (summarising). The mark allocations for Section C is as follows:
MARK ALLO-
STRUCTURE OF ESSAY:
CATION:
Introduction Max 2
The introduction is a lower-order response.
• A good starting point would be to the main concept related to the
question topic
• Do not include any part of the question in your introduction.
• Do not repeat any part of the introduction in the body
• Avoid saying in the introduction what you are going to discuss in the
body
Body:
Main part: Discuss in detail/ In-depth discussion/ Examine/ Critically dis- Max 26
cuss/ Analyse / Compare/ Distinguish/ Differentiate/ Explain/ Evaluate
Additional part: Critically discuss/ Evaluate/ Critically evaluate/ Calcu-
late/ Deduce/ Compare/ Explain Distinguish / Interpret/ Briefly debate/
How/ Suggest/ Construct a graph
Max 10
Conclusion
Any Higher or conclusion include: Max 2
• A brief summary of what has been discussed without repeating
facts already mentioned in the body
• Any opinion or value judgement on the facts discussed
• Additional support information to strengthen the discussion/analy-
sis
• A contradictory viewpoint with motivation, if required
• Recommendations
TOTAL 40

QUESTION 7

• Discuss South Africa's mixed economic system in terms of:

- Characteristics
- advantages and
- disadvantages (26 marks)

• Evaluate the government's efficiency in delivery social services to local

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communities. (10 marks)

[40]

QUESTION 8

•Discuss a centrally planned economic system, with special reference to:

- economic characteristics,
- advantages and
- disadvantages (26 marks)
 Analyse how South Africa’s dual economy and corruption are contributing factors
to the non-attainment of the state goals. (10 marks)
[40]
QUESTION 9

• Discuss the market economy with special reference to:

- Characteristics
- Advantages
- Disadvantages (26)
• Evaluate the efficiency of the state in addressing the disadvantages of the market
system. (10)
[40]

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MACROECONOMICS
TOPIC 4: ECONOMIC STRUCTURES
WEEK 8-9

BASIC ECONOMIC PROBLEM, BUSINESS CYCLES

AND PUBLIC SECTOR; ECONOMIC STRUCTURE

THE PRIMARY SECTOR

THE SECONDARY SECTOR
THE TERTIARY SECTOR

SOUTH AFRICAS'S INFRASTRUCTURE

COMMUNICATION
TRANSPORT
ENERGY
EXCLUSION AND DISCRIMINATION IN SERVICE
PROVISION

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ECONOMIC STRUCTURES

• The modern economy can be divided into three sectors that reflect the economic devel-
opment of that society.
• This lesson will discuss and explore the interaction between the primary, secondary
and tertiary sectors of the modern economy.

KEY CONCEPTS

KEY CONCEPTS DESCRIPTIONS/DEFINITIONS

Affirmative action All the measures taken by businesses to ensure that suitably
qualified employees from formerly disadvantaged groups have
equally employment opportunities at all levels of the work force.
Communication The ways in which information is moved through the world.
Economic infrastruc- The internal facilities that make business activity possible such
ture as communication, transportation and distribution networks, fi-
nancial institutions and energy supply systems.
Exploitative opera- Collection of raw materials that cannot be returned to nature
tions what is taken from it such as mining and fishing.
Genetic operations Collection of raw materials that can be returned to nature what is
taken from it such as farming and forestry.
Primary sector All the activities based on raw materials that come from the
earth such as farming, mining, forestry and fishing.
Secondary sector The manufacturing sector which includes manufacturing, elec-
tricity, gas and water production.
Structure of the The way in which GDP is divided between the three economic
economy/ Economic sectors
structure
Tertiary sector The sector that produces services such as transportation, ac-
commodation, retailers etc.

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Definition Composition Importance Exclusion and dis-

crimination
Primary sector:
• Refers to all the activities • Farming/ • Provides raw ma- • The Land Act of
based on raw materials Agriculture terials and fuels 1913 forbid the sale
that come from the earth • Fishing • Creates employ- of land outside the
• Forestry ment & provides ‘reserves’ or home-
• Mining training lands to blacks.
• Contribute to eco- • Black farmers in the
nomic reserves/homelands
growth/GDP were excluded from
• Earns foreign ex- generous financial
change. support that white
• Provides food farmers enjoyed
• Provide revenue from government
to the state in the • After 1948 blacks
form of taxes, were not allowed to
engage in mining as
owners.
Secondary sector:
• Is concerned with the • Manufacturing • Contribution to • Black people were
middle stages in the pro- • Electricity, gas GDP subjected to notori-
duction of final goods. It & water • Produces con- ous Bantu educa-
is also referred to as the • Construction sumer goods tion, which rendered
processing sector • Creates employ- even successful
ment & provides learners vulnerable
skills and training to competition in the
• Earns foreign ex- workplace.
change • Capital is required
• Increases self-suf- to enter the second-
ficiency ary sector success-
fully.
• The exclusion of
blacks from occupa-
tion that earns high
incomes left little
opportunities for
them that could pro-
duce wealth and
capital.

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Definition Composition Importance Exclusion and dis-

crimination
Tertiary sector
• The sector that produces • Wholesale & • Contribution to • The general rule
services. retail trade, ca- GDP/economic that blacks might
tering & ac- growth not own or occupy
commodation • Creates employ- property in any area
• Transport, ment & provides rather than specifi-
storage & com- and training cally set aside for
munication • Creates markets the group rendered
• Financial inter- • Contribution to ex- businesses and pro-
mediation, in- ports fessional opportuni-
surance, real • Backwards and ties out of their
estate & busi- forward linkage reach.
ness service • Even in the urban
• Community, townships, individu-
social & per- als & businesses
sonal services were limited.

QUESTIONS

SECTION A: TYPICAL EXAM QUESTIONS

ECONOMIC STRUCTURES

QUESTION 1 Section A – Short Questions

: When answering Section A – short question, it is important not to rush but

to read the questions carefully and to make sure you understand what the question is
asking. Always remember one alternative is completely wrong, one is nearly correct
and one is totally correct. It is easy to eliminate the completely wrong answer, but if
you do not read the question carefully the nearly correct answer will also appear cor-
rect. The answer will NEVER be two options. Only ONE option is correct. Your an-
swer will immediately be marked incorrect if you write TWO options.

1.1 Various options are provided as possible answers to the following

questions. Choose the answer and write only the letter (A–D) next to the
question number.
1.1.1 Food security renders … a vital industry.
A agriculture
B water
C energy
D retail

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1.1.2 … consist(s) mainly of private sector business enterprises e.g. cars, components,
machinery and tools.

A Manufacturing
B Construction
C Agriculture
D Wholesale and retail trade

1.1.3 In South Africa SABC, ESKOM and SAA are known as …

A corporates.
B enterprises.
C parastatals.
D private sector.

1.1.4 In the early 1900, the South African economy was dominated by the …

A Primary sector
B Secondary sector
C Tertiary sector
D Primary and tertiary sectors

1.1.5 Most of the electricity supply in South Africa is derived from …

A nuclear energy.
B hydroelectric power.
C coal generated energy.
D wind energy.

1.1.6 The secondary sector includes …

A mining.
B fisheries.
C farming.
D manufacturing.

1.1.7 Exploitative industries are part of the …

A secondary sector.
B primary sector.
C services sector.
D tertiary sector.

1.1.8 In South Africa, mining is the responsibility of the Department of …

A Public Works.
B Environmental Affairs.
C Mineral Resources.
D Energy.

1.1.9 Eskom generates electricity in South Africa by mainly using ...

A water.
B wind.
C coal.
D solar

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1.1.10 SANRAL is responsible for maintaining the ... in SA

A harbours.
B railway network.
C airports.
D national roads.

1.2 Choose a description from COLUMN B that matches the item in COLUMN
A. Write only the correct letter (A−I) next to the question number(1.2.1−1.2.8)
in the ANSWER BOOK.

COLUMN A COLUMN B
1.2.1 Primary sector A provides services such as transport and communi-
cation
1.2.2 Social services B involves the sale of goods or services directly to
the end-user.
1.2.3 Tertiary sector C issues broadcasting licenses.
D regulate the energy industry in accordance with
1.2.4 Eskom government laws, policies, standards and international
best practices in support of sustainable development.
E aims to unify critical Infrastructure and key re-
1.2.5 Wholesale source protection efforts across the country.
1.2.6 The Independent F South African electricity public utility
Communications Authority
of South Africa
1.2.7 National infrastruc- G those who sell products to businesses or other out-
ture protection plan lets who are not the end-user.
1.2.8 NERSA H are involved in the extraction of raw materials from
nature.
I are provided by the state e.g. education, health and
welfare.

(8 x 1) (8)
1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number. No abbreviations,
acronyms or examples will be accepted.

1.3.1 The transmission of information by various types of technologies over wire, radio,
optical or other electromagnetic systems.
1.3.2 The long-distance transportation of a liquid or gas through a system of pipes.
1.3.3 The sector’ activities result in in wood being made into furniture, steel being made
into cars or textiles being made into clothes.
1.3.4 The internal facilities that make business activity possible e.g. communication,
transportation.
1.3.5 This policy aims to address the availability, accessibility and affordability of
broadband; the building of an information society; and promoting the uptake and
usage of broadband.
1.3.6 The sector that contributes the most to the GDP in South Africa and creates many
jobs.
(6 x 1) (6)

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SECTION B

SECTION B: TYPICAL EXAM QUESTIONS

QUESTION 2
: When the question requires you to “list” or “name”, you need not write a
sentence but merely the word or a phrase. This MUST be done in bullet
form. This types of questions are applicable for 2.1.1, 3.1.1 and 4.1.1

2.1 Name TWO kinds of primary sector activities. (2 x 1) (2)

2.2 Name any TWO component of communication infrastructure. (2 x 1) (2)
2.3 Name any TWO components of the secondary sector. (2 x 1) (2)
2.4 Name any TWO of South Africa’s four licensed mobile operators. (2 x 1) (2)
2.5 List TWO components of the secondary sector. (2 x 1) (2)
2.6 Name TWO types of workers found in the secondary sector. (2 x 1) (2)
2.7 Name any TWO commercial ports in South Africa. (2 x 1) (2)
2.8 List TWO types of transport modes found in South Africa. (2 x 1) (2)

QUESTION 3

These types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2.
Answers must be provided in full sentences; learners must ensure
that their answer addresses the question asked

3.1 Why is the primary sector important to the South African economy? (1 x 2) (2)
3.2 How important is an efficient infrastructure for the economy? (1 x 2) (2)
3.3 Why is Eskom working on a renewable energy programme that involves
independent power producers? (1 x 2) (2)
3.4 How can the primary sector contribute to the country’s economic growth?
(1 x 2) (2)
3.5 How does construction differ from manufacturing? (1 x 2) (2)
3.6 How would poor infrastructure at sea ports affect the South African economy?
(1 x 2) (2)

QUESTION 4

: All section B questions have TWO data interpretation questions – each

total 10 marks. Section B consist of Questions 2-4 not as numbered in this
document

DATA RESPONSE

4.1 Study the picture below and answer the questions that follow.

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Transport infrastructure

South Africa’s air and rail networks are the largest on the continent.
The country has an extensive rail network – the 14th longest in the
world connecting with networks in the sub-Saharan region. The coun
try’s rail infrastructure, which connects the ports with the rest of South
Africa, represents about 80% of Africa’s total.

4.1.1 Name any transport system used in South Africa in the above diagram. (1)
4.1.2 Which Agency maintains national and toll roads in South Africa? (1)
4.1.3 Explain the reason for government investing money in public transport. (2)
4.1.4 Why did the government introduce the Bus Rapid Transport (BRT) in South
Africa? (2)
4.1.5 What is the positive impact of the Taxi Recapitalisation programme? (2 x 2) (4)

4.2 Study the extract below and answer the questions that follow

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4.2.1 Name any ONE component of communication infrastructure. (1)

4.2.2 When does the South African fiscal year start? (1)
4.2.3 Briefly describe the term infrastructure. (2)
4.2.4 Explain the importance of communication infrastructure to businesses. (2)
4.2.5 How will the R100 billion long term investment affect the economy? (2 x 2) (4)

4.3 Study the information below and answer the questions that follow.

SOUTH AFRICA HAS A HIGHLY DEVELOPED INFRASTRUCTURE

Eskom, one of the world’s top energy providers in terms of output, exports power to
other African countries. Electricity in South Africa comes from coal, water and nuclear
power. In 2008, Eskom implemented a mass electrification programme to upgrade and
expand the county’s electricity infrastructure.
[Source: www.eskom.co.za]

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4.3.1 Name the national provider of electricity in South Africa. (1)

4.3.2 Mention ONE source of energy in South Africa. (1)
4.3.3 What is the role of NERSA? (2)
4.3.4 Why is Eskom the only supplier of electricity in South Africa? (2)
4.3.5 How does load-shedding negatively affect the economy? (2 x 2) (4)

4.4 Study the picture below and answer the questions that follow.

4.4.1 Name the primary sector presented in the above picture. (1)
4.4.2 Mention ONE other type of primary sector. (1)
4.4.3 Briefly describe the term primary sector. (2)
4.4.4 How is the primary sector linked with the secondary sector? (2)
4.4.5 Why is the contribution to GDP important in the primary sector? (2 x 2) (4)

4.5 Study the information below and answer the questions that follow

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4.5.1 Identify the tertiary activity in Gauteng which contributes the most to
South Africa’s economy? (1)
4.5.2 Give an example of personal service. (1)
4.5.3 Briefly explain the term tertiary economic activities. (2)
4.5.4 Why is tertiary sector becoming more important than primary and secondary
sector? (2)
4.5.5 How will a better infrastructure benefit the community of South Africa?
(2x2) (4)

QUESTION 5 Paragraph type questions – Middle Cognitive

TYPICAL EXAM QUESTIONS

: All section B questions have TWO 8 marks questions, numbered according

to questions not like in this document.

5.1 Discuss the tertiary sector as a component of GVA. (8)

5.2 Briefly explain the economic importance of ‘energy’ as part of South Africa’s
infrastructure. (8)
5.3 Discuss the economic importance of the secondary sector in the economy (8)
5.4 Briefly discuss the economic importance of the primary sector. (8)
5.5 Briefly explain exclusions in South Africa’s infrastructure. (8)

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QUESTION 6 Paragraph type questions – Higher cognitive

TYPICAL EXAM QUESTION: THESE HIGHER ORDER QUES-

TIONS REQUIRE THE LEARNERS TO USE HER/ HIS CRITICAL
THINIKING SKILLS.

Higher order questions are grounded in the content. These types of questions test critical thinking,
where candidates should be able to apply their knowledge, through logical reasoning and also have
an awareness of their current economic climate. Content (covered by discuss/examine/describe/ ana-
lyse/explain/evaluate/compare/assess/justify/construct/calculate) can be assessed as higher-order
questions. Answers will not necessarily be found in textbooks.

6.1 How does the cell phone industry help the poor to gain access to communication?
(8)
6.2 What has caused the ongoing energy crisis in South Africa since 2008? (8)
6.3 How important is transport infrastructure in the economy? (8)
6.4 What is the link (interaction) between the Primary and Tertiary sector? (8)
6.5 Analyse the economic importance of energy as part of South Africa’s
infrastructure. (8)
6.6 Analyse the importance of communication in the economy. (8)

SECTION C

ESSAY STRUCTURE

: All section C questions have TWO questions 5 & 6 NOT like in this docu-
ment. In the examination you will need to answer only one.

HINT: Section C – the long question, must be answered in FOUR sections: Introduc-
tion (definition), Body (headings and full sentences in bullets) additional part and
conclusion (summarising). The mark allocations for Section C is as follows:
MARK
STRUCTURE OF ESSAY: ALLOCATION:
Introduction Max 2
The introduction is a lower-order response.
• A good starting point would be to the main concept related to
the question topic
• Do not include any part of the question in your introduction.
• Do not repeat any part of the introduction in the body
• Avoid saying in the introduction what you are going to discuss
in the body
Body:
Main part: Discuss in detail/ In-depth discussion/ Examine/ Criti- Max 26
cally discuss/ Analyse / Compare/ Distinguish/ Differentiate/ Ex-
plain/ Evaluate
Additional part: Critically discuss/ Evaluate/ Critically evaluate/
Calculate/ Deduce/ Compare/ Explain Distinguish / Interpret/ Max 10
Briefly debate/ How/ Suggest/ Construct a graph

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Conclusion
Any Higher or conclusion include: Max 2
• A brief summary of what has been discussed without re-
peating facts already mentioned in the body
• Any opinion or value judgement on the facts discussed
• Additional support information to strengthen the discus-
sion/analysis
• A contradictory viewpoint with motivation, if required
• Recommendations
TOTAL 40

QUESTION 7

• Discuss the economic importance of the tertiary sector. (26 marks)

• How do the economic sectors link with one another? (10 marks)
[40]

QUESTION 8

• Discuss transport as one type of infrastructure in South Africa.

(26 marks)
• How did discrimination and exclusion affected the provision of
infrastructure before democratisation of the South African economy.
(10 marks)
[40]
QUESTION 9

• Discuss the importance of the secondary sector in an economy. (26 marks)

• How can the establishment of more labour-intensive industries benefit South
Africa? (10 marks)
[40]
QUESTION 10

• Discuss the economic importance of the primary sector in the economy.

(26 marks)
• Critically evaluate the programmes that try to redress the issue of land in South
Africa. (10 marks)
[40]

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TOPIC 2 – MICROECONOMICS:
CONTENT PROGRESSION – MICRO ECONOMICS

Grade 10 Grade 11 Grade 12

DYNAMICS OF MARKETS RELATIONSHIP BETWEEN MARKETS PERFECT MARKETS

The market as a phenomenon (demand and Analysis of the relationships between markets Examine the dynamics of perfect markets with
supply). Use graphs to illustrate the establish- - illuminate them with the aid of graphs. the aid of cost and revenue curves.
ment of prices and quantities.

PRODUCTION POSSIBILITY CURVE EFFECTS OF COST AND REVENUE IMPERFECT MARKETS

Description of the production possibility curves Explain and illustrate by means of graphs the Examine the dynamics of imperfect markets with
(reflecting on efficiencies) and explain how they effects of cost and revenue on prices and the the aid of cost and revenue curves.
reconcile choice and scarcity. levels of production.

PRICE ELASTICITY

Explanation of price elasticity’s and calculating

their values. Use graphs in presentation for illus-
trations.

PUBLIC SECTOR INTERVENTION MARKET FAILURE

The effects (in terms of prices and quantities) of Explain the reasons for and consequences of
the public sector’s involvement and intervention market failures, reflecting on the cost-benefit
in the market, with the aid of graphs. analysis.

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MICROECONOMICS
TOPIC 1 : RELATIONSHIP BETWEEN MARKETS
(WEEK 1-2)

MICROECONOMICS
RELATIONSHIP
BETWEEN MARKETS

EFFECTS OF COSTS &

REVENUES

PRICE ELASTICITIES

: When answering Section A – short question, it is important not to rush but

to read the questions carefully and to make sure you understand what the question is
asking. Always remember one alternative is completely wrong, one is nearly correct
and one is totally correct. It is easy to eliminate the completely wrong answer, but if
you do not read the question carefully the nearly correct answer will also appear cor-
rect. The answer will NEVER be two options. Only ONE option is correct. Your an-
swer will immediately be marked incorrect if you write TWO options.

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TOPIC 1: MICROECONOMICS: RELATIOSHIP BEWTEEN MARKETS

QUESTION 1 MULTIPLE CHOICE

1.1.1 One of the following phrases depicts demand relationships between substitutes
(ceteris paribus)
A. Decrease in prices of a product and an increase in demand of the substitute
product
B. Increase in the price of a product and an increase in demand of the substitute
product
C. Decrease in the price of a product and a decrease in the demand of the prod-
uct
D. Increase in price of a product and no increase in demand of the substitute
product

1.1.2 A market that exists when buyers and sellers meet to negotiate the exchange of
prohibited goods, is referred to as a/the … market.
A. Goods
B. Factor
C. Black
D. Capital

1.1.3 The … price is the price of one good expressed in terms of another.
A. nominal
B. index
C. percentage
D. relative
1.1.4 If the bank charges of FNB decreases, the demand for ABSA products will …
A. increase.
B. decrease.
C. stay the same.
D. stop.
1.1.5 The sacrifice that must be made of one item in favour of another, because of
scarcity, is known as …
A. opportunity costs.
B. scarcity costs.
C. cost of living.
D. standard costs.

1.1.6 Satisfaction derived from consuming a product is known as … utility.

A. Average
B. Marginal
C. Total
D. Average variable

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1.1.7 An ice cream cost R10 and a cold drink costs R30. If a consumer chooses to buy
the cold drink, what will his/her opportunity cost be?
A. 2 ice creams
B. 1 ice cream
C. 2 cold – drinks
D. 1 cold drink and 1 ice cream

1.1.8 Tennis balls and tennis racquets are ... products

A substitute
B heterogeneous
C homogeneous
D complementary

1.1.9 The price that is quoted for a good on the market and give signals to the
buyers is called … price.
A absolute
B relative
C real
D constant

1.1.10 If ‘A’ and ‘B’ are substitute goods, and the price of ‘B’ rises, demand for ‘A.’
A decrease
B remains the same
C remains unstable
D increases

1.1.11 Ice cream and ice cream cones are … products.

A substitute
B complementary
C homogeneous
D heterogeneous

1.1.12 An increase in the price of one product leads to an increase in the demand for an-
other product, means that these two are ... goods.
A complementary
B essential
C substitute
D same

1.1.13 ... price is the ratio between the price of a product and the prices of other
products.
A Market
B Absolute
C Basic
D Relative

1.1.14 When one decision is made, the next best alternative not selected is called …
A economic resources.
B opportunity cost.
C scarcity.
D. need.

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1.2 MATCHING COLUMNS

COLUMN A COLUMN B
1.2.1 Base year A. The market price is determined by the market
forces.
1.2.2 Markets
B. Legal rights which protect the inventor from
1.2.3 Complementary goods competition.

1.2.4 Price taker C. Ensure optimal allocation of scarce resources

1.2 5 Economies of scale D. The cross-price elasticity of demand is posi-

tive.
1.2.6 Duopoly
E. Price of one good compared to another good
1.2.7 Total costs that indicates opportunity cost.

1.2.8 Patents F. Change in price has no effect on supply

1.2.9 Monopolistic competi- G. Production costs decrease as outputs increase

tion
H. The point where the firm breaks even.
1.2.10 Deadweight loss
I. Controls the price of the product and tends to
1.2.11 Perfectly inelastic set the price for its own benefit.
supply
J. A combination of perfect and imperfect compe-
1.2.12 Cartel tition.

1.2.13 Oligopoly K. The market makes economic loss in the short

run.
1.2.14 Marginal revenue
L. Natural resources are not evenly distributed
1.2.15 Substitutes
M. TFC + TVC
1.2.16 Normal profit
N. Legal rights which protect the inventor from
1.2.17 Disutility competition.

1.2.18 Ped is greater than 1 O. The year in which an index starts.

1.2.19 Inferior goods P. The demand curve is kinked.

1.2.20 Relative price Q. Quantity produced is below socially efficient

level

R. They are jointly demanded.

S. Price elastic demand

T. A feeling of uselessness, a lack of utility.

U. Market structure dominated by two firms.

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COLUMN A COLUMN B

V. The change in the firm’s total revenue as a re-

sult of selling an extra unit of the output.

W. A good that has a negative income elasticity of

demand

X. An association of manufacturers or suppliers

formed to maintain high prices and restrict
competition.
( 20 x 1 ) (20)

HINT: Learners must know their concepts well, as this will assist in a better understand-
ing of the content in general. Leaners are encouraged to revise with these type of ques-
tions, that are found in Section A of the paper

1.1 CONCEPTS
1.3.1 The demand relationship between goods that are used in conjunction with each
other.
1.3.2 The price of a good or service, in terms of another good or service
1.3.3 The responsiveness of the quantity supplied of a product to a change in its price.
1.3.4. This good can be used in place of another good.
1.3.5 The opportunity cost of the use of all self-owned resources in the production of
goods and services.

: When the question requires you to “list” or “name”, you need not write a
sentence but merely the word or a phrase. This MUST be done in bullet
form. This types of questions are applicable for 2.1.1, 3.1.1 and 4.1.1

QUESTION 2
2.1 Give TWO examples of normal goods. (2)
2.2 List any TWO examples of complementary goods. (2)
2.3 Give TWO examples of substitute goods (2)

These types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2.
Answers must be provided in full sentences; learners must ensure that
their answer addresses the question asked

QUESTION 3
3.1 Why would a change in the price of a good influence consumers’ demand for that
specific good? (1x2) (2)
3.2 What effect will the increase of absolute prices have on the consumers’ spending
power? (1x2) (2)
3.3 How would decreasing relative prices influence people’s standard of living?
(2)

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All section B questions have TWO data interpretation questions –

each total 10 marks. Section B consist of Questions 2-4 not as
numbered in this document.

QUESTION 4

4.1 Study the graph below and answer the questions that follow.

MARKET FOR PETROL

D S1
PRICE
EE S

E2
P1

P E

S1
D
S

Q QUANTITY

4.1.1 What is depicted by the diagram above? (1)

4.1.2 What is the impact on the price and quantity of the shift in supply from
SS to S1S1? (1)
4.1.3 Explain the phrase inverse relationship. (2)
4.1.4 What may be the cause of a shift in supply from SS to S1S1? (2)
4.1.5 Draw the graph of the complement product (petrol) and indicate what
the reaction would be. (4)

4.2 Study the graph and answer the questions that follow

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4.2.1 Give an example of a substitute for milk? (1)

4.2.2 What happened to the price of milk? (1)
4.2.3 Why did the demand for milk shift from D1 to D2? (4)
4.2.4 Explain how the demand for a good is affected by the prices of its related goods.
Give examples. (4)

4.3 Study the graphs and answer the questions that follow

4.3.1 Describe complementary products. (2)

4.3.2 In your answer book, copy the graph for Good Y and illustrate graphically
the impact of an increase in price (from P0 to P1) of Good X on the complemen-
tary Good Y. (6)
4.3.3 Why is it important to the producer to understand the relationship between
complements? (2)

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4.4 Study the graph and answer the questions that follow

4.4.1 Name the price shift that takes place in the graph above. (1)
4.4.2 Give ONE reason for the shift in supply from SS to S1S1. (1)
4.4.3 Briefly describe the term complementary goods. (2)
4.4.4 Why would the increase in the price of substitute goods like I-Phone devices
cause an increase in the demand of Samsung devices? (2)
4.4.5 Illustrate the impact of an increase in the petrol price on a complementary
good, using a neatly labelled diagram. (4)

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4.5 Study the graphs and answer the questions that follow

4.5.1 Describe complementary products. (2)

4.5.2 Why is it important for the producer to understand the relationship between
complementary products? (2)
4.5.3 In your answer book, copy the graph for Good Y and illustrate graphically the
impact of an increase in price (from P0 to P1) of Good X on the complementary
Good Y. (6)

QUESTION 5 MIDDLE ORDER PARAGRAPH

5.1 Explain the relationship between product market and the factor market. (8)
5.2 With the aid of graphs, explain how an increase in demand of a product affects the
factor market. (8)
5.3 Use a well-labelled graph to explain how the demand curve of milk would respond
when the price of coffee decreases. (8)
5.4 With the aid of graphs show the effect on the price of cars if there is a
decrease in the supply of machinery and equipment to produce them. (8)
5.5 Explain how the demand for a good is affected by the prices of its related goods.
(8)

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QUESTION 6 HIGHER ORDER PARAGRAPHS

TYPICAL EXAM QUESTION: THESE HIGHER ORDER QUES-

TIONS REQUIRE THE LEARNERS TO USE HER/ HIS CRITI-
CAL THINIKING SKILLS.
Higher order questions are grounded in the content. These types of ques-
tions test critical thinking, where candidates should be able to apply their knowledge, through
logical reasoning and also have an awareness of their current economic climate. Content (cov-
ered by discuss/examine/describe/ analyse/explain/evaluate/compare/assess/justify/construct/calcu-
late) can be assessed as higher-order questions. Answers will not necessarily be found in text-
books.

6.1 With the aid of a graph, illustrate the effect of an increase in the price of beef when
consumers can substitute beef with chicken. (8)
6.2 Why would consumers react to price changes? (8)
6.3 Why are relative prices important for the Economy?
6.4 Evaluate the impact of the law of diminishing returns on the producer. (8)

SECTION C

TYPICAL EXAM QUESTIONS

ESSAY STRUCTURE

: All section C questions have TWO questions 5 & 6 NOT like in this docu-
ment. In the examination you will need to answer only one.

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HINT: Section C – the long question, must be answered in FOUR sections: Introduc-
tion (definition), Body (headings and full sentences in bullets) additional part and
conclusion (summarising). The mark allocations for Section C is as follows:
MARK ALLO-
STRUCTURE OF ESSAY:
CATION:
Introduction Max 2
The introduction is a lower-order response.
• A good starting point would be to the main concept related to
the question topic
• Do not include any part of the question in your introduction.
• Do not repeat any part of the introduction in the body
• Avoid saying in the introduction what you are going to discuss
in the body
Body:
Main part: Discuss in detail/ In-depth discussion/ Examine/ Criti- Max 26
cally discuss/ Analyse / Compare/ Distinguish/ Differentiate/ Ex-
plain/ Evaluate
Additional part: Critically discuss/ Evaluate/ Critically evaluate/
Calculate/ Deduce/ Compare/ Explain Distinguish / Interpret/ Briefly Max 10
debate/ How/ Suggest/ Construct a graph
Conclusion
Any Higher or conclusion include: Max 2
• A brief summary of what has been discussed without repeat-
ing facts already mentioned in the body
• Any opinion or value judgement on the facts discussed
• Additional support information to strengthen the discus-
sion/analysis
• A contradictory viewpoint with motivation, if required
• Recommendations
TOTAL 40

RELATIONSHIP BETWEEN MARKETS

QUESTION 7

• Explain the demand side relationships with the aid of graphs and examples.
(26)
• Why is it important for the product market to consider what is happening in
the factor market? (10)

QUESTION E.G
With the aid of clearly labelled graphs and using typical examples of substitute
goods in both production and consumption, discuss demand and supply relation-
ships. (26)

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MICROECONOMICS
TOPIC 2: DYNAMICS OF MARKETS
EFFECTS OF COSTS & REVENUES (WEEK 3 – 4)

Concept / Term Definition / Description

Absolute price The price the consumer pays for goods and services in rand and
cents
Complement Two or more goods that are connected in some manner to each other
and can be used together
Complementary Goods that are used with another good; an increase in the price of the
goods one will result in a decrease in the demand for the complementary
product
Demand The quantity bought by customers at different prices
Economic profit The enterprise earns more profit than it could earn elsewhere employ-
ing the same factors of production
Factor market Markets where factors of production are sold to the producers in the
enterprises
Goods market Markets where the final goods are exchanged between producers and
consumers
Heterogenous Products differ
products
Homogenous The product of one producers is indistinguishable from that of another
products (products are the same)
Imperfect mar- These are the monopolistic competitors, oligopoly and monopoly, that
kets are not part of the perfect markets
Law of demand When prices increase the quantity demanded dropped, when prices
drops the demand increases
Law of supply When prices increase, the quantity supplied rises: when prices drop,
the supply drops
Market structures Describe the different levels and forms of competition
Monopolies A monopoly exists if there is only a single seller of a product of which
there are no close substitutes
Monopolistic Is a market composed of a number of producers whose
competition
Nominal prices The price you see on goods and those that are quoted for services
Oligopolies An oligopoly is a market composed of only a small number of
dominant producers, whose pricing decisions are interdependent
Perfect market Represents the ideal level of competition
Price takers It is sellers who do not believe they can control the markets price by
varying its own production levels
Relative price The price of one good or services in terms of another, expressed as a
ratio of two prices, the price of goods compared to other goods
Substitute goods Goods that can be used instead of another product, a change in the
price of the one will result in an increase/decrease of the other
Substitutes Products that are so similar that they can be bought instead of the
original good
Supply The quantity that producers are willing and able to sell at a certain
price and time

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SECTION A: TYPICAL EXAM QUESTIONS

DYNAMICS OF MARKETS
QUESTION 1: Section A – Short Questions
HINT: When answering Section A – short question, it is important not to rush but to
read the questions carefully and to make sure you understand what the question is
asking. Always remember one alternative is completely wrong, one is nearly correct
and one is totally correct. It is easy to eliminate the completely wrong answer, but if
you do not read the question carefully the nearly correct answer will also appear cor-
rect. The answer will NEVER be two options. Only ONE option is correct. Your an-
swer will immediately be marked incorrect if you write TWO options.

1.1 Various options are provided as possible answers to the following ques-
tions.
Choose the answer and write only the letter (A–D) next to the question num-
ber.

1.1.1 All other things being equal, supply curves slope upwards from left to right
because …
A. higher prices lead to higher profits.
B lower prices lead to higher output.
C lower prices lead to higher demand.
D middle prices lead to lower output.

1.1.2 In imperfect markets, fewer goods are produced at higher prices because
A there is constant allocation of resources.
B there is effective resource allocation
C there is ineffective resource allocation.
D there are no legal restrictions

1.1.3 What would be the economic profit if you had revenue of R10 000, explicit costs of
R6 000 and implicit costs of R2 500?
A 10 000
B 1 500
C 500
D 15 000

1.1.4 The following are examples of firms in oligopoly:

A MTN, Absa, Engen
B NIKE, McDonald’s, BMW
C KFC, Samsung, Romans Pizza
D Shoprite, Checkers, Pick n Pay

1.1.5 Many firms selling heterogeneous products are referred to as …

A monopolies.
B oligopolies.
C monopolistic competition.
D perfect competition.

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1.1.6 The demand curve for a monopolistic competition is ...

A horizontal.
B vertical.
C downward-sloping.
D upward-sloping.

1.1.7 The market where final goods and services that are locally produced are sold to
consumers is the ...
A money markets.
B goods market.
C international market.
D financial market.

1.1.8 Firms that determine their own prices are called price …
A takers.
B makers.
C negotiators.
D searchers.

1.1.9 Resources that may become exhausted if they are not managed in a sustainable
manner are known as … resources.
A natural
B non-renewable
C man-made
D renewable

1.1.10 Profit maximisation point is where ...

A. MC = AR
B. MC = MR
C. AC = MR
D. AC = AR
1.1.11 Monopolies produce goods that are … in nature.
A. homogenous
B. differentiated
C. good
D. unique
1.1.12 The oligopolist is a …
A. Price-searcher
B. Price-taker
C. Price –leader
D. Price giver

1.1.13 As a rule, the firm should shut down when …

A. MC = AVC
B. MC = ATC
C. MR = MC
D. AR = AC

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1.1.14 The AR curve is always above the MR curve because …

A. AR is more inelastic than MR
B. MR is more elastic than AR
C. AR is more elastic than MR
D. MR is more inelastic than AR

1.1.15 The … curves resemble the demand curve.

A. MC and AC
B. AR and AC
C. MC and MR
D. MR and AR

1.1.16 Which of the following is not a characteristic of a perfect market?

A. Few participants
B. Participants fully knowledgeable about prices
C. No barriers to entry and exit
D. Participants are price takers

1.1.17 Collusion is a common practice in …

A. Perfect markets
B. Monopolistic markets
C. Monopoly
D. Oligopoly

1.1.18 The graph below indicates…

A. profit of a perfect market.

B. loss of a perfect market.
C. profit of a monopoly.
D. loss of a monopoly.

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1.1.19 The minimum earnings that will prevent the entrepreneur from leaving
the business.
A. Economic profit
B. Economic loss
C. Normal profit
D. Normal loss

1.1.20 Price wars are characteristics of this type of market.

A. Monopolistic competition
B. Monopoly
C. Perfect
D. Oligopoly

1.1.21 Costs that change as production changes are called …

A. Fixed costs.
B. Variable costs.
C. Average costs.
D. Total costs.
1.1.22 A stage in which the long-run average cost curve (LRAC), where
production neither increase or decreases is known as …
A. economies of scale.
B. diseconomies of scale.
C. no returns to scale.
D. constant returns to scale.

1.1.23 The total cost curves always starts at …

A. 0
B. The same place total fixed cost starts
C. The same place total variable cost starts
D. The same place total revenue starts

1.1.24 Profit maximisation is where the vertical distance between … and TC

is the biggest.
A. TFC
B. TVC
C. MC
D. TR

1.1.25 Additional cost paid by the firm for every additional unit produced.
A. Marginal profit
B. Marginal revenue
C. Average cost
D. Marginal cost

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1.1.26 When one country can produce a good using fewer resources than another coun-
try, it has … advantage in the production of that good.
A absolute
B dual
C relative
D comparative cost

1.1.27 The dynamics of economies starts with …

A production.
B prices.
C markets.
D consumption.

1.1.28 Freedom of entry is a characteristic of … markets.

A perfect
B perfect and monopolistic
C monopolistic
D imperfect market

1.1.29 Selling differentiated products is a characteristic of a/an … market.

A monopoly
B perfect
C oligopolistic
D monopolistic

1.2 Choose a description from COLUMN B that matches the item in COLUMN
A. Write only the letter (A-Q) next to the question number (1.2.1 –1.2.17) in
the ANSWER BOOK.

COLUMN A COLUMN B
1.2.1 Relative prices A Able to influence the market price through
changing the quantity it supplies to the market.
1.2.2 Inferior goods B Barriers to enter the market.
1.2.3 Product market C Goods and services are traded.
1.2.4 Price maker D Period long enough to change the inputs.
1.2.5 Patent E Few large sellers dominating the market.
1.2.6 Business objective F barriers protect them from competition by
other businesses.
1.2.7 Long term G goods offered for sale at a given price.
1.2.8 Supply H Legal barrier to entry.
1.2.9 Monopolies I Increase in income leads to smaller quantities
demanded of these goods.
1.2.10 Oligopoly J Facilitates the purchase and sale of services of
factors of production, which are inputs like labour,
capital, land and entrepreneurship that are used by
a firm to make a finished product.
1.2.11 License K Comparison between prices of goods.
1.2.12 Factor market L Making as much profit as possible.
1.2.13 Absolute benefit M Any market that does not have all the
characteristics of a perfect market
1.2.14 Collusion N Businesses set and agree on prices
1.2.15 Duopoly O Powerful competitors try to take over each other’s
market share by progressively reducing prices

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COLUMN A COLUMN B
1.2.16 Imperfect market P Appear when a country can produce more of a
product than another country using the same
amount of resources
1.2.17 Price war Q Market structure dominated by two firms

HINT: Learners must know their concepts well, as this will assist in a better understand-
ing of the content in general. Leaners are encouraged to revise with these type of ques-
tions, that are found in Section A of the paper

1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number. No abbreviations
will be accepted.

1.3.1 The price of a good or service, in terms of another good or service

1.3.2 Many buyers and sellers selling differentiated products.
1.3.3 A period whereby only one factor of production can be varied.
1.3.4 Minimum earnings that will prevent an entrepreneur from employing its fac-
tors of production elsewhere.
1.3.5 The marketplace in which final goods or services are offered for purchase by
consumers, businesses, and the public sector
1.3.6 An increase in income causes a decrease in demand for this good.
1.3.7 Demand curve for an oligopoly.
1.3.8 When firms do branding, advertising, product differentiation, extend shopping
hours.
1.3.9 The rivalry among sellers trying to achieve such goals as increasing profits,
market share, and sales volume by varying the elements of the marketing
mix: price, product, distribution, and promotion
1.3.10 When consumers compare the cost of products with each other to ensure
value for money.
1.3.11 A platform where the quantities and prices of production inputs are negoti-
ated.
1.3.12 The number of customers that one firm has access to in relation to the other
firms in the market
1.3.13 Products that are not identical to other similar ones and have slight differ-
ences
1.3.14 A combination of perfect competition and imperfect competition
1.3.15 It states the inverse relationship between quantity demanded and prices
1.3.16 A situation where sellers enter into an agreement to limit competition and
increase financial gain.
1.3.17 The satisfaction gained from the consumption of a given quantity of goods.
1.3.18 A market structure in which one business has market power.
1.3.19 Burger King is an example of this market structure.
1.3.20 A market structure is very easy to enter and the products are homogenous.
1.3.21 The quantity where MR is equal to MC.
1.3.22 Cement is an example of a product sold in the market structure
1.3.23 The cost that changes according to the level of production
1.3.24 The sum of fixed costs and variable costs.
1.3.25 A market dominated by two firms

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1.3.26 A market structure in which all production of a good or service is done

by a single firm
1.3.27 Entry of new firms into the market is completely blocked
1.3.28 A period during which all factors of production are variable.
1.3.29 Satisfaction derived from consuming an additional unit of a good or service.
1.3.30 A period during which at least one factor of production is fixed.
1.3.31 Profit in excess of normal profit.

SECTION B

QUESTION 2:

HINT: When the question requires you to “list” or “name”, you need not write a sentence but
merely one or two words. This MUST be done in bullet form. This types of questions are ap-
plicable for 2.1.1, 3.1.1 and 4.1.1

2.1 Name any TWO monopoly industries in South Africa (2)

2.2 Give any TWO examples of monopolistic markets. (2)
2.3 List any TWO kinds of profit. (2)
2.4 Name any TWO factors that can cause a shift of the demand curve. (2)
2.5 Name (Give/List) TWO characteristics of perfect markets. (2)
2.6 List TWO objectives of business. (2)
2.7 Name any TWO monopoly industries in South Africa. (2)
2.8 List any TWO characteristics of perfect markets. (2)
2.9 Give any TWO examples of monopolistic markets. (2)
2.10 Give TWO derivatives calculated from Total Revenue. (2)
2.11 Name any TWO averages used to determine economic profit (2)
2.12 Name TWO barriers that prevent new businesses from entering a monopoly
market. (2)
2.13 Give TWO examples of fixed costs in the short run. (2)
2.14 Name any TWO Oligopoly industries in South Africa. (2)
2.15 List any TWO methods of non-price competition. (2)
2.16 Give any TWO examples of fixed costs in the short-run. (2)

QUESTION 3:

These types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2.
Answers must be provided in full sentences; learners must ensure that
their answer addresses the question asked

3.1 What would encourage a producer to continue increasing its production? (2)
3.2 How does an increase in demand affect the price of a good/service? (2)
3.3 Why is it important for businesses to set goals? (2)
3.4 What makes it impossible for an individual producer in perfect competition to
make an economic profit in the long run? (2)
3.5 How is non-price competition an advantage for a perfect competitor? (2)
3.6 Why is the demand curve for a perfect competitor horizontal? (2)
3.7 Why is it impossible for a monopoly to collude? (2)
3.8 Why is the demand curve of a monopolist sloping downwards? (2)
3.9 What is the implication of the Law of supply? (2)

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3.10 How do product and factor markets relate to one another? (2)
3.11 Explain what is meant by excess demand. (2)
3.12 Explain the role of the monopoly as a price maker (2)
3.13 Why does the average fixed-cost curve slope downwards from left to right?
(2)
3.14 How do imperfect market structures occur? (2)
3.15 Why will consumers benefit more under perfect competition than under a
monopoly? (2)
3.16 Why does the AR curve always lie above the MR curve? (2)
3.17 How do imperfect market structures occur? (2)

DATA RESPONSE

HINT: All section B questions have TWO data interpretation questions – each total 10
marks. Section B consist of Questions 2-4 not as numbered in this document

QUESTION 4:

4.1. Study the extract below and answer the following questions:

THREE MONOPOLIES THAT SOUTH AFRICA SHOULD END

Entities that are protected by legislation morph into monopolies, resulting in lim-
ited competition. Time and time again, these legislated monopolies bank on the
taxpayer’s rands to bail them out of the repercussions of what seems to be
chronic underperformance. Below is a list of industries that are overshadowed
by state-run monopolies that, if deregulated and privatised, will yield far greater
returns to the citizens of South Africa.
➢ Aviation
➢ Energy Supply
➢ Railways

4.1.1 Identify ONE of the three state monopolies implied in the extract (1)
4.1.2 How are monopolies protected? (1)
4.1.3 Describe the term monopoly. (2)
4.1.4 Why do you think South Africa should end the monopolies mentioned
above in the above extract? (2)
4.1.5 Explain the disadvantages of the monopolies (4)

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4.2 Study the extract below and answer the questions that follow:

OLIGOPOLIES

A few large oligopolies dominate an oligopoly market, i.e. just a few handset
manufacturing companies dominate the cell network of South Africa. The
products are similar, and sold by a few companies. Moreover, the products
are branded due to extreme competition, and because there are huge long-
term entry barriers, the companies make exorbitant profits. The competing
companies have an unusual interdependence, to the point that they almost
operate in unison.

[Adapted from Markitects./co.za]

4.2.1 From the extract, list any ONE feature of an oligopoly (1)
4.2.2 What other economic term describes the nature of the product sold by
oligopolies? (1)
4.2.3 Explain the term entry barrier (2)
4.2.4 Why do firms collude with one another? (2)
4.2.5 How does branding assist a company operating in an oligopoly market
structure? (4)

4.3 Study the graph and answer the questions that follow

4.3.1 Which market structure is depicted above? (1)

4.3.2 What type of profit is indicated in the above graph? (1)
4.3.3 Briefly explain point ‘e’ on the graph. (2)
4.3.4 Explain the slope of the marginal cost curve. (2)
4.3.5 Why are MR and AR equal in the graph? (4)

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4.4 Study the graph and answer the questions that follow

4.4.1 What does the shaded area in the graph represent? (1)
4.4.2 Which point on the graph illustrates profit maximisation? (1)
4.4.3 Briefly describe the term monopoly. (2)
4.4.4 Explain entry as a feature of a monopoly. (2)
4.4.5 Use the information from the graph, calculate the profit or loss.
Show ALL calculations. (4)

4.5 Study the scenario below and answer the questions that follow

4.5.1 What should be the main focus of ACSA? (1)

4.5.2 Identify ONE of the South African Airways competitors. (1)
4.5.3 Briefly explain the term competition (2)

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4.5.4 How did the introduction of competition benefit the airline? (2)
4.5.5 Would you describe the taxi industry in South Africa as a monopoly?
Explain. (4)

4.6 Read the extract below and answer the questions that follow

4.6.1 Which market structure is represented by the extract above? (1)

4.6.2 Name any ONE method of non-price competition. (1)
4.6.3 Briefly describe the term differentiated products. (2)
4.6.4 Why do firms benefit from collusion? (2)
4.6.5 How does branding and brand loyalty impact new entrants such as T-Touch
mobile to the market? (4)

4.7 Study the graphs and answer the questions that follow

4.7.1 Describe the shape of the individual firm's demand curve. (1)
4.7.2 Name the market price in the graphs above. (1)
4.7.3 Briefly explain what long-run cost of a business is. (2)
4.7.4 Why is a firm in the perfect market a price taker? (2)
4.7.5 How is the price of a perfect market influenced in the long run? (2 x 2) (4)

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4.8 Study the graph below and answer the questions that follow:

4.8.1 Which market structure is depicted by the graph above? (1)

4.8.2 What type of profit is being made by this firm? (1)
4.8.3 Briefly describe the term profit maximization. (2)
4.8.4 Why should Eskom always make an economic profit? (2)
4.8.5 Determine this firm’s economic loss/profit. SHOW ALL CALCULATIONS. (4)

4.9 Study the picture and answer the questions that follow

4.9.1 Why would an entrepreneur choose to operate in a monopolistically competitive

market? (1)
4.9.2 What kind of profit can these competitors make in the short run? (1)
4.9.3 Based on the cartoon, give TWO characteristics of monopolistic competition.
(2)

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4.9.4 Name TWO similarities between a perfect competitor and a monopolistic competi-
tor in the long run. (2x1) (2)
4.9.5 How can the two competitors depicted in the cartoon compete? Give examples.
(2x2) (4)

4.10 Read the extract and answer the questions that follow

4.10.1 Which company involved in a takeover mentioned above is a South African com-
pany? (1)
4.10.2 In which industry is the above-mentioned company they involved in? (1)
4.10.3 Name TWO examples of oligopoly industries mentioned in the article above.
(2)
4.10.3 Briefly describe the term cartels. (2)
4.10.4 What effect does “uncompetitive industries” have on the economy? Substantiate
your answer. (4)

4.11 Study the graph and answer the questions that follow

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4.11.1 Identify the market structure above. (1)

4.11.2 What is the market price? (1)
4.11.3 What type of profit will the above-mentioned market structure make in the long
term? (2)
4.11.4 Determine whether this business makes a normal/ economic profit or a loss. Show
ALL calculations. (6)

4.12 Study the table below and answer the questions that follow.
Price Quantity TR TC Profit
10 0 0 25 -25
10 5 A 30 20
10 10 100 35 65
10 15 150 40 B
10 20 200 45 155

4.12.1 Identify the market represented by the table. (1)

4.12.2 What is represented by the -25 in the profit column above? (1)
4.12.3 Determine the values of A and B. (2)
4.12.4 Why is there a value for TC when production (quantity) is zero? (2)
4.12.5 Present TR and TC on the same set of axes. (4)

4.13 Study the cartoon below and answer the questions that follow.

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Source: businessbookmail.com
4.13.1 Which market structure is illustrated in the cartoon above? (1)
4.13.3 What is the nature of the product in the cartoon? (1)
4.13.3 Briefly describe the concept collusion. (2)
4.13.4 Why is it more beneficial for firms to collude instead of engaging in competition?
(2)
4.13.5 Evaluate the impact price fixing has on the poor? (4)

4.14 Study the graph below and answer the questions that follow.

4.14.1 Identify the profit maximisation quantity in the graph above. (1)
4.14.2 Which curve is also known as the supply curve? (1)
4.14.3 Define the term marginal revenue. (2)
4.14.4 Why is the MC curve of a monopoly not intersecting the ATC at the minimum
point? (2)
4.14.5 Determine whether the firm represented in the above graph is making a profit
or a loss. (4)

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4.15 Study the graph below and answer the questions that follow.

4.15.1 Which market structure is represented by the graph? (1)

4.15.2 What does the shaded area represent? (1)
4.15.3 Briefly explain the concept price taker. (2)
4.15.4 Why is the demand curve of this market structure a horizontal line? (2)
4.15.5 Explain why a perfect market firm makes normal profit in the long run? (4)

HINT: All section B questions have TWO 8 marks questions, numbered according to ques-
tions not like in this document.

QUESTION 5 Paragraph type questions – Middle Cognitive

Each question count 8 marks – thus you must give at least 4 facts

All section B questions have TWO 8 marks questions. One is a Middle

order paragraph, the other is a Higher order paragraph

5.1. Differentiate between product market and factor market. (8)

5.2 Examine the implication of ‘non price competition’ in oligopolies. (8)
5.3 Briefly discuss nature of the product and price control as characteristics of
monopolistic competition. (8)
5.4 Discuss barriers to entry and collusion as some of the determinants of market
structures. (8)
5.5 Briefly explain the characteristics of an oligopoly. (8)
5.6 Briefly discuss the SMART principle in designing the objectives of business.
(8)
5.7 Briefly discuss nature of the product and entry as characteristics of a perfect
markets. (8)
5.8 Distinguish between natural and artificial monopolies. (8)

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5.9 Discuss competition and transport and communication as characteristics of

perfect markets. (8)
5.10 Discuss non-price methods to increase market share. (8)
5.11 Examine the disadvantages of a monopoly as a market structure. (8)
5.12 Explain interdependence of firms and non-price competition as characteristics of
an oligopoly. (8)
5.13 Discuss FOUR characteristics of a perfect market. (8)
5.14 What would producers benefit by producing at a level that allows them to
experience economies of scale. (8)
5.15 With the aid of a formula, explain the relationship between average and
marginal revenue when price is constant at all levels of output. (8)
5.16 With the aid of graphs explain the type of demand curve, type of profit and
profit maximizing points of the oligopolist and the monopolistic firm. (8)
5.17 Compare Perfect competition and the Monopoly in terms of entry and price
control. (8)
5.18 Briefly explain how oligopolies can increase their market share. (8)
5.19 Compare the nature of the product and ease of entry, as characteristics
of a perfect market, with that of an oligopoly. (8)
5.20 Discuss non-price methods to increase market share. (8)
5.21 Briefly discuss the demand curve of the monopolist. (8)
5.22 Distinguish between TWO types of profit. (8)
5.23 Discuss the characteristics of monopolistic competitor. (8)
5.24 Explain the terms price makers and completely blocked entry in terms of
a monopoly. (8)
5.25 Discuss the impurities in perfect markets. (8)
5.26 Distinguish between natural and artificial monopolies.
5.27 Differentiate between accounting profit and economic profit. (8)
5.28 Distinguish between Fixed costs and Variable costs. (8)
5.29 Discuss the characteristics of monopolistic competition. (8)

QUESTION 6 Paragraph type questions – Higher cognitive

TYPICAL EXAM QUESTION: THESE HIGHER ORDER QUES-

TIONS REQUIRE THE LEARNERS TO USE HER/ HIS CRITICAL
THINIKING SKILLS.

Higher order questions are grounded in the content. These types of questions test critical thinking,
where candidates should be able to apply their knowledge, through logical reasoning and also have
an awareness of their current economic climate. Content (covered by discuss/examine/describe/ ana-
lyse/explain/evaluate/compare/assess/justify/construct/calculate) can be assessed as higher-order
questions. Answers will not necessarily be found in textbooks.

6.1 How can changes in the product market effect the factor market? (8)
6.2 How can fast food outlets, namely KFC and Nando’s, compete without using
market price? (8)
6.3 Examine the positive impact of competition on markets. (8)
6.4 How would collusion between companies negatively impact on the consumers?
(8)

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6.5 How do legal barriers prevent new businesses from entering a specific type
of market?
6.6 Why is collusion among Oligopolists illegal? (8)

SECTION C

HINT: All section C questions have TWO questions 5 & 6 NOT like in this document. In the
examination you will need to answer only one.

TYPICAL EXAM QUESTIONS

ESSAY STRUCTURE

: All section C questions have TWO questions 5 & 6 NOT like in this docu-
ment. In the examination you will need to answer only one.

HINT: Section C – the long question, must be answered in FOUR sections: Introduc-
tion (definition), Body (headings and full sentences in bullets) additional part and
conclusion (summarising). The mark allocations for Section C is as follows:
MARK ALLO-
STRUCTURE OF ESSAY:
CATION:
Introduction Max 2
The introduction is a lower-order response.
• A good starting point would be to the main concept related to
the question topic
• Do not include any part of the question in your introduction.
• Do not repeat any part of the introduction in the body
• Avoid saying in the introduction what you are going to discuss
in the body
Body:
Main part: Discuss in detail/ In-depth discussion/ Examine/ Criti- Max 26
cally discuss/ Analyse / Compare/ Distinguish/ Differentiate/ Ex-
plain/ Evaluate
Additional part: Critically discuss/ Evaluate/ Critically evaluate/
Calculate/ Deduce/ Compare/ Explain Distinguish / Interpret/ Briefly Max 10
debate/ How/ Suggest/ Construct a graph
Conclusion
Any Higher or conclusion include: Max 2
• A brief summary of what has been discussed without repeat-
ing facts already mentioned in the body
• Any opinion or value judgement on the facts discussed
• Additional support information to strengthen the discus-
sion/analysis

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• A contradictory viewpoint with motivation, if required

• Recommendations
TOTAL 40

[40]
QUESTION 7

(MARKET STRUCTURES) 40 MARKS

• Discuss in detail the characteristics of a perfect market. (26)
• Examine the positive impact of competition on markets. (10)
A maximum of 8 marks allocated for headings/sub-headings and examples)

QUESTION 8
(MARKET STRUCTURES) 40 MARKS
• Discuss in detail the characteristics of a perfect market. (26)
• Briefly highlight how the perfect market differs from that of a monopolistic market.
(10)

QUESTION 9
(MARKET STRUCTURES) 40 MARKS
• Discuss in detail the characteristics of a perfect market (26)
• Examine the positive impact of competition on markets. (10)

QUESTION 10

• Discuss the FOUR broad types of market structures. (26)

• Determine which market structure KFC operates in and give a reason for your an-
swer. Draw a graph that shows economic profit for KFC. (10)

QUESTION 11
• Discuss in detail the characteristics of an oligopoly. (26)
• Use a graph and explain why oligopolists are reluctant to compete on prices.
(10)

QUESTION 12
• Discuss the Oligopoly as an imperfect market structure and pay specific attention
to its characteristics and general behaviour. (26)
• Why is collusion among Oligopolists illegal? (10)
[40]

QUESTION 13
• Compare in detail, the features of a monopoly with those of monopolistic competi-
tion. (26 marks)
• Why would government support or license monopolies? (10 marks)
[40]

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QUESTION 14

• Discuss in detail the characteristics of an oligopoly. (26 marks)

• Explain without the use of a graph why oligopolies are reluctant to compete based
on price. (10 marks)

QUESTION 15
• Compare the market structure of a perfect with that of a monopoly (in detail)
using the characteristics. ( No graphs required) (26 marks)
• With reference to the graphs, explain how the price formation process
takes places in the perfect market. (10 marks)

QUESTION 16
• Compare the market structure of a the oligopoly with that of a monopoly (in detail)
using the characteristics. ( No graphs required) (26 marks)
• With the aid of a graph, explain fully the graph of an oligopolist. (10 marks)

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MICROECONOMICS
TOPIC 3: ELASTICITIES (WEEK 5 TO 6)

TERM DESCRIPTION
Ceteris paribus If all other factors remains the same
Complements Two or more products that are connected in some manner to each
and can be used together, e.g. bread and butter
Consumer equilib- When consumer make choices about quantity of goods and services
rium it is presumed that the objective is maximum total utility
Cross elasticity of This is the relationship between changes in the price of one product
demand and the resulting changes in the quantity demanded of another prod-
uct.
Demand The quantity bought by customers at different prices
Elasticity This is a measure of responsiveness or sensitivity
Income elasticity Measures the responsiveness of the quantity demanded against
changes in income
Income elasticity of It shows how sensitive the demand for a good is to change in in-
demand come
Inelastic Inelastic is an economic term used to describe the situation in which
the quantity of a good or service is unaffected when the price of that
good or service changes.
Inferior goods Negative income elasticity of demand as the income of consumers
rises, less demanded of these goods at each price level
Law of demand The principle that a higher price for a good or a service, other things
equal, leads people to demand a smaller quantity of that good or
service
Law of diminishing States that as a person increase consumption of a product there is a
marginal utility decline in the marginal utility that the person derives from consum-
ing each additional unit of that product
Luxury goods Goods that are not necessities, the change in income is less than
the change in the quantity demanded of these goods
Marginal utility (MU) The utility of an additional unit consumed / It is the additional satis-
faction a consumer gains from one more unit of a good or service
Negative marginal It is when the consumption of an additional item decrease the total
utility utility
Normal goods More is demanded of these goods at each price level as the income
of consumers rises
Positive marginal It is when the consumption of an additional item increases the total
utility utility
Price discrimination The practice of charging different prices to different sets of custom-
ers according to difference in price
Price elasticity of Measured in % so we will be dealing with %change in price and the
demand quantity demanded
Price elasticity of It measures the responsiveness of quantity supply to changes in
supply price.
Substitutes Products that are so similar that they can be bought or used instead
of the original good
Total utility (TU) It is the amount of satisfaction a consumer gains from consuming a
given quantity of output
Utility The satisfaction received from consuming a good or a service

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𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝐷𝑒𝑚𝑎𝑛𝑑𝑒𝑑

𝑃𝑟𝑖𝑐𝑒 𝑒𝑙𝑎𝑠𝑡𝑖𝑐𝑖𝑡𝑦 𝑜𝑓 𝑑𝑒𝑚𝑎𝑛𝑑 =
𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑃𝑟𝑖𝑐𝑒
Formula 2
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝐷𝑒𝑚𝑎𝑛𝑑𝑒𝑑 𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑃𝑟𝑖𝑐𝑒
𝑃𝑟𝑖𝑐𝑒 𝑒𝑙𝑎𝑠𝑡𝑖𝑐𝑖𝑡𝑦 𝑜𝑓 𝑑𝑒𝑚𝑎𝑛𝑑 = x
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑃𝑟𝑖𝑐𝑒 𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑄𝑢𝑎𝑛𝑖𝑡𝑦

There are five elasticity forms:

Elasticity form Value (meaning)
Perfectly elastic demand x=∞
Relatively elastic demand 1<x<∞
Elasticity of 1 (unitary elasticity) x=1
Relatively inelastic demand 0<x<1
Perfectly inelastic x=0

PRICE ELASTICITY OF DEMAND

Price elasticity of demand can be distinguished into 5 categories

• Perfectly inelastic demand
• Inelastic demand
• Unitary elasticity of demand
• Elastic demand
• Perfectly elastic demand

Degrees and curves of price elasticity of demand

PERFECTLTY ELASTIC DEMAND CURVE

Curve and value Explanation
• There is an infinite amount at a certain
price and smallest change in price results
to a large change in quantity demanded.
• Consumers are willing to buy any quan-
tity at certain price
• It is also referred to as infinite elasticity.
(PED = ∞)
• The price elasticity of demand is ∞.
• To improve revenue always increase
price never decrease
• This concept is theoretical and there is
not really an example

PERFECTLY INELASTIC DEMAND

Curve and value Explanation
• There is no change in demand with
change in price
• This shows that consumers plan to buy a
fixed amount of the product,

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irrespective the price

• Its referred to as perfectly inelastic

• The price elasticity of demand is zero
(PED = 0)
• It implies a change in price will cause
no change in the quantity that con-
sumers demand
• The curve is a vertical line, which means
that, no matter how price will change,
the demand will stay the same
• Though it’s a theoretical concept it can
be applied to
• Petrol – people continue to buy as much
as before even if there is an increase as
there is no substitute for petrol

RELATIVELY ELASTIC DEMAND CURVE

Curve and value Explanation

• Occurs when the change in quantity
demanded is more than the percent-
age change in price
• The demand for such commodity is
said to be elastic. PED›1.
• The relative elastic demand curve is
flatter and its slope is inclined more to-
wards the quantity-axis
• Price elasticity is greater than one, but
less than infinity 
• To improve revenue price should be
reduced

RELATIVELY INELASTIC DEMAND CURVE

Curve and value Explanation
• Occurs when quantity demanded is
less than percentage change in price
(does not respond as strongly to
changes in price)
• Price elasticity is less than one but
greater than zero (Value of PED is be-
tween 0 and 1)
• The curve is steeper and its slope is in-
clined more towards price-axis
• To improve revenue, prices should be
increased

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• Examples are cigarettes and alcohol as

these are habit forming and users are
only very slightly sensitive to changes in
price (Addiction)

UNITARY ELASTIC DEMAND CURVE

Curve and value Explanation

• When a percentage change in price

causes exactly the same percentage
change in quantity demanded
• PED = 1
• If a price increases by 10%, quantity de-
manded also increases by 10%
• The value of elasticity is equal to one
• Price changes have no effect on reve-
nue

HINT: Learners must know their concepts well, as this will assist in a better understanding
of the content in general. Leaners are encouraged to revise with these type of questions,
KNOW THE DEFINITION AND THE GRAPH ASSOCIATED WITH IT. Practice the draw-
ing of these basic elastic curves, it will come in handy in Grade 12

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SECTION A: TYPICAL EXAM QUESTIONS

QUESTION 1: Section A – Short Questions

HINT: When answering Section A – short question, it is important not to rush but to
read the questions carefully and to make sure you understand what the question is
asking. Always remember one alternative is completely wrong, one is nearly correct,
and one is totally correct. It is easy to eliminate the completely wrong answer, but if
you do not read the question carefully the nearly correct answer will also appear cor-
rect. The answer will NEVER be two options. Only ONE option is correct. Your an-
swer will immediately be marked incorrect if you write TWO options.

1.1 Various options are provided as possible answers to the following ques-
tions. Choose the answer and write only the letter (A–D) next to the question num-
ber.

1.1.1 A change in the quantity requested as a result of a change in income is referred

to as … elasticity.
A price
B income
C offer
D supply and income

1.1.2 A positive value of cross elasticity of demand will …

A. move in the opposite direction to price.
B not be influenced by price.
C move in the same direction as price.
D be independent of the related goods.

1.1.3 Total utility can be defined as …

A difference in measurements of utility.
B satisfaction gained from consuming the last unit.
C measure of the value of satisfaction.
D total satisfaction gained by adding up all utils.

1.1.4 If the price of a packet of cigarettes has gone up, the quantity demanded also
goes up then the demand for cigarettes is …
A perfectly elastic.
B elastic.
C inelastic.
D unitary elastic.

1.1.5 An economic term used to describe the situation in which the quantity of a good or
service is unaffected when the price of that good or service changes

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A inelastic
B elastic
C elasticity
D unitary elastic

1.1.6 The income elasticity of demand for an inferior good, for example paraffin, will
be…
A less than 0
B equal to 1
C greater than 1
D less than 1

1.1.7 Elasticity of income is ... if Ey = 0

A relatively inelastic
B relatively elastic
C completely inelastic
D completely elastic

1.1.8 The responsiveness of the quality demanded of a particular good against changes
in the price of a related good is deferred to as ... elasticity.
A price
B income
C supply
D cross

1.1.9 Satisfaction derived from consuming a product is own as ... utility

A average
B marginal
C total
D average variable price

1.1.10 The effect of brand loyalty is to make the demand for the product more price ...
A elastic.
B inelastic.
C unitary elastic.
D perfectly elastic.

1.1.11 A change in quantity demanded due to change in income is referred to as …

elasticity
A income
B supply
C supply and income
D cross

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1.1.12 One of the following is amongst the factors that determine price elasticity of de-
mand.
A Availability of natural resources
B Capital goods
C Time
D Increase in risk

1.1.13 The greater the proportion of the consumer’s income spent on the product, the
more price ... the demand for it is.
A elastic
B inelastic
C unit elastic
D perfectly inelastic

1.1.14 The satisfaction that we get from consuming goods and services is known as ...
A scarcity.
B utility.
C opportunity cost.
D necessity.

1.1.15 The effect of brand loyalty is to make the demand for the product more price …
A. Elastic.
B. Inelastic.
C. Unitary elastic.
D. Perfectly elastic.

1.1.16 Change in quantity demanded due to changes in income is referred to

as … elasticity.
A. income
B. supply
C. supply and demand
D. cross
1.1.17 A change in quantity demanded of product A, due to a change a change in price
of product B is referred to as … elasticity
A. income
B. cross
C. price
D. demand

1.1.18 … goods are goods for which demand increases as consumer income rises.
A. Inferior
B. Luxury
C. Normal
D. Elastic
1.1.19 When the percentage change in quantity supplied is greater than the percentage
change in price it refers to …
A. price elastic supply

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B. price inelastic supply

C. unitary elasticity of supply
D. zero elasticity of supply
1.1.20 The more a variable input is used, while all the other inputs are being kept con-
stant, then each additional unit of the variable input will eventually produce less additional
output. This is called…
A. the law of demand.
B. the law of diminishing returns.
C. diminishing marginal utility.
D. marginal cost.

1.2 Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the letter (A-I) next to the question number (1.2.1 –1.2.10) in the
ANSWER BOOK.

COLUMN A COLUMN B
1.2.1 Income elastic- A When the proportionate change produced in demand is
ity of demand. greater than the proportionate change in price of a product.
1.2.2 Negative B The cost of producing one extra unit of output, it can be
marginal utility. found by calculating the change in total cost when output is
increased by one unit.
1.2.3 Relative elastic C With other conditions remaining the same, other things
demand. being equal.
1.2.4 The law of D The solution to the consumer's problem, which entails de-
demand. cisions about how much the consumer will consume of a
number of goods and services.
1.2.5 Marginal cost E When the consumption of an additional item decreases
the total utility.
1.2.6 Elastic F States, all other factors being equal, as the price of a
good or service increases, consumer demand for the good or
service will decrease, and vice versa.
1.2.7 Inferior G Is an economic term referring to the change in behaviour
that buyers and sellers have in response to a price change for
a good or service.
1.2.8 Consumer H An increase in income reduces demand for the good.
equilibrium
1.2.9 Value I The power that goods or services have to command
other goods or services in exchange.
1.2.10 Ceteris paribus J Measures the responsiveness of demand to a change in
income.

HINT: Learners must know their concepts well, as this will assist in a better understand-
ing of the content in general. Leaners are encouraged to revise with these type of ques-
tions, that are found in Section A of the paper

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1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number. No abbreviations,
acronyms and examples will be accepted.

1.3.1 The relationship between the change in the price of one product and the quantity
demanded of another item.
1.3.2 The price of a good or service, in terms of another good or service
1.3.3 The total satisfaction gained from consuming a product.
1.3.4 The cost advantages due to the larger size of production.
1.3.5 When there is no change produced in the demand of a product with change in its
price
1.3.6 An increase in income without a change in quantity demanded.
1.3.7 Change in behaviour that buyers have in response to a price change for a good or
service.
1.3.8 The power that goods or services have to command other goods or services in ex-
change.
1.3.9 This law states that the quantity producers are willing to sell decreases when the
price decreases and the quantity supplied increases when the price increases if all
the other factors remain unchanged.
1.3.10 A good whose demand rises as income rises is called
1.3.11 The relationship between the change in the price of one product and the quantity
demanded of another item.
1.3.12 A change in price that causes exactly the same change in quantity demanded.
1.3.13 The increase in total cost when one additional unit of output is produced
1.3.14 It states the inverse relationship between quantity demanded and prices.
1.3.15 Goods that have a negative income elasticity of demand
1.3.16 The change in demand is equal to the change in price.

SECTION B

QUESTION 2:

HINT: When the question requires you to “list” or “name”, you need not write a sen-
tence but merely one or two words. This MUST be done in bullet form. This types of
questions are applicable for 2.1.1, 3.1.1 and 4.1.1

2.1 List any TWO ways a firm can increase its scale of operations (2).
2.2 Name any TWO determinants of the price elasticity of demand. (2)
2.3. State any TWO degrees of price elasticity of supply. (2)
2.4 Give TWO factors influencing the price elasticity of supply. (2)
2.5 List any TWO factors determining the price elasticity of demand (2)
2.6 List any TWO categories of price elasticity of demand. (2)
2.7 Name any TWO types of supply elasticity. (2)
2.8 List any TWO factors that influence the elasticity of demand. (2)
2.9 Name any TWO features of utility. (2)

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QUESTION 3:

HINT: This types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2

3.1 How does scarcity impact on total utility? (2)

3.2 Why is it important for businesses to evaluate price elasticity of demand? (2)
3.3 What effect does a price elastic demand have on a producer, should the
price of a product increase? (2)
3.4 Why are productively efficient firms make use of cost curves in perfectly
competitive market? (2)
3.5 Why is the cross elasticity of demand important? (2)
3.6 Why is the quantity demanded of habit-forming products, price inelastic? (2)
3.7 How does durability affect elasticity of demand? (2)
3.8 What happens to the quantity demanded if the income elasticity of demand
is 2 and income increases by 7%? (2)
3.9 Why would a producer of a product with a unitary price elastic demand not use
price to increase profits? (2)
3.10 What price elasticity would a supply curve have if it intercepts the horizontal
(quantity) axis? (2)
3.11 What effect does a price elastic demand have on a producer? (2)
3.12 How would a firm benefit from considering the price elasticity of demand
before changing prices? (2)

DATA RESPONSE

HINT: All section B questions have TWO data interpretation questions – each total
10 marks. Section B consist of Questions 2-4 not as numbered in this document

QUESTION 4:

4.1. Study the cartoon below and answer the questions that follow.

4.1.1 Identify the phenomenon depicted by the cartoon. (1)

4.1.2 Name ONE example of normal goods. (1)

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4.1.3 Explain the term perfectly inelastic demand. (2)

4.1.4 A product has a price elasticity of 1,58. What kind of elasticity
of demand does it represent? Motivate your answer. (2)
4.1.5 Why is the elasticity of demand important to producers? (4)

4.2 Study the table below and answer the questions that follow.

4.2.1 What type of cross elasticity is depicted in the above table? (1)
4.2.2 Give ONE example of goods for cross elasticity of demand above. (1)
4.2.3 Briefly describe the term cross elasticity of demand. (2)
4.2.4 Explain cross elasticity of demand for unrelated goods. (2)
4.2.5 Use the information above calculate the cross elasticity of demand. (4)

4.3 Study the extract below and answer the questions that follow:

In January a small pizza shop received 350 boxes

of Margherita pizzas and 200 boxes of cheese from
its supplier. They sold each box of Margherita piz-
zas at R30 and a box of cheese at R35. The fol-
lowing month (February) pizza prices increased to
R42 for margherita and R49 for cheese. In the
same month (February) the supplier increased the
number of boxes supplied from 350 to 441 boxes
for Margherita pizzas and from 200 to 252 boxes
for cheese.

4.3.1 What is depicted by the extract above? (1)

4.3.2 Indicate the slope of the supply curve. (1)
4.3.3 Briefly describe the term price elasticity of supply. (2)
4.3.4 Explain any challenge that may be experienced by producers when
they have to increase supply in the short run. (2)
4.3.5 Calculate the elasticity of supply for cheese. (4)

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4.4 Study the following graphs and answer the questions that follow

4.4.1 Which picture represents a perfectly inelastic price elasticity of demand? (2)
4.4.2 Briefly describe the term elasticity of demand in full. (2)
4.4.3 Why is the change in the quantity demanded larger than the change in price in
picture B? (2)
4.4.4 Calculate the price elasticity of demand (PEd) for picture B.
Show ALL calculations. (4)

4.5 Study the graph below and answer the questions that follow.

4.5.1 Provide the correct label for curve ‘aa’. (1)

4.5.2 If the price would increase from R10 to R15, what is the quantity of goods
that would be demanded? (1)
4.5.3 Briefly explain price elasticity of demand for luxury goods. (4)
4.5.4 Using information from the graph, calculate and indicate the type of price
elasticity of demand. (4)

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4.6 Study the graph given below and answer the questions that follow.

4.6.1 According to the graph above, what kind of an elasticity of demand is represented
in the graph? (2)
4.6.2 Briefly explain the kind of elasticity of demand represented in the above graph.
(6)
4.6.3 Give an example of a product with the same kind of elasticity of demand represented
in the above graph. (2)

4.7 Study the graphs given below and answer the questions that follow.

4.7.1 Briefly describe the term Elasticity of demand. (2)

4.7.2 Identify the degrees of elasticity as shown in the above Graph A and B.
(4)
4.7.3 Distinguish between the TWO types of elasticity of demand in the
above two graphs. (4)

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4.8 Study the article below and answer the questions that follow

How income and price changes affect demand

When economists tell us that the demand for basic food products is ‘inelas-
tic’, this is frequently misunderstood to mean that demand will not decrease
if food prices are increased.

In reality, it only means that the quantity demanded will decrease by a

smaller percentage than the increase in prices.

In addition to the response of demand to price change (price elasticity).

Change in income affect the quantities demanded (income elasticity)

If demand increase by a higher percentage than the increase in prices (elas-

tic demand) gross income will decrease, if the quantity demanded decreases
by a lower percentage gross income will increase

4.8.1 Give a reason why food has an inelastic demand. (1)

4.8.2 Name ONE example of normal goods. (1)
4.8.3 Briefly describe the term income elasticity. (2)
4.8.4 Will a producer with a unit elastic demand use price to increase profits?
Explain. (2)
4.8.5 Why is the demand elasticity of importance to the economy? (4)

4.9 Study the graph below and answer the questions that follow:

4.9.1 Identify the type of elasticity illustrated above. (1)

4.9.2 What is the PED of this type of elasticity? (1)
4.9.3 Explain the type of elasticity illustrated above. (2)
4.9.4 Which type of goods would fall under this type of elasticity? Give a
reason for your answer. (2)
4.9.5 Of what benefit is this type of elasticity to the seller? (4)

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4.10 Study the table below and answer the questions that follow.

4.10.1 What type of cross elasticity is depicted in the above table? (1)
4.10.2 Give ONE example of goods for cross elasticity of demand above. (1)
4.10.3 Briefly describe the term cross elasticity of demand. (2)
4.10.4 Explain cross elasticity of demand for unrelated goods. (2)
4.10.5 Using the information above calculate the cross elasticity of demand.
Show ALL calculations. (4)

4.11 Study the table below and answer the questions that follow

4.11.1 Name the product with the highest price inelasticity of demand. (1)
4.11.2 Explain perfectly inelastic demand. (2)
4.11.3 Apples have a price elasticity of - 0.58. What elasticity does this indicate?
Substantiate your answer. (3)
4.11.4 How do we explain the price elasticity of the demand for cigarettes?(2 x 2) (4)

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4.12
Study the cartoon below and answer the questions that follow.

cartoonistgroup.com

4.12.1 Give the form of elasticity illustrated in the cartoon above. (1)
4.12.2 State the relationship between the two products in the above cartoon. (1)
4.12.3 Briefly describe the concept elasticity of demand in full. (2)
4.12.4 What is the impact of the change in price of margarine on the demand for butter?
(2)
4.12.5 Assume the two products were being sold at the same price, the percentage
change in quantity demanded for butter is 20%. Calculate the cross elasticity of
demand for the two products. Show ALL calculations. (4)

4.13 Study the table below and answer the questions that follow

Diminishing Marginal Utility

Muffins Total Utility Marginal Utility
1 10 12
2 13 3
3 14 1
4 12 -2
5 9 -3

4.13.1 According to the table above, how many muffins should this person consume?
(1)
4.13.2 What is the formula to calculate marginal utility? (1)
4.13.3 Briefly describe the concept diminishing marginal utility. (2)
4.13.4 Differentiate between economic profit and normal profit. (2)
4.13.5 Why is it important for an entrepreneur to cover implicit and explicit costs? (4)

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4.14.Study the graph below and answer the questions that follow

4.14.1 What does the abbreviation TVC stand for? (1)

4.14.2 Why is the FC curve horizontal? (1)
4.14.3 Briefly describe the term long run. (2)
4.14.4 Given that TVC= R235. How much are the total costs? (2)
4.14.5 What is meant by marginal costs? Explain in detail. (4)

SECTION B

HINT: All section B questions have TWO 8 marks questions, numbered according to
questions not like in this document. Answers must be presented in full sentences

QUESTION 5 Paragraph type questions – Middle Cognitive

5.1 Briefly discuss relative inelastic demand without the aid of a graph. (8)
5.2 Distinguish between elasticity and inelasticity of demand. (8)
5.3 With the aid of a graph, explain the relationship between an increase in
consumption, total utility and marginal utility. (8)
5.4 Discuss time and availability of labour as factors that determine price elasticity
of supply. (8)
5.5 Briefly discuss any TWO characteristics of utility. (8)
5.6 Elaborate on the importance of price elasticity of demand to producers. (8)
5.7 What reasons would you give for the reaction of consumers to price changes?
(8)
5.8 Examine the reasons for unequal distribution of income in South Africa. (8)
5.9 Compare positive and negative cross elasticity. (8)
5.10 Briefly explain relative inelastic supply and unitary elastic supply as a degree
of price elasticity of supply, without the use of diagrams. (8)

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QUESTION 6 Paragraph type questions – Higher cognitive

TYPICAL EXAM QUESTION: THESE HIGHER ORDER QUES-

TIONS REQUIRE THE LEARNERS TO USE HER/ HIS CRITI-
CAL THINIKING SKILLS.
Higher order questions are grounded in the content. These types of ques-
tions test critical thinking, where candidates should be able to apply their knowledge, through
logical reasoning and also have an awareness of their current economic climate. Content (cov-
ered by discuss/examine/describe/ analyse/explain/evaluate/compare/assess/justify/construct/calcu-
late) can be assessed as higher-order questions. Answers will not necessarily be found in text-
books.

6.1 How can the government benefit from having knowledge on elasticity of demand?
(8)
6.2 Why is demand elasticity of importance to the economy? (8)
6.3 Why are relative prices important in the economy? (8)
6.4 How would it help the entrepreneur to increase or decrease the price of his
product if he is aware of the elastic of demand curve? (8)
6.5 Explain the importance of price elasticity of demand to producers. (8)
6.6 Explain the price elasticity of supply for maize in the short and long term. (8)
6.7 Examine the importance of income elasticity of demand to businesses. (8)
6.8 In which way would knowledge of price elasticity of demand support an
entrepreneur to decide if he must adjust the profit levels? (8)
6.9 Briefly debate whether a supplier of chocolates and a supplier of petrol
would both use price increases to increase their profits. (8)
6.10 Explain the price elasticity of supply for maize in the short and long term. (8)
6.11 What reasons would you give for the reaction of consumers to price
changes? (8)
6.12 What is the importance of elasticity of demand to the economy? (8)

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SECTION C

HINT: All section C questions have TWO questions 5 & 6 NOT like in this document.
In the examination you will need to answer only one.

ESSAY STRUCTURE

HINT: Section C – the long question, must be answered in FOUR sections: Introduction
(definition), Body (headings and full sentences in bullets) additional part and conclusion
(summarising). The mark allocations for Section C is as follows:
MARK ALLO-
STRUCTURE OF ESSAY:
CATION:
Introduction Max 2
The introduction is a lower-order response.
• A good starting point would be to the main concept related to the
question topic
• Do not include any part of the question in your introduction.
• Do not repeat any part of the introduction in the body
• Avoid saying in the introduction what you are going to discuss in the
body
Body:
Main part: Discuss in detail/ In-depth discussion/ Examine/ Critically Max 26
discuss/ Analyse / Compare/ Distinguish/ Differentiate/ Explain/ Evaluate
Additional part: Critically discuss/ Evaluate/ Critically evaluate/ Draw a
graph and explain/ / Calculate/ Deduce/ Compare/ Explain Distinguish /
Interpret/ Briefly debate/ How/ Suggest / Construct a graph Max 10
Conclusion
Any Higher or conclusion include: Max 2
• A brief summary of what has been discussed without repeating facts
already mentioned in the body
• Any opinion or value judgement on the facts discussed
• Additional support information to strengthen the discussion/analysis
• A contradictory viewpoint with motivation, if required
• Recommendations
TOTAL 40

QUESTION 7
(PRICE ELASTICITY OF SUPPLY) 40 MARKS
• With the aid of graphs describe the various categories of price elasticity of supply.
(26)
• Explain the price elasticity of supply for maize in the short and long term. (10)
A maximum of 8 marks allocated for headings/sub-headings and examples)

QUESTION 8
(PRICE ELASTICITY OF DEMAND) 40 MARKS
• With the aid of graphs, explain in detail the different categories of demand elastic-
ity. (26)
• Briefly debate whether a supplier of chocolates and a supplier of petrol would both
use price increases to increase their profits (10)

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QUESTION 9
PRICE ELASTICITY
• With the aid of relevant graphs, discuss FIVE degrees of price elasticity of demand
(26)
• A couple of factors are determents of the elasticity of demand. Briefly discuss sub-
stitution possibilities as one of those factors. (10)

QUESTION 10
PRICE ELASTICITY
With the aid of graphs, discuss the following types of price elasticity of demand:
• Perfectly inelastic. (8)
• Relatively elastic (8)
• Unitary elasticity (10) (26)
Evaluate the reasons for consumer reactions to price changes. (10)

QUESTION 11
PRICE ELASTICITY

• Discuss in detail, the different degrees of demand elasticity. (26)

(No graphs required)
• Evaluate how a monopolist like Eskom can benefit from using the price
elasticity of demand for their product. (10)

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ECONOMIC PURSUITS & CONTMEPORARY ECONOMIC ISSUES CONTENT PROGRESSION

Grade 10 Grade 11 Grade 12

Growth, Development & Globalisation / Examination and debate of globalisation, its rele- Econ Growth and Development (North/South divide) Comparison
vance to the North/South divide, and its effects (neg- of South African growth and development policies in terms of
Economic Redress ative and positive) on South Africa. international benchmarks, and highlight the North/South divide
Explanation of economic growth and development South Africa’s industrial development policies and their suitability
in terms of international best practice
Unemployment Factors of production and their remuneration (Term Economic and Social Indicators
1)
None None Inflation
None None Tourism
Environment deterioration Environmental sustainability
Population and Labour force Factors of production and their remuneration (Term
1)
Labour Relation
Composition of Money and Banking in SA
Wealth creation and patterns of distribution (inequal-
ity)

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ECONOMIC PURSUITS:
TOPIC 1: ECONOMIC GROWTH (WEEK 7-9)

Wealth Wealth
creation distribution

ECONOMIC Affirmative
GROWTH action in SA

Standard Economic
of Living Growth

1 ECONOMIC GROWTH AND DEVELOPMENT

Key Concepts Description

Wealth Is the stock/value of assets accumulated overtime or owned by indi-
viduals, businesses and government
Income Is the amount of money earned by factors of production for participat-
ing in economic activities.
Economic Growth Is the increase in the productive capacity of the economy/country over
a certain period of time? It is measured by the percentage change in
the real GDP in a certain period, usually a year
Economic Develop- s an increase in of the standard of living of people in a country? It in-
ment cludes the improvement of health, education, infrastructure and living
conditions in general
Income distribution Shows how the total income is distributed among its population, this
may be even or uneven.
Wealth distribution It is unevenly distributed in all societies, but more obvious in free mar-
ket economies than in centrally planned systems
Lorenz Curve Is a graphical representation of how uneven the distribution of income
/quintile distribution of income
Land Restitution Policy that consists of the state buying land from the present owners
and giving it to those who had their land confiscated during the apart-
heid years.
Real GDP is GDP after the increase in the general price level has been taken
into account, GDP deflator index is used to remove effects of inflation
(adjusted to inflation)
Nominal GDP It doesn’t give a true picture of economic growth, as the increase in
general price level (inflation) is not taken into account/considered.

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2. WEALTH CREATION PROCESS

Definition of wealth
Is the stock/value of assets accumulated overtime or owned by individuals,
businesses and government

Income
Is the amount of money earned by factors of production for participating in
economic activities?

Sources of wealth
• Inheritance
• Savings
• Gifts
• Appreciation of assets
• Luck (winning lottery and jackpots)
• profits

Methods to create wealth

• Wealth creation is the process of increasing your stock of assets
Methods:
• Education and training
• Savings
• Investment

3. DISTRIBUTION
Income distribution: Shows how the total income is distributed among its
population, this may be even or uneven.
Wealth distribution: It is unevenly distributed in all societies, but more obvious in
free market economies than in centrally planned systems.
Inequality: Means there is a big difference between income and levels of wealth
of the richest and the poorest households/countries
Quintile ratio is used to measure income inequality between different groups of
people.
It is obtained by dividing the income of the highest 20% by the income the lowest
20%
Gini Coefficient: Is a statistic that can be used to measure the degree of
inequality in the distribution of income, is calculated using the Lorenz curve
Lorenz curve is a graphical representation of how uneven the distribution of
income /quintile distribution of income.

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Redistribution methods:
• Taxation
• Social security programmes/grants
• Minimum wage
• Free benefits
• Subsidised services
• Job creation programmes Land redistribution
• Redress policies
• Reducing discrimination

4 ECONOMIC GROWTH
• Is the increase in the productive capacity of the economy/country over a
certain period of time
• It is measured by the percentage change in the real GDP in a certain pe-
riod, usually a year
• It is important because it provides citizens with more job opportunities.

Calculation
Nominal GDP – doesn’t give a true picture of economic growth, as the increase in
general price level (inflation) is not taken into account/considered.
Formula: output multiplied by average price
Real GDP – is GDP after the increase in the general price level has been taken
into account,
GDP deflator index is used to remove effects of inflation (adjusted to inflation).
The real GDP cannot be used to determine income distribution in a country, but
must be divided by the size of the population to obtain: real GDP per capita
An increase in real GDP indicates economic growth, while increase in real GDP
per capita Indicates:
economic development (increase in the standard of living of the population.

To calculate the GDP deflator:

GDP deflator = average price for current year X 100
average price for the base year

Once the GDP deflator has been calculated, real GDP can be calculated
Real GDP = nominal GDP X 100
GDP deflator

Importance
Benefits of economic growth
• Reduce unemployment
• Reduce poverty
• Income increase
• Increase in government revenue
• Reduce government expenditure

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Methods
• Increase in productivity
• Especially labour productivity
• The availability of production factors
• All four factors of production
• Increase in investment
• Capital widening and capital deepening
• Technological development
• Inventions, scientific discoveries and innovation
• Improvement in infrastructure

Constraints on growth
• Lack of appropriate skills
• Low levels of entrepreneurship
• Too many regulations
• Shortage of infrastructure
• Lack of management skills
• Poverty and unemployment
• High value of the rand

SA’s recent growth experience

• By world’s standards, the economic growth rate in South Africa is fairly low
• Real GDP did increase when compared with years before 1994
• The global recession of 2009 had a great impact on South African econ-
omy.
• The impact of Covid 19 continues to be felt on the economy and potential
growth

5. STANDARD OF LIVING
Definition
• The quality of life of an individual/household (welfare)
• Measured by the quantity of goods and services available to the population
of a country on average.
• Economic growth is essential for an improvement in standard of living

Population size
• The standard of living of the population of a country is influenced by the
size of the population
Per Capita income
• Is the average income received by every person in the country?
• Is calculated by dividing the real GDP by the total population.
• The standard of living is measured in terms of the total income earned per-
capita; this method is useful for comparing standard of living between coun-
tries.

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6. ECONOMIC DEVELOPMENT
Definition
• Is an increase in of the standard of living of people in a country. It includes
the improvement of health, education, infrastructure and living conditions in
general
• Economic development is linked to economic growth

Methods of development
• Attracting new businesses
• Building community capacity
• Building economic partnerships
• Expanding local markets/development of industries
• Using out-dated facilities – sustainable development
• Promoting direct investment – capital formation
• Natural resources – effective utilisation.

Common characteristics
Low standard of living: Low per capita income, slower growth of the per capita income,
unequal distribution of income, poverty, low life expectancy, education
Low levels of productivity: Lack of necessary skills, expertise, poor health, poor nutri-
tion High population growth and dependency burdens: High birth rates, high population
cause problems (unemployment, pressure on housing, education and health services),
younger children and elderly people (non-productive) cause a dependency burden
High levels of unemployment: Very few job opportunities for large number of unem-
ployed people, low levels of literacy, low levels of technological skills
Dependence on primary sector: A high proportion of people is employed in the primary
sector. Most exports are in this sector
Deficiency of infrastructure: In most developing countries, the major problem is infra-
structure is lacking or poorly maintained. This results in poor access to markets
Developing strategies
Improve the quality and quantity of factors of production: Natural resources, capital
formation, human resources, entrepreneurship
Use of technology by accessing modern technology
Improve the infrastructure: Investment will expand a range of opportunities
Job creation
Government policies

SA’s endeavours (best efforts)

The government had to set new policies, implement programmes and strategies to de-
velop a new democratic society to improve people’s quality of life, which are:
Reconstruction and Development Programme (RDP)
Growth, Employment and Reconstruction (GEAR)
Accelerated and Shared Growth Initiative for South Africa (AsgiSA)

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Some of the endeavours are:

• Provision of basic services (housing subsidies, free electricity, water, sani-
tation)
• Creating stability in the economy
Regional level (Spatial Development Initiatives (SDIs) by DTI
Continental level (Industrial Development Zones (IDZs)
Global level (Integrated Manufacturing Strategy (IMS) to improve international competi-
tiveness and being member of BRICS to improve cooperation between countries.

Human Resource Development (HRD)

New Growth Path (NGP) to reduce unemployment
The Government’s electoral mandate (five priorities)
• Transform the economy
• Implement a rural development strategy
• Provide an affordable education system
• Create a national healthcare system
• Fight crime and corruption.

The way forwards (areas that need to improve for SA to move forward)
• Speeding up growth and transforming the economy
• Fighting poverty and building social cohesion
• International co-operation
• Building an effective development state
The target year for achieving Millennium Development Goals was 2015

Indigenous Knowledge Systems (IKS)

• It is sometimes called traditional knowledge
• Is the local knowledge that is unique to a certain culture or society.
• Are a complex set of knowledge, skills and technologies which is part of Af-
rican philosophy and social practises which developed over many centuries
• Since 1994 SA has accepted that indigenous knowledge has value and
must be researched and preserved.
• The IKS policy was adopted by the Cabinet in 2004
Elements of IKS
• Political element (all authority systems)
• Social/cultural element (religion and belief systems)
• Economical element (agriculture, mining and manufacturing)

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SECTION A: TYPICAL EXAM QUESTIONS

QUESTION 1: Section A – Short Questions

: When answering Section A – short question, it is important not to rush but

to read the questions carefully and to make sure you understand what the
question is asking. Always remember one alternative is completely wrong,
one is nearly correct and one is totally correct. It is easy to eliminate the completely
wrong answer, but if you do not read the question carefully the nearly correct answer
will also appear correct. The answer will NEVER be two options. Only ONE option is
correct. Your answer will immediately be marked incorrect if you write TWO options.

1.1 Various options are provided as possible answers to the following ques-
tions. Choose the answer and write only the letter (A–D) next to the question
number.

1.1.1 A graph that shows how uneven the distribution of income is between households
is called the ...
A Laffer curve.
B Philips curve.
C Circular flow.
D Lorenz curve.

1.1.2 High-income earners are taxed at a higher rate:

A Proportional
B Regressive
C Progressive
D Indirect tax

1.1.3 The standard of living of a population is best described by the …

A per capita income.
B low economics growth.
C decrease in expenditure.
D secondary education.

1.1.4 This is used to help beneficiaries acquire ownership of fixed residential property.
A Property subsidy
B Land restitution
C Land redistribution
D BEE

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1.1.5 The value of the Gini-coefficient ranges between...

A 0 and 1
B 10 and 100
C 1 and 10
D 100 and 1000

1.1.6

Refer to the graph above

What happens if the curve is away from the line of equality.
A Constant inequality
B Less inequality
C Greater degree of inequality
D Average inequality

1.1.7 … measures the economic growth in percentage from one period to another.
A Real economic rate
B Economic growth rate
C Inflation
D GDI

1.1.8 An increase in the production of goods and services in a country over a year in
physical terms is known as ...
A Economic development.
B Economic growth.
C Investment.
D Capital formation.

1.1.9 The ... is used to measure the standard of living in a country.

A Level of per capita income
B Inflation
C Balance of payment account
D Producer price index

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1.1.10 Gini coefficient of ONE represents ... distribution of wealth in the economy.
A perfectly equal
B perfectly unequal
C straight
D identical

1.1.11 ... refers to the welfare of all people and their ability to maintain an
acceptable existence.
A Poverty
B Productivity
C Standard of living
D Economic growth

1.1.12 Why do female traditional healers implement a strategy for management of

indigenous knowledge systems?
A To derive monetary gain
B To contribute to the country’s GDP.
C To improve the lives of rural communities
D Compete with western knowledge systems

1.1.13 Indigenous knowledge systems are important to the community.

The following statements confirm the above except
A It improves culture-fit problem-solving solutions
B Key to sustainable development
C Help understand international conditions
D Contribute to global development process.

1.1.14 The following statement best argues the fact that SA has the most highly
developed telecommunications network in Africa.
A. A stronger economy
B More calls are made in South Africa compared to other African countries
C Colonialism
D International support

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1.2 Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the letter (A-I) next to the question number (1.2.1 – 1.2.10) in the
ANSWER BOOK.

COLUMN A COLUMN B
A This expresses the number of years a new born
1.2.1 Wealth infant will live if the prevailing patterns of mortality
remain the same throughout this person’s life.
B Is the reward that owners of factors of production
1.2.2 Gini coefficient receive for using it in the production process.
C Show how a nation’s wealth is distributed across its
1.2.3 Inheritance population.
1.2.4 Life D This is used to help beneficiaries acquire ownership
expectancy of fixed residential property.
1.2.5 Economic E A statistical measure used to express the inequality
Growth of income distribution.
F When a county’s stock of capita increase at the same
1.2.6 Income rate as the workforce.
1.2.7 Standard of G The practice of passing on wealth from one
living generation to the next.

1.2.8 Lorenz curve H Financial assistance that need not to be repaid.

1.2.9 Per capita in- I Refers to the wealth, comfort, material goods and ne-
come cessities available to a certain socio-economic class in a
certain geographical area
1.2.10 Property subsidy J A measure of the total output of a country and divide
it by the population size of a country.
K The increase in the production capacity of the
economy
L Value of all assets that individuals, businesses and
government own

1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number. No abbreviations,
acronyms or examples will be accepted.

1.3.1 Income per member of the population of a country.

1.3.2 The index that measures the inequality of income.
1.3.3 Relationship between the quantity of output and quantity of input.
1.3.4 A curve that shows how nation’s wealth is distributed across its population.
1.3.5 An institution that uses CPI to measure headline inflation.
1.3.6 Stock of capital assets of households, representing money earned and saved at
some point of time.
1.3.7 Shows whether the gross national income is divided equally among population
1.3.8 This term refers to purchasing from BEE qualifying businesses.
1.3.9 This term means fairness or evenness, and achieving it is an economic objective.
1.3.10 The level of wealth, comfort, material goods and necessities available to a certain
socioeconomic class in a certain geographic area.

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SECTION B

QUESTION 2:

: When the question requires you to “list” or “name”, you need not write a
sentence but merely the word or a phrase. This MUST be done in bullet
form. This types of questions are applicable for 2.1.1, 3.1.1 and 4.1.1

2.1 Name TWO social indicators related to income distribution. (2x1)

2.2 Name TWO factors that influence the income levels. (2x1)
2.3 Name TWO factors that promote economic growth. (2x1)
2.4 List TWO ways in which wealth can be created. (2x1)
2.5 Mention any TWO uses of per capita GDP. (2x1)
2.6 Mention any TWO methods the government use to distribute income. (2x1)

QUESTION 3:

This types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2. They must
be answered in full sentences.

3.1 How is the standard of living in a country determined? (1x2)

3.2 What is the use of the Gini-coefficient? (1x2)
3.3 How does wealth differ from income? (1x2)
3.4 What effect does a low economic growth rate have on the economy? (1x2)
3.5 Why does South Africa need to increase its economic growth rate? (1x2)
3.6 What is the meaning per capita income? (1x2)
3.7 What is income inequality? (1x2)
3.8 What do we measure using the Lorenz curve? (1x2)
3.9 What effect will an increase in the income tax rate have on the inequality gap
between the rich and the poor? (1x2)
3.10 What effect will HIV/Aids have on future economic growth? (1x2)
3.11 How important is economic growth in the economy? (1x2)

DATA RESPONSE

All section B questions have TWO data interpretation questions –

each total 10 marks. Section B consist of Questions 2-4 not as
numbered in this document.

QUESTION 4.1:

4.1 Study the graph below and answer the questions that follows

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4.1.1. What is represented by the graph above? (1)

4.1.2. In which year, was South Africa’s growth rate was at the lowest? (1)
4.1.3. Describe the concept Gross Domestic Product. (2)
4.1.4. Briefly explain why the South African growth rate was -2,0 in quarter 1of 2020.
(2)
4.1.5. Distinguish between economic growth and economic development. (4)

4.2 Read the extract and answer the questions that follow

NDP 2030 – THE STATE CANNOT ACHIEVE OBJECTIVES ALONE

Growing SA’s skills base and supporting students from poor and middle-income
families is critical to the growth and development of SA’s economy.

According to a report released by the department of higher education and train-

ing, a very small number of people attend tertiary education institutions in South
Africa, the lowest of the five BRICS countries.

According to the NDP, active citizenry, where the citizens make strides in uplift-
ing themselves and those around them, is needed in the last 10 years before
2030 for its objectives to be realized.

Source: Adapted from https://www.isfap.co.za/about-us/#.YNHJkWgzbIU

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4.2.1 Name any other development strategy that has been used in South Africa. (1)
4.2.2 Give an example of what the citizens of South Africa can do to uplift themselves.
(1)
4.2.3 Briefly describe the term economic development. (2)
4.2.4 Explain the main aim of the National Development Plan. (2)
4.2.5 How will South Africa’s skills base be improved through the NDP implementation?
(4)

QUESTION 4.3:

4.3 Study the graph below and answer the questions that follow:

4.3.1 Which economic concept is depicted in the graph above? (1)

4.3.2 Provide the label for line A. (1)
4.3.3 Briefly describe the term wealth. (2)
4.3.4 Why does South Africa have one of the highest rates of inequality in the world?
(2)
4.3.5 Explain the relationship between the Gini coefficient and the Lorenz curve (4)

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4.4 Study the information below and answer the questions that follow:
LIFE EXPECTANCY TRENDS IN AFRICA

Africa Month - our continent celebrates from Rasben Sakka in Tunisia to

Cape Agulhas in South Africa
Life expectancy surged by over 20 percent in many countries between
2000 and 2016, according to World Bank figures. Much of this is due to
more affordable medication and the availability of antiretroviral drugs.

YEAR LIFE EXPECTANCY AT LIFE EXPECTANCY

BIRTH WITHOUT HIV AT BIRTH WITH HIV
2014 65,5 52,1
2015 66,3 56,0
2016 67,9 58,7
2017 67,1 61,2
[Source: www.statssa.gov.za/Public Sector Manager - May 2017]

4.4.1 Name the type of indicator under which life expectancy is classified (1)
4.4.2 Give ONE reason for low life expectancy levels in Africa. (1)
4.4.3 Explain the term life expectancy. (2)
4.4.4 What impact will HIV/AIDS have on productivity levels (2)
4.4.5 Evaluate the factors which brought about the improvement in life expectancy
from 52,1 years to 61,2 years (4)

4.5 Study the curve below and answer the questions that follow.

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4.5.1 Which international institution provided the data in the extract? (1)
4.5.2 When did the income disparities in South Africa increase drastically (1)
4.5.3 Explain the term ‘Gini coefficient’ (2)
4.5.4 Explain why South Africa has one of the highest rates of inequality in the world.
(2)
4.5.5 Briefly describe any TWO constraints to economic growth. (4)

4.6 Study the extract below and answer the questions that follow:
EDUCATION STATISTICS FOR SOUTH AFRICA

Education indicator Percentage Effects on wealth creation

Enrolment in second- 57% of total Almost half of the popula-
ary school possible tion does not get matric –
less likely to be employed.
Enrolment in tertiary 15% Severe lack of degrees
education and diplomas impact on
skills workforce – negative
impact on human capital.
Literacy rate 88% Almost 12% of the popula-
tion cannot read and write-
few job prospects.
[Sourcehttps://en.mwikipedia.org]

4.6.1 What percentage is the enrolment in secondary education? (1)

4.6.2 What impact does the literacy rate have on wealth? (1)
4.6.3 What has led to the low enrolment in tertiary education? (2)
4.6.4 Explain how lack of education can lead to low standard of living (2)
4.6.5 How should higher education inequalities be addressed to improve the standard
of living of South Africa? (4)

4.7 Study the graph below and answer the questions that follows:

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4.7.1 Identify the curve (Z) in the above graph (1)

4.7.2 What does the straight line OB imply? (1)
4.7.3 Identify the shaded area (Y). (2)
4.7.4 What is the relationship between line OB and curve Z? (2)
4.7.5 Briefly explain the concept Gini coefficient. (4)

4.8 Study the Gini Indexes for a selected group of nations in the table below, then an-
swer the questions that follow:

Country Gini Index Country Gini Index

Japan 24.9 United Kingdom 36.0
Sweden 25.0 Iran 43.0
Germany 28.3 United States 46.6
France 32.7 Argentina 52.2
Pakistan 33.0 Mexico 54.6
Canada 33.1 South Africa 57.8
Switzerland 33.1 Namibia 70.7

4.8.1 Name the curve that is used to represent the above data. (1)
4.8.2 Which country has the highest income inequality? (1)
4.8.3 Which country has the highest level of equality? (2)
4.8.4 What is income distribution? (2)
4.8.5 Convert the Gini Indexes to Gini coefficient for South Africa and France (4)

4.9 Study the extract below and answer the questions that follow:
THE WEALTH CREATION PROCESS

Wealth can be inherited. When a person dies, his or her belongings may be
passed on to someone else. However, the wealth has to be created first.
[Adopted from ‘Solution for all’]

4.9.1 Mention ONE other sources of wealth other than inheritance. (1)
4.9.2 Give an example of what the citizens of South Africa can do to uplift themselves.
(1)
4.9.3 Name TWO methods used to measure inequality of wealth. (2)
4.9.4 What makes wealthy people to be essential in the economy? (2)
4.9.5 Explain how individuals create wealth. (4)

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4.10 Study the information below and answer the questions that follow.
INCOME AND WELATH REDISTRIBUTION IN SOUTH AFRICA
According to Mr Patrick Craven, spokesperson for Cosatu, the inequality must be
addressed in South Africa. 48% of the population must survive with an income of less
than R322 per month, while there are 20 people in South Africa who together own a
total of R112,2 billion.

This is a very sensitive issue, and one could ask what the reason for this inequality
is. The main reason why 24 million people are living below the poverty line is not that
the ‘super-rich’ have too much money, but that there are too many people with no
jobs.

The debate should be about whose responsibility it is to create jobs. Should it be the
state and public sector, as Cosatu suggested in its economic policy, or the private
sector companies that belong to the super-rich, who have built these companies, in
most cases, out of nothing? (Source: Beeld, 6 September 2011)

4.10.1 Identify the stakeholder/ organisation concerned about income and wealth
distribution in South Africa. (1)
4.10.2 What is the purpose of implementing redistribution methods? (1)
4.10.3 Explain the term ‘living below the poverty line’. (2)
4.10.4 Who should be responsible for creating job in the economy? (2)
4.10.5 Differentiate between land redistribution and land restitution. (4)

4.11 Study the information below and answer the questions that follow.

SOUTH AFRICA’S HDI RANKING

South Africa boasts of a highly-developed economy and advanced infrastructure.

It is a significant player on the African continent.

However, development has slowed down, and the nation has one of the highest
inequality rates in the world.

Global ranking: 113

Life expectancy: 63,4
GDP: 349,4 billion USD
Gross National Income Per Capita: USD 11,923
HDI ranking in Africa: 8
[Adapted from: africanexponent.com]

4.11.1 Name any characteristic of developing countries. (1)

4.11.2 Which indicator is used in measuring HDI? (1)
4.11.3 Briefly describe the term economic development. (2)
4.11.4 Explain the use of per capita figures. (2)
4.11.5 How can the South African government improve the quality of human
resource? (4)

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All section B questions have TWO 8 marks questions. One is a Middle

order paragraph, the other is a Higher order paragraph

QUESTION 5.1 Paragraph type questions – Middle Cognitive

5.1.1 Briefly explain two main factors that causes economic growth. (8)
5.1.2 Discuss reasons for the unequal distribution of income. (8)
5.1.3 Differentiate between economic growth and economic development. (8)
5.1.4 Differentiate between physical wealth and financial wealth. (8)
5.1.5 Discuss the availability and use of factors of production as a way of growing
the economy. (8)
5.1.6 Discuss how income is redistributed in South Africa. (8)
5.1.7 Briefly explain ‘taxation’ as a method of redistributing income and wealth. (8)

TYPICAL EXAM QUESTION: THESE HIGHER ORDER QUES-

TIONS REQUIRE THE LEARNERS TO USE HER/ HIS CRITICAL
THINIKING SKILLS.
Higher order questions are grounded in the content. These types of questions
test critical thinking, where candidates should be able to apply their knowledge, through logical
reasoning and also have an awareness of their current economic climate. Content (covered by dis-
cuss/examine/describe/ analyse/explain/evaluate/compare/assess/justify/construct/calculate) can be
assessed as higher-order questions. Answers will not necessarily be found in textbooks.

QUESTION 5.2 Paragraph type questions – Higher cognitive

5.2.1 Critically evaluate the reconstruction and development programme as a

development strategy in South Africa. (8)
5.2.2 Analyse savings as a method used to create wealth. (8)
5.2.3 Discuss capital formation as an important determinant economic growth? (8)
5.2.4 Outline entrepreneurship as the determinants of wealth creation. (8)
5.2.5 Evaluate South Africa’s approach to redistribute wealth and income. (8)
5.2.6 How is the Lorenz curve related to the Gini coefficient? (8)
5.2.7 Why are indigenous knowledge systems (IKS) important for the economic
development of a country? (8)
5.2.8 Examine the impact of high population growth on a developing economy such
as South Africa. (8)

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SECTION C

HINT: All section C questions have TWO questions 5 & 6 NOT like in this document.
In the examination you will need to answer only one.

ESSAY STRUCTURE

HINT: Section C – the long question, must be answered in FOUR sections: Introduction
(definition), Body (headings and full sentences in bullets) additional part and conclusion
(summarising). The mark allocations for Section C is as follows:
MARK ALLOCA-
STRUCTURE OF ESSAY:
TION:
Introduction Max 2
The introduction is a lower-order response.
• A good starting point would be to the main concept related
to the question topic
• Do not include any part of the question in your introduc-
tion.
• Do not repeat any part of the introduction in the body
• Avoid saying in the introduction what you are going to dis-
cuss in the body
Body:
Main part: Discuss in detail/ In-depth discussion/ Examine/ Criti- Max 26
cally discuss/ Analyse / Compare/ Distinguish/ Differentiate/ Explain/
Evaluate
Additional part: Critically discuss/ Evaluate/ Critically evaluate/
Calculate/ Deduce/ Compare/ Explain Distinguish / Interpret/ Briefly Max 10
debate/ How/ Suggest / Construct a graph
Conclusion
Any Higher or conclusion include: Max 2
• A brief summary of what has been discussed without re-
peating facts already mentioned in the body
• Any opinion or value judgement on the facts discussed
• Additional support information to strengthen the discus-
sion/analysis
• A contradictory viewpoint with motivation, if required
• Recommendations
TOTAL 40

QUESTION 7

• Discuss the methods used by the government to redistribute income and

wealth. (26)
• Why do we have uneven distribution of income? (10)
[40]

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QUESTION 8

• Discuss in detail the following methods used to redistribute income and

wealth:
• Taxes (10)
• Cash grants (8)
• Natural benefits (8)
• Examine the government’s efforts to redress economic inequality in South
Africa. (10)
[40]

QUESTION 9
• Discuss the methods used to increase economic growth in detail. (26)
• How can human and natural resources be used to ensure economic
development? (10)
[40]

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ECONOMIC PURSUITS
TOPIC 2: ECONOMIC DEVELOPMENT
(WEEK 1-3)

ECONOMIC DEVELOPMENT
Compare Economic Growth
& Development
Methods of development

Developing strategies

South Africa's endeavours

Indigenous knowledge systems

CONCEPTS

KEY CONCEPT DEFINITION/DESCRIPTION

Accelerated and Shared An initiative to promote development strategies, e.g.
Growth initiative for infrastructure and skills development
South Africa (ASGISA)
Basic needs Essential requirements needed to have a decent life such as
housing, fresh water, food, health services and physical safety.
Capital goods Tangible assets that are available to be used in the production
process.
Dependency burden The ratio of dependent young and old people to the population
of working age
Developed economy An economy where all citizens enjoy a standard of living that
enables them to live a free, healthy and safe life.
Developing economy An economy where all citizens do not have the resources
available to live a free, healthy and safe life.
Development strategy A plan of action to achieve economic development, which
takes into account the current situation in a certain country.
Economic development An increase in the overall living standard of all the people in a
country.
Economic growth A sustained increase in the GDP of a country/An increase in
the productive capacity of an economy over time. It is a change
in the real GDP.
Gross domestic product The total market value of goods and services produced within
(GDP) the boundaries of a country within a specific period of time.

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KEY CONCEPT DEFINITION/DESCRIPTION

Growth, employment and A strategy to promote economic growth, increase employment
redistribution (Gear) and redistribute income.
A complex set of knowledge, skills and technologies that exist
and have been developed around specific conditions in popula-
Indigenous knowledge tions and communities indigenous to a particular geographic
systems area.
Traditional, local knowledge and technologies that developed
over time around specific conditions by communities living in a
particular geographic area
Infant mortality Death rate during the first year of life
Infrastructure The basic facilities which directly benefit the process of produc-
tion and distribution in an economy e.g. roads, railways, tele-
communication systems, waterways, airways, financial
institutions, electricity, water supply etc.
Joint initiative on Priority An initiative to aid the development of urgently needed skills to
Skills acquisition (JIPSA) facilitate job creation.
National Growth Path Initiatives to stimulate economic growth.
(NGP)
Per capita income a measure of the amount of money earned per person in a
nation or geographic region/It is calculated by dividing the
country's national income by its population.
Poverty A state or condition in which a person or community lacks the
financial resources and essentials for a minimum standard of
living/The income level from employment is so low that basic
human needs can't be met.
Reconstruction and A development policy to improve service delivery to the poor
Development Programme and create an environment for human development
(RDP)
Standard of living The material well-being of the average person in a given
population. It is typically measured using gross domestic
product (GDP) per capita.
Strategy A plan of action designed to achieve a particular goal.
Unemployment Occurs when a person who is actively searching for employ-
ment is unable to find work.

A comparison between economic growth and economic development

• Economic growth is a sustained increase in the GDP of a country. It is also refers

to an increase in the productive capacity of an economy over time. It is a change
in the real GDP.
• Economic development is an increase in the overall living standard of all people in
a country. It is measured using gross domestic product (GDP) per capita.

Common characteristics of developing countries:

• Low per capita real income – developing countries suffer from low per capita real
income level, which results in low savings and low investments. It means the aver-
age person doesn’t earn enough money to invest or save money. They spend
whatever they make.

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• Low standard of living in developing countries due to low income that results in
poverty, inadequate housing, poor health, limited education and training, high in-
fant mortality and low life expectancy.
• Low levels of productivity due to lack of skills, particularly in areas such as sci-
ence and technology. Conditions such as poor health, poor nutrition, lack of edu-
cation and training can also be a cause of low labour productivity.
• High population growth and dependency burdens – the population growth rate
in developing countries is high with many people who are unemployed. The few
who are working take care of the unemployed ones.
• High levels of unemployment due to very few opportunities which are available
for the large number of unemployed people.
• Dependence on the primary sector – the vast majority of people in less devel-
oped countries live and work in rural areas. Although agriculture is a dominant
sector in many developing countries, it is characterised by low levels of productiv-
ity. Exports in primary sector make up more than the exports of manufactured and
service goods in developing countries.
• Deficient infrastructure – some of the areas in developing countries are not ac-
cessible due to the poor conditions of the roads and bridges. Inadequate railways,
low gas and electricity production, poor housing and educational and public health
care facilities also work against development.

The strategies to increase economic development:

• Entrepreneurship - an increase in the number of businesses in the country which

can create more job opportunities. More businesses from local and abroad should
be attracted. Various incentives and funding of small and medium businesses
should be used to encourage entrepreneurial development.
• Community skills development - building community capacity by developing
skills for community which will be able to provide for their own needs without rely-
ing too much on the government.
• Natural resources - effective use of the natural resources of the country is im-
portant.
• Human resource - education and training should be used to improve the quality
and quantity of a country’s labour force. Improvement in healthcare and nutrition
can help to improve the quality of the labour force.
• Capital - to increase investment in capital goods is essential. Economic develop-
ment is possible if the local government promotes direct investment. Foreign fund-
ing can also be used to finance projects and capital goods.
• Technological developments and improvements which affect productivity
positively. An emphasis on science and technology, managing technological
products and resources and strategic planning are important for development.

South Africa’s endeavours:

Reconstruction and development (RDP)

• The main strategy was to alleviate poverty and address the inequalities and short-
falls in social services by focusing on job creation, welfare, housing, transport,
land reform, healthcare, education, training, water and sanitation.
• Evaluation thus far:

- Meeting basic needs: government creates an increased demand for goods and
services.

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- The expanded public works programmes were mostly labour intensive. This
helped alleviate unemployment and poverty slightly.
- Some social achievements: building houses, providing clean water,
electrification, land reform, and healthcare.
- Real GDP growth erratic since 1994, unemployment in formal sector increased.
- Key objectives of poverty reduction and improved service delivery hardly suc-
cessful

Growth, Employment and Redistribution programme (GEAR)

• The main strategy was to strengthen economic development, redistribute income
and create socio-economic opportunities for the poor.
• Evaluation thus far:
- Mixed outcomes.
- Brought greater financial discipline and macroeconomic stability.
- Real reduction in fiscal deficit (less than 3% in terms of international bench-
marks).
- Inflation has dropped mostly to within inflation targets.
- Foreign exchange reserves increased in most regards.
- Failure to create sustainable job opportunities.
- Failure to redistribute wealth more evenly.

The joint initiative on priority skills acquisition (JIPSA)

• It is the skills development arm of ASGISA. Focus is on skills development, espe-
cially through the SETAS.
The accelerated and shared growth initiative for South Africa (AsgiSA)
• Its objective is to co-ordinate government initiative to create economic
development:
• The key elements are:
- Halve unemployment and poverty by 2014.
- Accelerate economic growth to an average of 6% between 2010 and 2014.
• Evaluation thus far:
- Growth in infrastructure investment, especially in the public sector.
- Employment growth has lagged behind economic growth – reason real wage
increases are higher than productivity.
- The second economic strategy helped slightly to reduce unemployment through
the Expanded public Works Programme.
- Poor economic growth and high unemployment for the youth.

National Skills Development Strategy (NSDS)

• The Skills Development Act (1998) provides a framework for skills development in
the workplace.
• Skills development has been identified as a key requirement for economic empow-
erment of the previously disadvantaged.
• The Skills Levy Act (1998) provides for the payment of levies by employers and
the establishment of Sectoral Education and Training to administer the funds of
the scheme and manage the skills development process.

Financing Entrepreneurship Promotion Programmes

• Entrepreneurship promotion programmes exist, which outline how the government
intends to support local entrepreneurs.
• Some local businesses have the potential to solve some socioeconomic problems
in rural areas, but they need financial support.

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• There are institutions that assist local entrepreneurs such as Isivande Women’s
Fund, National Empowerment Fund, South African Micro-Finance Apex Fund,
Business
Partners Ltd.

The importance of indigenous knowledge systems (IKS):

• IKS is important for economic development – IKS is important in key areas such
as agriculture, animal husbandry, primary health care, saving, lending, community
development and poverty alleviation.
• IKS is relevant for developmental processes – it is important for local communities
in which the bearers for such knowledge live and produce. It must be recognised,
valued, appreciated by those who want to interact with local communities for
development purposes.
• IKS serves as a basis for problem-solving strategies for local communities – it
addresses many problems that concern local people such as local pest and weed
problems, indigenous soil fertility practices, and innovative ways in which local
people collect water. Some of these problems cannot be addressed by scientific
research.
• IKS is important for both local communities and the global economy – the impact
and sustainability of international practices could be more effective if they adapted
to local conditions and indigenous practices.
• IKS is part of the lives of the rural poor – the lives of the rural poor depend on spe-
cific skills and knowledge essential for their survival.
• Indigenous knowledge systems can make a significant contribution to sustainable
development through conservation and sustainable use of biodiversity. A clear
need to strengthen indigenous knowledge practices and cultures by protecting and
recognising the value of such systems and preventing their loss has emerged.
• Indigenous knowledge can help to meet the broader objectives of society, for in-
stance conserving the environment, developing sustainable agriculture and ensur-
ing food security, while its protection encourages the maintenance of traditional
practices and lifestyles.

QUESTION 1: Section A – Short Questions

: When answering Section A – short question, it is important not to rush but to read the
questions carefully and to make sure you understand what the question is asking. Always remem-
ber one alternative is completely wrong, one is nearly correct and one is totally correct. It is easy
to eliminate the completely wrong answer, but if you do not read the question carefully the nearly
correct answer will also appear correct. The answer will NEVER be two options. Only ONE option
is correct. Your answer will immediately be marked incorrect if you write TWO options.

Learners must know their concepts well, as this will assist in a better understanding
of the content in general. Leaners are encouraged to revise these types of questions that
are found in Section A of the paper

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1.1. Various options are provided as possible answers to the following

questions. Choose the answer and write only the letter (A–D) next to the
question number.
1.1.1 The Human Development Index (HDI) measures the level of economic … of all
countries of the world.
A development
B growth
C importance
D growth

1.1.2 The … is used to measure the standard of living in a country.

A level of per capita income
B inflation level
C balance of payments
D circular flow

1.1.3 The Millennium Development Goals included …

A better higher education.
B reducing child mortality.
C promoting better skills among youth.
D lowering interest rates.

1.1.4 The standard of living of a population is best described by the ...

A per capita income.
B low economic growth.
C a decrease in expenditure.
D secondary education.

1.1.5 The nationwide government intervention plan to create employment for the poor
and vulnerable is called the ...
A Industrial Policy Action Plan.
B Affirmative Action.
C Expanded Public Works Programme.
D Black Economic Empowerment (BEE).

1.1.6 … measures the economic growth in percentage from one period to another.
A Real economic growth rate
B Economic growth rate
C Inflation rate
D GDI

1.1.7 The acronym RDP stands for …

A Rural Development Programme.
B Road Development Project.
C Reconstruction and Development Programme.
D Reconstruction and Development Project.

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1.1.8 This programme was implemented in 1994 to address the socio-economic prob-
lems brought about by the policies of the previous government.
A HDI
B RDP
C Jipsa
D NGP

1.1.9 Purpose built Industrial estates in South-Africa, which are exempted from import
duties known as a/an …
A SDI
B IMS
C IAP
D IDZ

1.1.10 The most important asset of a country is its … resources.

A capital
B human
C natural
D financial

1.1.11 Which indicator is used by the World Bank to measure the level of economic
development?
A life expectancy at birth
B adult literacy rate
C infant mortality rate
D Gross National Income

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1.2 Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the letter (A-I) next to the question number (1.2.1 – 1.2.13) in the
ANSWER BOOK.

COLUMN A COLUMN B
1.2.1 Indigenous A Measures the level of development of countries)
knowledge
B Include protection, sanitation and water
1.2.2 Population growth
C Unique practices of locals in a given culture or society
1.2.3 Per capita GDP
D A measure of standard of living
1.2.4 Human Develop-
ment Index E A trade agreement between a group of emerging
markets
1.2.5 Productivity
F A policy aimed to increase the ownership of
1.2.6 Land redistribution agricultural land to black people in the economy
program
G The change in the number of people in a country over
1.2.7 DBSA time

1.2.8 BRICS H This institution was established in 1983 to promote

economic development in Southern Africa.
1.2.9 Community service
I Measures the level of development of countries
1.2.10 Poverty
J A program in which government funding is invested in
1.2.11 Capital infrastructure development and educational skills develop-
ment
1.2.12 SETA
K The estimated minimum level of income needed to
1.2.13 AsgiSA secure the necessities of life

L A vocational skills training organisation in South Africa

M Not wanted for itself but for its ability to help in produc-
ing other goods

1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number. No abbreviations,
acronym or examples will be accepted.

1.3.1 Returning land to people from whom it was forcibly taken

1.3.2 Income per member of the population of a country
1.3.3 The knowledge that is unique to a given culture or community
1.3.4 A statistic used to rank countries by level of human development in terms of set
criteria
1.3.5 A country with a low level of material well-being
1.3.6 Implies an increase in the standard of living of the entire population

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1.3.7 The health function, to provide basic health services to the community as a whole
1.3.8 Relationship between the quantity of output and quantity of input
1.3.9 The number of children and elderly people to be financially supported by house-
holds in a country
1.3.10 Implementing programs whereby current needs are met without endangering re-
sources for future needs
1.3.11 Launched in 2006 to address the country’s chronic unemployment problem and
skill shortages
1.3.12 A program in which government funding is invested in infrastructure development
and education skills development

QUESTION 2:

: When the question requires you to “list” or “name”, you need not write a
sentence but merely the word or a phrase. This MUST be done in bullet
form. These types of questions are applicable for 2.1.1, 3.1.1 and 4.1.1

2.1 List any TWO ‘development strategies’. (2 x 1) (2)

2.2 List TWO groups of people that are marginalised in South Africa (2 x 1) (2)
2.3 List the TWO aims/purposes of government’s intervention in the economy.
(2 x 1) (2)
2.4 Mention any TWO uses of per capita GDP. (2 x 1) (2).
2.5 List any TWO development policies that were implemented in South Africa
since 1994. (2 x 1) (2)
2.6 In what TWO ways can a country ensure the promotion of quality human
resources? (2 x 1) (2)
2.7 State any TWO characteristics of developing countries. (2 x 1) (2)
2.8 Name any TWO of South Africa’s developmental endeavours. (2 x 1) (2)

QUESTION 3:

These types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2.
Answers must be provided in full sentences; learners must ensure that
their answer addresses the question asked

3.1 Why do you think the government should spend more on infrastructure
development? (1 x 2) (2)
3.2 What impact does the Expanded Public Works Programme have on your local
community? (1 x 2) (2)
3.3 How can technology accelerate economic development in South Africa?
(1 x 2) (2)
3.4 How important is an efficient infrastructure for the economy? (1 x 2) (2)
3.5 How is the standard of living in a country determined? (1 x 2) (2)

DATA RESPONSE

All section B questions have TWO data interpretation questions – each to-
tal 10 marks. Section B consist of Questions 2-4 not as numbered in this
document.

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QUESTION 4:

4.1 Study the cartoon and answer the questions that follow

4.1.1 What is depicted in the cartoon above? (1)

4.1.2 What is the age of the economically active population in South Africa? (1)
4.1.3 What is the greatest threat to labour in South Africa? (2)
4.1.4 How do nominal wages differ from real wages? (2)
4.1.5 Why do developing countries have a large supply of unskilled workers?
(2 X 2) (4)

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4.2 Study the information and answer the questions that follow

4.2.1 What percentage is the enrolment in secondary education? (1)

4.2.2 What impact does the literacy rate have on wealth? (1)
4.2.3 What has led to the low enrolment in tertiary education? (2)
4.2.4 Explain how lack of education can lead to a low standard of living. (2)
4.2.5 How should higher education inequalities be addressed to improve the
standard of living of South Africa? (4)

4.3 Read the extract and answer the questions that follow

4.3.1 Identify ONE previous strategy in the information above that was used to improve
economic growth in South Africa. (1)
4.3.2 List ONE characteristic of developing countries. (1)
4.3.3 What is the main aim of the NDP? (2)
4.3.4 What negative impact will the implementation of the NDP have on taxpayers?
(2)
4.3.5 How successful will the implementation of the NDP be in the South African
economy? (2 x 2) (4)

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4.4 Read the extract below and answer the questions that follow:

Government’s great plans disappeared

Johannesburg – The implementation of several great plans by the government have
disappeared “like dew in the morning sun” and the NDP 2030 faces the same fate,
the IFP Brigade said at a press briefing.

South Africa has been down the road of grand plans and ideas before, “Inkhatha
Freedom Party Youth Brigade chairman said at the NDP Indaba in Umhlanga, Kwa-
zulu-Natal.

“Since 1994 great plans have been mooted, but their implementation has never seen
the light of day,” he said. He said the GEAR plan was progressive but disappeared
“like dew in the morning sun”. “The same fate befell AsgiSA. In similar fashion, the
youth wage subsidy also walked the plank”

SOURCE: https://www.iol.co.za/news/politics/governments-great-plans-have-disappeared-1766794

4.4.1 Identify the policy in the extract that was implemented in 2006 to address the
country’s chronic problem of unemployment and skills shortage. (1)
4.4.2 What does the Acronym AsgiSA stand for? (1)
4.4.3 Briefly describe the term economic development. (2)
4.4.4 What is the main aim of the NDP? (2)
4.4.5 How can South Africa realise the main aim in NDP identified above? (4)

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4.5 Study the extract and answer the questions that follow

4.5.1 Why do female traditional healers implement a strategy for management of

indigenous knowledge systems? (1)
4.5.2 Name a health-related problem that can be cured by extracts of wild plants.
(1)
4.5.3 Describe the term indigenous knowledge system (IKS). (2)
4.5.4 Explain the importance of indigenous knowledge systems as part of local
community development. (2)
4.5.5 Why does the government implement policies to protect and promote indigenous
knowledge systems? (4)

All section B questions have TWO 8 marks questions. One is a Middle

order paragraph, the other is a Higher order paragraph

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QUESTION 5 Paragraph type questions – Middle Cognitive

5.1 Differentiate between a developing economy and a developed economy. (8)

5.2 Differentiate between economic growth and economic development. (8)
5.3 Explain low life expectancy and lack of education as the characteristics of
developing country. (8)
5.4 Discuss the objectives of GEAR. (8)
5.5 Discuss the aims of Small Enterprise Development Agencies (SEDA) and the
National Skills Development Strategy (NSDS) as strategies for development.
(8)
5.6 Discuss ‘low levels of productivity’ as one of the characteristics of developing
countries. (8)
5.7 Briefly explain any TWO elements of Indigenous Knowledge Systems. (8)

TYPICAL EXAM QUESTION: THESE HIGHER ORDER QUESTIONS

REQUIRE THE LEARNERS TO USE HER/ HIS CRITICAL
THINIKING SKILLS.

Higher order questions are grounded in the content. These types of questions test critical think-
ing, where candidates should be able to apply their knowledge, through logical reasoning and
also have an awareness of their current economic climate. Content (covered by discuss/
examine/ describe/ analyse/explain/evaluate/compare/assess/justify/construct/calculate) can be
assessed as higher-order questions. Answers will not necessarily be found in textbooks.

QUESTION 6 Paragraph type questions – Higher cognitive

6.1 Examine the impact of high population growth on a developing economy such
as South Africa. (8)
6.2 Why is South Africa regarded as a developing economy? (8)
6.3 How can investment in social (human) capital improve economic development
in South Africa? (8)
6.4 How does the South African government promote indigenous knowledge
systems? (8)
6.5 Analyse the standard of living and low levels of productivity as characteristics
of developing countries. (8)
6.6 Why are indigenous knowledge systems important for local communities? (8)

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ESSAY STRUCTURE

All section C questions have TWO questions 5 & 6 NOT like in this
document. In the examination you will need to answer only one.

HINT: Section C – the long question, must be answered in FOUR sections: Introduction
(definition), Body (headings and full sentences in bullets) additional part and conclusion
(summarising). The mark allocations for Section C is as follows:
MARK ALLO-
STRUCTURE OF ESSAY:
CATION:
Introduction Max 2
The introduction is a lower-order response.
• A good starting point would be to the main concept related to the
question topic
• Do not include any part of the question in your introduction.
• Do not repeat any part of the introduction in the body
• Avoid saying in the introduction what you are going to discuss in the
body
Body:
Main part: Discuss in detail/ In-depth discussion/ Examine/ Critically Max 26
discuss/ Analyse / Compare/ Distinguish/ Differentiate/ Explain/ Evaluate
Additional part: Critically discuss/ Evaluate/ Critically evaluate/ Calcu-
late/ Deduce/ Compare/ Explain Distinguish / Interpret/ Briefly debate/
How/ Suggest/ Construct a graph Max 10
Conclusion
Any Higher or conclusion include: Max 2
• A brief summary of what has been discussed without repeating
facts already mentioned in the body
• Any opinion or value judgement on the facts discussed
• Additional support information to strengthen the discussion/analy-
sis
• A contradictory viewpoint with motivation, if required
• Recommendations
TOTAL 40

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QUESTION 7

• Critically analyse the following developmental strategies used in support of the

development of countries.
- Human resources
- Natural resources
- Technology (26 marks)
• Why are Indigenous Knowledge Systems (IKS) important for the economic devel-
opment of a country? (10 marks)
[40]

QUESTION 8

•Discuss in detail the characteristics of developing countries. (26)

•Explain income inequality with the aid of a graph, making specific reference to SA
in your answer. (10)
[40]
QUESTION 9

• Discuss characteristics of developing countries. (26 marks)

• How have basic services, such as health and welfare, improved in South Africa?
(10 marks)
[40]
QUESTION 10

• Discuss the methods used to increase economic growth in detail. (26 marks)
• How can human and natural resources be used to ensure economic
development? (10 marks)
[40]

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ECONOMIC PURSUITS
TOPIC 3: MONEY AND BANKING
(WEEK 4 -6)
MIND MAP

Micro
lending
activities
Central
Banking
Banking

Bank Failures
MONEY &
Money &
BANKING
Consequences

CONCEPTS

KEY CONCEPTS DESCRIPTION / DEFINITION

Fiat currencies A medium of exchange whose value derives entirely from its
official status as a means of payment.
Prime lending rates The rate at which banks charges the general public when
money is borrowed by the public.
Micro-lending Is a financial innovation made possible by technology and the
peer to peer economy.
Repo rate The rate at which commercial banks are charged by reserve
bank when they borrow money.
Money associated Credit cards, debit cards and electronic transfers.
instruments
Deflation The decrease of the purchasing power of money.
Moral Persuasion The South African Reserve Bank use it to convince banks to
act in a way that is desirable in the current economic climate.
Monetary policy The central banks use of changes in the quantity of money or
the interest rates to stabilise the economy.
Inflation target 3-6% band
Central Bank An institution that over -sees and regulates the banking sys-
tem and controls the monetary base.
M1 Coins and bank notes in circulation plus cheque account.
M2 M1 plus short term and medium term deposits.
M3 M2 PLUS LONG TERM DEPOSITS.

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KEY CONCEPTS DESCRIPTION / DEFINITION

cash reserve ratio that minimum percentage of deposits with the commercial
(crr) banks which the commercial banks must keep with the central
bank
Micro-lenders The industry that lends small amounts to those who are una-
ble to borrow from normal banks.
Capital markets Financial institutions involved in long term investments
SARB The body that regulates and supervises the banks
Money market The market for short -term savings and loans
Foreign exchange This market include all the foreign exchange dealers, such as
markets / forex banks
Currency Legal tender in the country of its origin.

SECTION A: TYPICAL EXAM QUESTIONS

QUESTION 1

MONEY AND BANKING

QUESTION 1: Section A – Short Questions

HINT: When answering Section A – short question, it is important not to rush but to
read the questions carefully and to make sure you understand what the question is
asking. Always remember one alternative is completely wrong, one is nearly correct
and one is totally correct. It is easy to eliminate the completely wrong answer, but if
you do not read the question carefully the nearly correct answer will also appear cor-
rect. The answer will NEVER be two options. Only ONE option is correct. Your an-
swer will immediately be marked incorrect if you write TWO options.

1.1 Various options are provided as possible answers to the following

questions. Choose the answer and write only the letter (A–D) next to the
question number.

1.1.1 Money is not…

A a medium of exchange.
B a measure of value.
C real wealth.
D a standard of future payment.

1.1.2 The total supply of money in the economy is known as…...

A M2
B M3
C M1
D M4

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1.1.3 The … rate is the most important determinant of short-term interest rates.
A bank
B repo
C export
D import

1.1.4 The … makes all the coins on behalf of the central bank.
A South African Reserve Bank
B South African Bank Note Company
C South African Mint Company
D South African Coin Makers

1.1.5 The key cause of inflation is increases in the … of money.

A supply
B demand
C value
D transfer

1.1.6 Which one of the following can NOT be done at an ATM?

A coin deposit
B cash withdrawals
C inter account transfer
D notes deposit

1.1.7 An exchange rate system in which the price of a currency is determined by

demand and supply is called … exchange rate system.

A free floating
B managed
C inflationary
D fiscal

1.1.8 A … occurs when a bank is unable to meet its obligations to its depositors
or other creditors.
A bank finance
B bad loan
C bank fraud
D bank failure

1.1.9 A reason for bank failure is …

A lower inflation rate.
B upswing in the economy.
C bad management of liquidity.
D increase in interest rates.

1.1.10 The … is a set of mechanism by which a government provides money (cash)

in a country’s economy.
A MPC
B monetary system
C fiscal system
D cash in transit

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1.2 Choose a description from COLUMN B that matches the item in COLUMN
Write only the letter (A-L) next to the question number (1.2.1 – 1.2.10) in the
ANSWER BOOK.

COLUMN A COLUMN B
1.2.1 Fiat currencies A. Financial innovation made possible by technology
1.2.2 Prime lending and the peer to peer economy.
rates B. Money supply and interest rates are some of its in-
1.2.3 Repo rate struments.
1.2.4 Micro-lending C. Used by the SARB to convince banks to act in a
1.2.5 Central Bank way that is desirable in the current economic climate.
1.2.6 Monetary policy D. The rate at which banks charges the general public
1.2.7 3-6% band when money is borrowed by the public.
1.2.8 Moral Persuasion E. Notes and coins from a central bank such as the
1.2.9 Money associ- SARB in South Africa.
ated instruments F. SARBs inflation target.
1.2.10 Deflation G. The rate at which commercial banks are charged
by Reserve Bank when they borrow money.
H An institution that manages a States currency,
money supply and interest rates.
I. The purchasing power of money will decrease.
J. Credit cards and electronic transfers.
K. Coins and bank notes.
L. Assets such as money saved for future use.

HINT: Learners must know their concepts well, as this will assist in a better understand-
ing of the content in general. Leaners are encouraged to revise with these type of ques-
tions, that are found in Section A of the paper

1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number. No abbreviations, acro-
nyms or examples will be accepted.

1.3.1 Money that must be accepted by law as means of payments.

1.3.2 Giving loans to small businesses and low income earners.
1.3.3 The central bank of South Africa.
1.3.4 Measures of central banks to achieve economic objectives.
1.3.5 Bank rates at which banks borrow funds from the Reserve Bank.
1.3.6 Property given as a security for payment of a loan.
1.3.7 A legal proceeding involving a person or business that is unable to repay
outstanding debts.
1.3.8 The most liquid money market instrument.
1.3.9 Used by the SARB to convince banks to act in a way that is desirable in the
current economic climate.
1.3.10 Notes and coins from a central bank, such as the SARB in South Africa.
1.3.11 A type of negotiable instrument known as promissory note, made by a bank,
payable to the bearer on demand.
1.3.12 Legal tender in the country of its origin.

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1.3.13 The industry that lends small amounts to those who are unable to borrow
from normal banks.
1.3.14 The Act that promotes fair and sustainable credit market.
1.3.15 Financial institutions involved in long term investments.
1.3.16 The lowest rate at which a bank will lend money to its best customers.
1.3.17 The body that regulates and supervises the banks.
1.3.18 The market for short -term savings and loans.
1.3.19 The most important function of banks.
1.3.20 This market include all the foreign exchange dealers, such as banks.

SECTION B

QUESTION 2:

:When the question requires you to “list” or “name”, you need not write a
sentence but merely the word or a phrase. This MUST be done in bullet
form. This types of questions are applicable for 2.1.1, 3.1.1 and 4.1.1

2.1 Answer the following questions:

2.1.1 Name TWO money associated instruments. (2)
2.1.2 List any TWO functions of money. (2)
2.1.3 Give the TWO forms of modern money. (2)
2.1.4 List any TWO examples of credit instruments. (2)
2.1.5 List TWO properties a commodity must have in order to serve as money. (2)
2.1.6 Name TWO aims of monetary policy. (2)

QUESTION 3:

These types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2.
Answers must be provided in full sentences; learners must ensure that
that their answer addresses the question asked

3.1 How do credit cards contribute positively to the economy? (2)

3.2 How is Covid-19 impacting on the financial sector? (2)
3.3 How are short term borrowings made by the government from the central bank
(2)
3.4 How effective is high interest as an “inflation fighter”? (2)
3.5 How does the SARB change the money supply? (2)
3.6 How do currency and coin enter the money supply? (2)
3.7 How will an increase in the quantity of money affect prices of goods and
services and the value of money? (2)

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QUESTION 4

DATA RESPONSE

4.1 Study the picture below and answer the questions that follow:

Source : google images

4.1.1 What is illustrated above that is put in place by SARB? (1)
4.1.2 Name any ONE secondary instrument used as a payment method in
South Africa. (1)
4.1.3 Describe how does inflation affect money as a store of value. (4)
4.1.4 Discuss the aims of monetary policy. (4)

4.2 Read the article below and answer the questions that follow:

[ALERT] RESERVE BANK CUTS REPO RATE BY 25 BASIS POINTS

The prime lending rate, which is the interest charged by banks to clients, is now at 10%. “The
MPC decided to reduce the repurchase rate by 25 basis points to 6.5% with effect from 29 March
2018. Four members preferred a reduction while three members preferred an unchanged stance.
“The 25 basis point cut had been expected by traders and economists, after a slowdown in con-
sumer price inflation to 4.0% in February meant price growth was well within the central bank's 3-
6% target range.
Lesetja Kganyago says risks to South Africa's inflation outlook have subsided somewhat since
the bank's last monetary policy meeting in January and that the outlook for economic growth is
more positive but still challenging. “The lack of compensation for fiscal drag, weak employment
growth as well as by subdued growth in credit extension to households. While consumption
expenditure is expected to grow at a slightly slower rate in 2018 compared to last year, the trend
over the forecast period is moderately stronger than previously expected, reaching 2.1% in
2020.”The central bank last cut rates in July 2017, highlighting an improving inflation outlook,
but warning of a slowdown in economic growth. Consumer inflation, which the bank uses as a
guide for deciding rates, has remained within the bank's target of 3% to 6% for the past year
and is expected to average 4.9% this year.
Source :Eyewitness News

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4.2.1 What role does Mr Lesetja Kganyago play at the SARB currently? (1)
4.2.1 What is the current repo rate in South Africa? (1)
4.2.3 Briefly define the term interest rate. (2)
4.2.4 How will businesses be affected with the cutting repo rates by a few basis Points?
(2)
4.2.5 Differentiate between the micro-lending industry and village financial services
cooperatives. (4)
4.3 Study the information below and answer the questions that follow:

4.3.1 Identify the cost responsible for the skyrocketing of small money loans? (1)
4.3.2 Name ONE cost that would remain constant. (1)
4.3.3 Calculate the total cost of credit for a R500 loan over one month. (2)
4.3.4 Describe the effect on the cost of the loan if the monthly service fee is removed?
(2)
4.3.5 What impact will this high cost have on small money loans for low income
earners? 2x2(4)

4.4 Study the table below and answer the questions that follows:
SOUTH AFRICAN BANKS THAT HAVE FAILED

Year of
Bank Reason
curatorship
Poor management and liquidity
VBS Mutual Bank 2018
problems
Poor management and liquidity
African Bank 2014 problems, particularly around
unsecured lending
Poor management and liquidity
Saambou Bank 2002
problems
New Republic Poor management and liquidity
2002
Bank problems

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4.4.1 Name TWO risks that banks face (2)

4.4.2 How does the South Africa Reserve bank deal bank failures? (2)
4.4.3 Who are the victims of bank failure? (2)
4.4.4 Briefly explain medium of exchange and measure of value as
functions of money. 2x2 (4)

4.5 Study the cartoon below and answer the questions that follow:

MONETARY POLICY COMMITTEE CUTS REPURCHASE (REPO) RATE

[Adapted from https://images.app.goo.gl]

4.5.1 Name the central bank in South Africa. (1)

4.5.2 Mention any other instrument used in monetary policy, besides interest
rates. (1)
4.5.3 Briefly describe the term repurchase rate. (2)
4.5.4 Briefly explain government’s banker as a function of the central bank.
(2)
4.5.5 How will a cut in interest rates influence consumer spending? 2x2 (4)

4.6 Study the picture below and answer the questions that follow.

MONEY AND BANKING IN SOUTH AFRICA

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4.6.1 Name any TWO major banks in South Africa according to this picture. (2)
4.6.2 Mention a value-added service provided by banks. (2)
4.6.3 Explain why money can retain its value over a long time. (2)
4.6.4 What are the basic principles of credit creation by banks (4)

4.7 Study the information below and answer the questions that follow:

Notes and coins in circulation outside the banking sector: R140 million
Demand deposits: R980 million
M3 money supply: R3000 million
Long – term deposits: R800 million

4.7.1 Name ONE financial intuitions which deals with coins. (1)
4.7.2 Use the information above to calculate the value of M1. (1)
4.7.3 Briefly explain the term endogenous money. (2)
4.7.4 Discuss the basic function of a financial intermediary. (2)
4.7.5 Explain what a security is and why it is created. (4)

4.8 Study the cartoon below and answer the questions that follow:

SOURCE:GOOGLE IMAGES

4.8.1 Who is crying for help in the cartoon above? (1)

4.8.2 Name one essential function of a bank. (1)
4.8.3 Briefly explain the term cash reserve ratio. (2)
4.8.4 What is an overdraft facility? (2)
4.8.5 Discuss the advantages of e-banking. (4)

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QUESTION 5 Paragraph type questions – Middle Cognitive

HINT: All section B questions have TWO 8 marks questions, numbered accord-
ing to questions not like in this document.

5.1 Discuss money as a medium of exchange and a store of value. 2x4 (8)
5.2 Discuss the quantity theory of money. (8)
5.3 Discuss the success of the establishment of the Micro Finance Regulatory
council (MFRC). (8)
5.4 Why would there be so many different rates of interest existing at the same time?
(8)
5.5 Distinguish between direct and indirect financing. (8)
5.6 Explain why money will not be a good measure to preserve wealth during
periods of inflation. (8)
5.7 Explain with the aid of a diagram the role of banks in the money creation
process. (8)
5.8 Briefly discuss qualities of money. (8)

QUESTION 6

TYPICAL EXAM QUESTION: THESE HIGHER ORDER QUES-

TIONS REQUIRE THE LEARNERS TO USE HER/ HIS CRITICAL
THINIKING SKILLS.

Higher order questions are grounded in the content. These types of questions test critical thinking,
where candidates should be able to apply their knowledge, through logical reasoning and also have
an awareness of their current economic climate. Content (covered by discuss/examine/describe/ ana-
lyse/explain/evaluate/compare/assess/justify/construct/calculate) can be assessed as higher-order
questions. Answers will not necessarily be found in textbooks.

Paragraph type questions – Higher cognitive

6.1 How can the government stabilize the value of money in a country? (8)
6.2 Analyse the consequences of bank failures (8)
6.3 Analyse the instruments that the SARB has available to influence the
liquidity deficit of the banking sector. (8)
6.4 Analyse the role of the SARB in maintaining financial stability (8)
6.5 How and why the central bank can influence the money supply? (8)
6.6 How can banks influence economic growth? (8)
6.7 Explain with the aid of a diagram why the SARB may decide to increase the
repo rate. How this increase in the repo rate affect the money market? (8)

SECTION C

HINT: All section C questions have TWO questions 5 & 6 NOT like in this document.
In the examination you will need to answer only one.

HINT: Section C – the long question, must be answered in FOUR sections: Introduction
(definition), Body (headings and full sentences in bullets) additional part and conclusion
(summarising). The mark allocations for Section C is as follows:

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MARK ALLO-
STRUCTURE OF ESSAY:
CATION:
Introduction Max 2
The introduction is a lower-order response.
• A good starting point would be to the main concept related to the
question topic
• Do not include any part of the question in your introduction.
• Do not repeat any part of the introduction in the body
• Avoid saying in the introduction what you are going to discuss in the
body
Body:
Main part: Discuss in detail/ In-depth discussion/ Examine/ Critically dis- Max 26
cuss/ Analyse / Compare/ Distinguish/ Differentiate/ Explain/ Evaluate
Additional part: Critically discuss/ Evaluate/ Critically evaluate/ Calcu-
late/ Deduce/ Compare/ Explain Distinguish / Interpret/ Briefly debate/
How/ Suggest/ Construct a graph Max 10
Conclusion
Any Higher or conclusion include: Max 2
• A brief summary of what has been discussed without repeating
facts already mentioned in the body
• Any opinion or value judgement on the facts discussed
• Additional support information to strengthen the discussion/analy-
sis
• A contradictory viewpoint with motivation, if required
• Recommendations
TOTAL 40

QUESTION 7: ECONOMIC PURSUITS 40 MARKS – 40 MINUTES

• Discuss the main functions of the SARB. (26)

• What causes bank failures? (10)
[40]
QUESTION 8: ECONOMIC PURSUITS 40 MARKS – 40 MINUTES

• Discuss the functions of the South African Reserve Bank under the following
headings:
o Government’s banker (8)
o Bank of issue (8)
o Bankers bank (10) (26)

• How will the Governor of the Reserve Bank use monetary policy to influence the
quantity of money of a country? (10)
[40]

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CONTEMPORARY ECONOMIC ISSUES

TOPIC 1: GLOBALISATION
(WEEK 7-8)

GLOBALISATION

Comparison of
the North/South Meaning
divide

Consequences of Causes of
Globalisation Globalisation

KEY CONCEPTS
TERM / CONCEPT BRIEF DESCRIPTION/ DEFINITION
Absolute advantage A scenario where a country produces a product more effi-
ciently than others
African continental Free The newly formed trade block for African countries, to
Trade Area boost trade between African countries
Economic integration Trade unification between different states by partial or full
abolishing of customs and tariffs on trade
Foreign Direct invest- A form of investment where a foreign company invests in
ment a business in the form of buildings, machines and equip-
ment
Free Trade The trading of goods and services between countries with
less red tape
Free Trade Area Countries remove all trade barriers among themselves on
goods and services traded.
G 20 The group of the first twenty most industrialised countries
Globalisation A process where the economies of countries become
more connected to one another
Integration A grouping of countries to get more control over the
global economy
Internationalisation The extension of economic activities across national
boundaries.
Multinational corpora- International businesses that produce goods and ser-
tions vices in several countries

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TERM / CONCEPT BRIEF DESCRIPTION/ DEFINITION

Multinational Enterprises Businesses that are producing goods or services in more
than one country.
Quota/s Limit the quantity of a product that can be imported
Limits the quantity of a product that can be imported into
a country
Regionalisation A process whereby countries decide to cooperate eco-
nomically
The World Bank It works to standardise economic development and meas-
uring of development.
Trade Block A grouping of countries to get more control over the
global economy

SECTION A

1.1 Various options are provided as possible answers to the following questions.
Choose the answer and write only the letter (A–D) next to the question number.

1.1.1 Which of the following is not an element of trade?

A. Communication
B. Production
C. Consumption
D. Logistics

1.1.2 FDI moves physical … between countries.

A. Technology
B. Capital
C. Resources
D. Goods

1.1.3 International trade agreements disputes are mediated by the …

A. UN
B. WTO
C. IMF
D. WHO

1.1.4 Because of lower wages developing countries have a/an … advantage in respect
of globalisation.
A. Comparative
B. Relative
C. Absolute
D. Marginal

1.1.5 Which of the following countries is not a member of BRICS?

A. Botswana
B. Russia
C. India
D. China

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1.1.6 For trade to take place, … elements need to come together.

A. 2
B. 3
C. 4
D. 5

1.1.7 In spite of globalisation, poverty in developing countries …

A. has declined.
B. remain unchanged.
C. has increased.
D. has been eradicated.

1.1.8 The trade disputes between rich and poor countries revolve around subsidies on…
A. Tourism
B. Technology
C. Communication
D. Agriculture

1.1.9 Africa is seen as part of the …

A. developed world.
B. North divide.
C. first world.
D. developing world.

1.1.10 This institution is responsible for assisting countries with balance of payment
deficits.
A. ILO
B. World Bank
C. IMF
D. WTO

1.1.11 What is a multinational corporation?

A. It is situated north of the equator
B. It sells products in several countries
C. It forms multilateral agreements
D. It is owned and controlled by the state

1.1.12 Export promotion refers to ...

A production of goods previously imported.
B subsidising producers to produce more for exports.
C removing trade restrictions.
D making trade rules the same all over the world.

11.13 A country that is a member of the G8 is …

A South Africa.
B France.
C Nigeria.
D India.

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1.1.14 The institution responsible for supporting countries with balance of payments
losses, is the …
A ILO.
B World Bank.
C SARB.
D IMF.

1.1.15 Trade liberalisation refers to …

A the free movement of goods and services.
B the free movement of people.
C the establishment of trade barriers between South Africa and the rest of the
world.
D import and export restrictions.

1.1.16 Increased co-operation between countries results in the formation of …

A trade blocks.
B building blocks.
C banking blocks.
D business blocks.

1.1.17 The process of interaction among the countries of the world to bring their
economies closer together is called ...
A globalisation.
B industrialisation.
C containerisation.
D liberation. (17x 2) (34)

1.2 Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the letter (A-H) next to the question number (1.2.1 – 1.2.6) in the
ANSWER BOOK.

COLUMN A COLUMN B
1.2.1 Capital liberalisation A. An organisation that initiated trade liberalisation.

1.2.2 IMF B. Removal of exchange and investment controls

1.2.3 Internationalisation C. Trade is an important element.

1.2.4 Globalisation D. Removal of restrictions such as tariffs and quotas.

1.2.5 GATT E. Extension of economic activities across national

borders.
1.2.6 Absolute advantage F. A country can produce the same output at a lower
resource input than another country.

G. Standardise trade, BOP and exchange rates,

international lending and borrowing.

H. A country can produce more output with the same in-

put than another country

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(6 x 1)

HINT: Learners must know their concepts well, as this will assist in a better under-stand-
ing of the content in general. Leaners are encouraged to revise with these type of ques-
tions, that are found in Section A of the paper

1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number. No abbreviations,
acronyms or examples will be accepted.

1.3.1 The extension of economic activities across national boundaries.

1.3.2 Businesses that are producing goods or services in more than one country.
1.3.3 Trade unification between different states by partial or full abolishing of customs
and tariffs on trade.
1.3.4 The group of the first twenty most industrialised countries.
1.3.5 It works to standardise economic development and measuring of development.
1.3.6 Countries remove all trade barriers among themselves on goods and services
traded.
1.3.7 Limits the quantity of a product that can be imported into a country.
1.3.8 International businesses that produce goods and services in several countries
1.3.9 The trading of goods and services between countries with less red tape
1.3.10 A scenario where a country produces a product more efficiently than others
1.3.11 A process where the economies of countries become more connected to one
another
1.3.12 A grouping of countries to get more control over the global economy
1.3.13 A process whereby countries decide to cooperate economically
1.3.14 A grouping of countries to get more control over the global economy
1.3.15 A form of investment where a foreign company invests in a business in the form of
buildings, machines and equipment
1.3.16 Limit the quantity of a product that can be imported
1.3.17 A government imposed trade restriction that limits the number, or monetary value,
of goods that can be imported or exported during a particular time period
1.3.18 The newly formed trade block for African countries, to boost trade between African
countries.
(18 x 1) (18)

SECTION B
QUESTION 2
2.1 State two characteristics of internationalisation. (2 x 1)
2.2 Name any TWO member countries of BRICS. (2 x 1)
2.3 Name any TWO Multinational Enterprises. (2 x 1)
2.4 List any TWO territorial divisions of the world. (2 x 1)
2.5 State any TWO key structures of trade. (2 x 1)
2.6 Give any TWO elements of globalisation. (2 x 1)
2.7 Mention TWO major divisions of the global economy. (2 x 1)
2.8 Give any TWO member states of the SADC region. (2 x 1)
2.9 List any TWO causes of globalisation. (2 x 1)
2.10 List any TWO positive consequences of globalisation. (2 x 1)

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QUESTION 3

These types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2.
Answers must be provided in full sentences; learners must ensure
that their answer addresses the question asked

3.1 What is internationalisation? (1 x 2)

3.2 Define the term globalisation. (1 x 2)
3.3 Why is it beneficial for countries to engage in free trade? (1 x 2)
3.4 What is the purpose of AfCFTA? (1 x 2)

All section B questions have TWO data interpretation questions – each

total 10 marks. Section B consist of Questions 2-4 not as numbered in
this document.

QUESTION 4 Data response

4.1 Study the cartoon below and answer the questions that follow.

4.1.1 What is the message of the cartoon? (1)

4.1.2 State ONE negative impact of globalisation. (1)
4.1.3 Define the term globalisation. (2)
4.1.4 According to the cartoon, why should globalization be stopped? (2)
4.1.5 What will be the impact of stopping globalization on South African’s economy?
(4)

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4.2 Read the extract below and answer the questions that follow:

INTERNATIONAL TRADE JOURNEY

Your product is already popular in the domestic market, so now you are thinking
about going international. Where do you start? These are the questions one hears
from people starting their international journey. It is common for teams to underesti-
mate the complexity of going international which leads to delays, over spending and
epic fails. It is crucial to select regions for international expansion in some priority
order instead of picking them based on gut feeling.
Source: blog.usejournal.com

4.2.1 What is the above extract about? (1)

4.2.2 State the first step international businesses take when establishing themselves.
(1)
4.2.3 Describe the term economic integration. (2)
4.2.4 Briefly explain increased quantities as a characteristic of internationalisation.
(2)
4.2.5 Differentiate between globalisation and internationalisation. (4)

4.3 Study the picture below and answer the questions that follow.

4.3.1 What is the message of the picture? (1)

4.3.2 Which group of countries cause pollution? (1)
4.3.3 Describe the term global warming. (2)
4.3.4 Why are developing countries more affected by climate change than
industrialised nations? (2)
4.3.5 Explain the impact of the actions of industrialised nations on developing
countries. (4)

4.4 Study the cartoon below and answer the questions that follow

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4.4.1 Name ONE main function of the World Trade Organisation (WTO) (1)
4.4.2 Why is the USA regarded as a first world country? (1)
4.4.3 Briefly describe the term free trade. (2)
4.4.4 Why are trade barriers bad for the economy of a country? (2)
4.4.5 What do countries stand to gain from a free trade policy? (4)

4.5 Study the picture below and answer the questions that follow.

4.5.1 What does the above picture represent? (1)

4.5.2 From the above picture, which part of the globe represent developing countries?
(1)
4.5.3 Briefly describe the term wealth. (2)
4.5.4 Differentiate between countries in the North and countries in the South in
terms of levels of education. (2)
4.5.5 What are the positive effects of globalisation on South Africa? (4)

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4.6 Study the cartoon below and answer the questions that follow:

4.6.1 Explain the economic message portrayed by the cartoon above. (1)
4.6.2 From the cartoon, name the continent that is in the hands of the short man.(1)
4.6.3 Name TWO institutions established to manage the flow of trade between
countries. (2)
4.6.4 Explain the effect of globalisation on the developing countries. (2)
4.6.5 Which factors contributed to the above scenario? (2 x 2) (4)

4.7 Study the cartoon below and answer the questions that follow.

4.7.1 What is globalisation? (1)

4.7.2 Does globalisation benefit all countries? (1)
4.7.3 Briefly describe the concept free trade. (2)
4.7.4 Discuss any negative impact of free trade according to the cartoon. (2)
4.7.5 Describe the role of the WTO. (2 x 2) (4)

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4.8 Study the cartoon below and answer the questions that follow.

4.8.1 Which economic concept can be associated with the phrase ‘The world is round,
we’ll get there’? (1)
4.8.2 What does the abbreviation WTO stand for? (1)
4.8.3 Briefly explain the concept free trade. (2)
4.8.4 Explain the relationship between comparative advantage and free trade. (2)
4.8.5 What do countries stand to gain from a free trade policy? (4)

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4.9 Study the following and answer the questions that follow

4.9.1 Identify ONE country that forms part of BRICS. (1)

4.9.2 Has the BRICS agreement resulted in any significant improvements to the SA
economy? (1)
4.9.3 Briefly describe the term trade block. (2)
4.9.4 What is an emerging economy? . (2)
4.9.5 How can South Africa benefit from trade agreements such as BRICS?
(2x2) (4)

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4.10 Study the cartoon below and answer the questions that follow.

4.10.1 What is the economic message portrayed in the cartoon above? (1)
4.10.2 From the above cartoon state the other term that can be used to describe
countries in the South? (1)
4.10.3 Describe the term globalisation. (2)
4.10.4 Explain the major help countries in the South get from countries in the North?
(2)
4.10.5 Differentiate between developing countries and developed countries using
information in the cartoon above. (4)

All section B questions have TWO 8 marks questions. One is a Middle

order paragraph, the other is a Higher order paragraph

QUESTION 5
5.1 Explain the advantages of internationalisation. (8)
5.2 Briefly discuss the positive effects of globalisation. (8)
5.3 Discuss the advantages of Multinational enterprises. (8)
5.4 Briefly discuss any TWO characteristics of globalisation. (8)
5.5 Briefly explain trade liberalisation and standardisation as causes for
globalisation. (8)
5.6 Explain changes in employment conditions and changes in culture as
consequences of globalisation. (8)
5.7 Explain improvement of communication and technology as a cause of
globalisation. (2 x 4) (8)
5.8 Discuss the positive effects of globalisation. (8)
5.9 Discuss the disadvantages of globalisation. (8)
5.10 Tabulate TWO differences to illustrate the North-South divide. (8)

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TYPICAL EXAM QUESTION: THESE HIGHER ORDER QUES-

TIONS REQUIRE THE LEARNERS TO USE HER/ HIS CRITI-
CAL THINIKING SKILLS.
Higher order questions are grounded in the content. These
types of questions test critical thinking, where candidates should be able to
apply their knowledge, through logical reasoning and also have an aware-
ness of their current economic climate. Content (covered by discuss/exam-
ine/describe/ analyse/explain/evaluate/compare/assess/justify/construct/calculate)
can be assessed as higher-order questions. Answers will not necessarily be
found in textbooks.

QUESTION 6 Paragraph type questions – Higher cognitive

6.1 What would South Africa gain from integrating with other economies? (8)
6.2 Why would a country prefer foreign direct investment as opposed to portfolio
investment? (4 x 2) (8)
6.3 How can South Africa benefit from trade agreements such as BRICS? (8)
6.4 Evaluate the effect of globalisation on the economy of South Africa. (8)
6.5 Evaluate the effect of the Covid-19 pandemic on globalisation (8)
6.6 Discuss in detail the AfCFTA. (8)

QUESTION 7
• Examine in detail the causes of globalisation. (26 marks)

• Evaluate the negative impact globalization has on South African economy.

(10 marks)

QUESTION 8
• Compare the characteristics of the North and South divide economies.
(26 marks)
• How has the Covid-19 pandemic negatively impacted on the South African
economy? (10 marks)

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CONTEMPORARY ECONOMIC ISSUES

TOPIC 2 :ENVIRONMENTAL DETERIORATION
(WEEK 9 -10)

RELATIONSHIP:
ENVIRONMENT &
ECONOMY

Conflict of
The global and
different uses of
local impact on
the natural
South Africa
environment

ENVIRONMENTAL
DETERIORATION

Examine in detail
Approaches to
the state of
sustainability
environment

Protecting the
environment

KEY CONCEPTS:
CONCEPT DESCRIPTION /DEFINITION
Air pollution Occurs when there is an accumulation of substances in the at-
mosphere in such concentrations that they become part of the
air we breathe. Air pollution can include tobacco smoke, exhaust
fumes and acid rain etc.
Brown Issues Effects on environmental health impacts, such as water usage
and waste collection.
Clean energy This is energy that is produced through methods that do not re-
lease greenhouse gases or any other pollutants, such as elec-
tricity or nuclear power.
Command and control The direct regulation of an industry or activity through laws that
(CAC) state what is allowed and what is illegal.
Conservation Deals with the sustainable use and management of both renew-
able and non-renewable resources to ensure that they are avail-
able for use for future generations.
Deforestation Cutting, clearing and removal of rainforest/trees into less bio-di-
verse ecosystem such as pasture, cropland or plantations/per-
manent destruction of forests in order to make the land available
for other uses.
Ecosystem A localised group of interdependent organisms together with the
environment that they inhabit and depend on.

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CONCEPT DESCRIPTION /DEFINITION

Environment Refers to everything around us: land, water, air, plant and ani-
mal life. It provides us with the space to live, erect buildings and
produce food.
Environmental Exploiting natural resources without destroying the ecologi-
degradation cal balance of an area
Environmental subsidies Cash granted by the government for activities that reduce envi-
ronmental damage. For example, recycling of waste, production
of unleaded petrol, development of an equipment to save energy
or to reduce smoke etc.
Environmental Sustaina- Means the ability of the environment to survive its use for eco-
bility nomic activity
Erosion It is a gradual process of movement and transport of the upper
layer of soil (topsoil) by different agents, particularly water, wind
and mass movement causing its deterioration in the long term.
Externalities Are the extra costs and benefits that are not captured by the
market transactions. They can either be positive or negative.
Global warming The emission of greenhouse gases due to human activity
causes global warming which in turn causes an increase in tem-
perature that then leads to rising sea levels, melting of polar ice
caps, flash floods and desertification.
Climate change affecting the whole world
Green Issues Effects of future generations, such as water conservation and
less waste generation.
Green tax/ environmental Tax that can be imposed on the output of a good, wherever ex-
tax ternal environmental costs are generated. Green taxes are
charged on items such as tyres.
Greenhouse Gasses A gas that contributes to the greenhouse effect by absorbing in-
frared radiation. Carbon dioxide is an example of greenhouse
gasses.
Kyoto protocol It is an international agreement whereby developed countries
pay developing countries for their right to pollute.
Land pollution/ Arises from dumping toxic waste products. It includes visible
environmental pollution waste and litter as well as the pollution of the soil itself
Marketable permits Each business is given a license (permit) to emit a share of the
chemical pollutants.
Noise pollution The excessive noise released by factories, motor vehicles, loud
music etc. People who live near airports, train stations or facto-
ries can actually be harmed by the noise levels they endure
Pollution Pollution is the introduction of waste matter into the environ-
ment, both directly and indirectly.
Preservation To keep resources that are non-renewable intact e.g. ecological
systems, heritage sites
Soil erosion Refers to the wearing away of a field’s topsoil by natural physi-
cal forces of water, wind or through forces associated with farm-
ing activities such as tillage.

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TYPICAL EXAM QUESTIONS

QUESTION 1: Section A – Short Questions

HINT: When answering Section A – short question, it is important not to rush but to
read the questions carefully and to make sure you understand what the question is
asking. Always remember one alternative is completely wrong, one is nearly correct
and one is totally correct. It is easy to eliminate the completely wrong answer, but if
you do not read the question carefully the nearly correct answer will also appear
correct. The answer will NEVER be two options. Only ONE option is correct. Your
answer will immediately be marked incorrect if you write TWO options.

Various options are provided as possible answers to the following questions.

Choose the answer and write only the letter (A–D) next to the question
number.

1.1.1 Carbon dioxide that is emitted during the production of goods and services are
called
A the greenhouse effect.
B global warming.
C biodiversity.
D carbon emissions.

1.1.2 Achieving significant improvement in the lives of at least 100 million slum dwellers
by 2020 is one of the ... goals.
A World Summit on Sustainable Development
B Millennium Development
C Kyoto Protocol
D COP 17 conference

1.1.3 Which of the following factors is/are responsible for the depletion of the ozone
layer?
A Carbon monoxide
B Ultraviolet rays
C Carbon dioxide
D Pollution

1.1.4 What is the degradation of land in dry countries called?

A Environmental deterioration
B Soil erosion
C Deforestation
D Desertification

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1.1.5 Resources that may become exhausted if they are not managed in a sustainable
manner are known as … resources.
A natural
B finite
C man-made
D renewable

1.1.6 Environmental degradation can be described as ...

A letting agricultural runoff cause depletion and killing fish downstream.
B using solar power at a rapid rate.
C using oil to make gasoline.
D recycling.

1.1.7 The National Forest Act aims to...

A protect and enhance quality air.
B ensure that local communities share the benefits of forests.
C set standards for the disposal of waste.
D promote sustainable management, development and protection of forests.

1.1.8 Carbon dioxide that is emitted during the production of goods and services are
called ...
A the greenhouse effect.
B global warming.
C biodiversity.
D carbon emissions.

1.1.9 Achieving significant improvement in the lives of at least 100 million slum dwellers
by 2020 is one of the ... goals.
A World Summit on Sustainable Development
B Millennium Development
C Kyoto Protocol
D COP 17 conference

1.1.10 South Africa is currently experiencing a … crisis due to global warming.

A vegetation
B conservation
C water
D food

1.1.11 Fossil fuels are an example of …

A non-renewable resources.
B renewable resources.
C recyclable resources.
D non-recyclable resources.

1.1.12 The international agreement on fighting climate change that was adopted in 1997
is called the …
A Johannesburg Summit
B Kyoto protocol
C Rio summit
D World Summit on Sustainability and Development

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1.1.13 The expression with regard to the environment that the human “footprint” is too big
means
A population grows to fast
B People consume too much
C There is too much wastage
D Humans use more than the earth’s capacity to reproduce

1.1.14 Land consumption means …

A using sand in building materials.
B using land for establishing of towns.
C converting roads into farmland.
D building dams in rivers.

1.1.15 Gas emissions and climate change are connected to …

A. property rights taxes.
B. global warming.
C. positive externalities.
D. Private benefits

1.1.16 The state can play an important role in maintaining environmental sustainability
through its …
A. fiscal policy.
B. urbanisation policy.
C. monetary policy.
D. supply side policy.

1.1.17 The state can play an important role in maintaining environmental sustainability
through …
A. taxation.
B. externalities.
C. tariffs.
D. quotas.

1.1.18 A firm will spend less on pollution reduction equipment because of its small
marginal…
A. private cost.
B. social cost.
C. private benefit.
D. social benefit.

1.1 19 Local capacity building among … people is a crucial aspect of sustaining the
environment.
A. endogenous
B. indigenous
C. exogenous
D. biodiverse

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1.2 Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the letter (A-P) next to the question number (1.2.1 – 1.2.16) in the
ANSWER BOOK.

COLUMN A COLUMN B
1.2.1 Land consumption A A localised group of interdependent organisms
1.2.2 Environmental together with the environment that they depend on
degradation B This causes the temperature of the earth to increase.
1.2.3 Deforestation C examples include electricity or nuclear power that
1.2.4 Global warming does not pollute the atmosphere when used as
1.2.5 Private ownership opposed to cost of oil
1.2.6 Greenhouse D Ensuring a healthy and a continuation of present
Gasses ecological systems so as to be productive in the
1.2.7 Overexploitation present and in the future
1.2.8 Desertification E the permanent destruction of woodlands
1.2.9 Kyoto protocol F To reduce emissions of carbon dioxide
1.2.10 Natural capital G Conversion of open space or farmland to residential,
1.2.11 Erosion commercial, office or establishment of towns
1.2.12 Ecosystem H A resource is used at a rate faster than the rate at
1.2.13 Environmental which that resource regenerates
Sustainable I The wearing away of natural resources
1.2.14 Clean energy J depletion of resources such as air, soil and water
1.2.15 Conservation K Turns productive farmland into non-productive
1.2.16 Preservation desert as a result of poor land management
L Gas emissions on climate change
M The stock of assets that our environment provides,
such as soil and water
N It concerns elements of the environment that are
threatened with extinction, e.g. wildlife
O People are for flora and fauna if they are given the
right to own them
P Refers to protecting of nature – wildlife, air water and
earth deposits

HINT: Learners must know their concepts well, as this will assist in a better understand-
ing of the content in general. Leaners are encouraged to revise with these type of ques-
tions, that are found in Section A of the paper

1.3 Provide the economic term/concept for each of the following descriptions.
Write only the term/concept next to the question number. No abbreviations, acro-
nyms or examples will be accepted.

1.3.1 When the flow of residual emissions resulting from human activity exceeds the
natural environment’s capacity to absorb them / The introduction of contaminants into the
environment
1.3.2 Animal or plant that are seriously at risk of extinction
1.3.3 Exploiting natural resources without destroying the ecological balance of an area
1.3.4 A way of using natural resources without destroying the ecological balance of an
area
1.3.5 Cutting down forest to make place for plantation and housing
1.3.6 To manage the environment in such a way that it will be protected from change
1.3.7 Limits the quantity of a product that can be imported into a country

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1.3.8 Refer to a change in average water conditions. Or in the time variation of weather
around longer-term average conditions
1.3.9 The consumption of a resources faster than it can be replenished
1.3.10 A type of land degradation in which a relatively dry land region becomes
increasingly arid, typically losing its bodies of water as well as vegetarian and wildlife
1.3.11 Taxes levied on goods damaging the environment
1.3.12 The ability of the environment to survive its use for economic activity.
1.3.13 It refers to meeting the needs of the present generation without compromising the
needs of future generations
1.3.14 Climate change affecting the whole world
1.3.15 To keep resources that are non-renewable intact, e.g. ecological systems,
heritage sites
1.3.16 Its goal was to create strategies to stop and reverse the effects of environmental
degradation (damage), and to support international efforts to promote sustainable devel-
opment in all countries

QUESTION 2:

HINT: When the question requires you to “list” or “name”, you need not write a sen-
tence but merely few words or a phrase. This MUST be done in bullet form. This
types of questions are applicable for 2.1.1, 3.1.1 and 4.1.1

2.1 Name any TWO policies and legislation introduced by the Department of
Environmental Affairs to protect the environment. (2 x 1) (2)
2.2 Name any TWO examples of pollution. (2 x 1) (2)
2.3 Name any TWO examples of consumer waste. (2 x 1) (2)
2.4 List any TWO examples of renewable resources (2 x 1) (2)
2.5 Name any TWO principles for sustainable development. (2 x 1) (2)
2.6 Name any TWO of the millennium development goals. (2 x 1) (2)
2.7 List TWO examples of fossils fuels? (2 x 1) (2)

These types of questions are applicable for 2.1.2, 3.1.2 and 4.1.2.
Answers must be provided in full sentences; learners must ensure
that their answer addresses the question asked

QUESTION 3:

3.1 What impact does HIV/Aids have on poverty? (2)

3.2 How do Green Taxes contribute towards sustainability? (2)
3.3 Why is it important for us to sustain the environment? (2)
3.4 How do international protocols help sustainable development? (2)
3.5 How would the Kyoto Protocol help the environment? (2)
3.6 How do international protocols help sustainable development? (2)
3.7 How do Green Taxes contribute towards sustainability? (2)
3.8 How does granting property rights ensure environmental sustainability? (2)
3.9 What negative externality can be caused during the process of manufacturing
electricity? (2)
3.10 How do environmental subsidies ensures environmental sustainability? (2)

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DATA RESPONSE

HINT: All section B questions have TWO data interpretation questions – each total
10 marks. Section B consist of Questions 2-4 not as numbered in this document
QUESTION 4:

4.1 Study the following and answer the questions that follow

4.1.1 Identify from the above extract any TWO ways of protecting the environment.(2)
4.1.2 Briefly describe the concept ecosystem. (2)
4.1.3 Explain price policy as a method of protecting the environment. (2)
4.1.4 Why is it vital for human beings to protect the environment? (4)

4.2 Study the cartoon below and answer the questions that follow

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4.2.1 Identify TWO environmental issues (problems) that can be derived from the
cartoon. (2)
4.2.2 Explain the term sustainable economic development. (2)
4.2.3 Name action steps that households can take to reduce the amount of toxic
material we use. (2 x 1) (2)
4.2.4 What could the government do to prevent unsustainable use of the environment?
(2 x 2) (4)

4.3 Study the information and answer the questions that follow

4.3.1 Identify any ONE environmental issue (problem) . (1)

4.3.2 What are brown issues in the environment? (1)
4.3.3 Briefly explain sustainable economic development. (2)
4.3.4 Name action steps that households can take to prevent the amount of toxic
material we use. (2)

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4.3.5 What could the government do to prevent the unsustainable use of the
environment? (4)

4.4 Study the graph below and answer the questions that follow.

4.4.1 Name ONE factor contributing the most to soil erosion. (1)
4.4.2 What is green environmental issue? (1)
4.4.3 Briefly describe the term conservation. (2)
4.4.4 How can technological innovation be used to protect the environment?(2)
4.4.5 How does agriculture contribute to soil degradation? (4)

4.5 Read the extract below and answer the questions that follow:

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4.5.1 Which South African Department attended the UNFCCC? (1)

4.5.2 How many African countries were represented at the UNFCCC? (1)
4.5.3 Name TWO problems mentioned in the article, about climate change in
Africa (2)
4.5.4 Briefly describe the term sustainable economic development. (2)
4.5.5 What could the government do to prevent the unsustainable use of
the environment? (2 x 2) (4)

4.6 Read the extract and answer the questions that follow

4.6.1 List any ONE factor that contribute to the loss of biodiversity. (1)
4.6.2 What is the increase of global temperatures called? (1)
4.6.3 What is the main cause of climate change? (2)
4.6.4 Briefly explain brown environmental issues. (2)
4.6.5 How does climate change affect the economic environment? (2 x 2) (4)

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4.7 Study the article below and answer the questions that follow:

FISHING QUOTAS “DESIGNED TO SQUEEZE OUT THE POOR”

The quota system implemented by the government appeared to be designed to

keep small fishing companies and poor fishers out, says an action group.

Hlanganani Fishing Business Forum chairperson Mawethu Ndude said: “Firstly,

you have the bona-fide fishermen who failed to get quotas and are now sitting with-
out an income. Then you have the small guys who were given quotas, but the costs
of using those quotas are so high, they cannot make a living out of it.” Co-ordinator
Pedro Garcia said: “some allocations are just too small for people to really make a
living from and many bona-fide fishermen sit on the beach, while people who have
never been fishermen go out and catch.”

But Marine and Coastal Management spokesperson Carol Moses said: “The hard
reality is that our marine resources are dwindling and it is impossible to allocate
rights to all. We are investigating various possible alternative job opportunities for
these communities. We are planning the development of harbours and we are look-
ing at the possibilities of ecotourism.”
[Source: www.iol.co.za]

4.7.1 Why is it necessary for government to impose fishing quotas, according to

the article above? (1)
4.7.2 Name a solution which government is planning to create alternative
jobs for the communities. (1)
4.7.3 Explain the quota system implemented by government. (2)
4.7.4 Discuss a reason why the poor fisherman will not benefit from these quotas.
(2)
4.7.5 How could we prevent our “marine resources from dwindling”? (2 x 2) (4)

4.8 Read the extract below and answer the questions that follow

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4.8.1 How much did it cost Mpumalanga to neutralise the effects of acid rain? (1)
4.8.2 What is the introduction of waste matter into the environment, both directly and
indirectly? (1)
4.8.3 Briefly describe the term carbon dioxide emissions. (2)
4.8.3 List TWO economic consequences of land degradation. (2)
4.8.4 Distinguish between renewable and non-renewable resources. (4)

4.9 Study the information below and answer the questions that follow.

4.9.1 Give the name of ONE city in the extract where climate change conferences were
held. (1)
4.9.2 Identify the international organisastion in the extract above that initiates climate
change conferences. (1)
4.9.3 Describe how greenhouse gases contribute to global warming. (2)
4.9.4 How can a green fund help to reduce global warming? (2)
4.9.5 Why is global warming increasing despite the many international conferences
on climate change? (2 x 2) (4)

4.10 Study the information below and answer the questions that follow.

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4.10.1 What is the main reason for the poaching of rhinos? (1)
4.10.2 During which year was rhino poaching at its worst in South Africa? (1)
4.10.3 Briefly describe the term biodiversity. (2)
4.10.4 Give ONE example of how awareness of the natural fauna and flora can be
created. (2)
4.10.5 How will conservation benefit the people living near the rhino habitat? (2 x 2) (4)

All section B questions have TWO 8 marks questions. One is a Middle

order paragraph, the other is a Higher order paragraph

QUESTION 5 Paragraph type questions – Middle Cognitive

5.1 Explain basic conservation methods used to protect global natural resources.
(8)
5.2 Discuss private property rights and voluntary agreements as approaches to
sustaining the environment. (8)
5.3 In which way do international agreements protect the environment? (8)
5.4 Briefly discuss South Africa’s endeavour in renewable resources. (8)
5.5 Explain FOUR ways to achieve environmental sustainability. (8)
5.6 Give FOUR downstream effects of soil erosion. (8)
5.7 Briefly discuss the granting of property rights as a measure to sustain the
environment. (8)

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TYPICAL EXAM QUESTION: THESE HIGHER ORDER QUES-

TIONS REQUIRE THE LEARNERS TO USE HER/ HIS CRITICAL
THINIKING SKILLS.

Higher order questions are grounded in the content. These types of questions test critical thinking,
where candidates should be able to apply their knowledge, through logical reasoning and also have
an awareness of their current economic climate. Content (covered by discuss/examine/ describe/
analyse/explain/evaluate/compare/assess/justify/construct/calculate) can be assessed as higher-order
questions. Answers will not necessarily be found in textbooks.

QUESTION 6

6.1 What role can society play in trying to save the environment from global warming?
(8)
6.2 How does environmental degradation impact on South Africa’s economy? (8)
6.3 Why do you think taking care of forests is important for the economy and the
environment? (8)
6.4 What problems would be experienced in the economy if non-renewable
resources were consumed excessively? (8)
6.5 How can humans positively impact on the environment? (8)
6.6 In which way do international agreements protect the environment? (8)
6.7 Explain how the state can aid preservation of the natural forest? (8)
6.8 How do environmental subsidies ensure environmental sustainability? (8)
6.9 How does environmental degradation lead to poverty? (8)

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ESSAY STRUCTURE

HINT: All section C questions have TWO questions 5 & 6 NOT like in this document.
In the examination you will need to answer only one.

HINT: Section C – the long question, must be answered in FOUR sections: Introduction
(definition), Body (headings and full sentences in bullets) additional part and conclusion
(summarising). The mark allocations for Section C is as follows:
MARK AL-
STRUCTURE OF ESSAY: LOCATION:
Introduction Max 2
The introduction is a lower-order response.
● A good starting point would be to the main concept related to the ques-
tion topic
● Do not include any part of the question in your introduction.
● Do not repeat any part of the introduction in the body
● Avoid saying in the introduction what you are going to discuss in the
body
Body:
Main part: Discuss in detail/ In-depth discussion/ Examine/ Critically dis- Max 26
cuss/ Analyse / Compare/ Distinguish/ Differentiate/ Explain/ Evaluate
Additional part: Critically discuss/ Evaluate/ Critically evaluate/ Calculate/
Deduce/ Compare/ Explain Distinguish / Interpret/ Briefly debate/ How/
Suggest / Construct a graph Max 10
Conclusion
Any Higher or conclusion include: Max 2
● A brief summary of what has been discussed without repeating facts
already mentioned in the body
● Any opinion or value judgement on the facts discussed
● Additional support information to strengthen the discussion/analysis
● A contradictory viewpoint with motivation, if required
Recommendations
TOTAL 40

QUESTION 7

•Discuss the various approaches that can be used to sustain the environment.
(26 marks)
• What role can society play in trying to save the environment from global warming?
(10 marks)
[40]
QUESTION 8
• Discuss in detail public sector interventions and public sector control as measure
to ensure sustainable development. (26 marks)
• How did globalisation negatively affect South Africa? (10 marks)
[40]

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