ECONOMICS PAPER1
GRADE 12
SENIOR CERTIFICATE EXAMINATIONS
2016

INSTRUCTIONS AND INFORMATION

1. Answer FOUR questions as follows in the ANSWER BOOK:
   SECTION A: COMPULSORY
   SECTION B: Answer TWO of the three questions.
   SECTION C: Answer ONE of the two questions.
2. Answer only the required number of questions. Answers in excess of the required number will NOT be marked.
3. Number the answers correctly according to the numbering system used in this question paper.
4. Write the question number above each answer.
5. Read the questions carefully.
6. Start EACH question on a NEW page.
7. Leave 2–3 lines between subsections of questions
8. Answer the questions in full sentences and ensure that the format, content and context of your responses comply with the cognitive requirements of the questions.
9. Use only black or blue ink.
10. You may use a non-programmable pocket calculator.
11. Write neatly and legibly.

SECTION A (COMPULSORY)
QUESTION 1 30 MARKS – 20 MINUTES
1.1 Various options are provided as possible answers to the following questions. Choose the answer and write only the letter (A–C) next to the question number (1.1.1–1.1.8) in the ANSWER BOOK, for example 1.1.9 C.
1.1.1 Earnings received from the export of goods and services are called …

1. leakages.
2. injections.
3. investments.

1.1.2 Estimating unknown data based on a pattern of known data is called …

1. the amplitude.
2. a trend.
3. extrapolation.

1.1.3 Countries with fundamental balance of payment problems can apply for financial support from the …

1. International Monetary Fund.
2. Federal Bank.
3. Reserve Bank.

1.1.4 The mini-budget that covers a period of three years, which is tabled in October each year, is called the …

1. main budget.
2. medium-term expenditure framework.
3. short-term budget.

1.1.5 Government expenditure forms part of the … policy.

1. monetary
2. fiscal
3. Reserve Bank's

1.1.6 An important aim of industrial development is to increase …

1. imports.
2. economic growth.
3. foreign aid.

1.1.7 The nationwide government intervention plan to create employment for the poor and vulnerable is called the …

1. Expanded Public Works Programme.
2. Industrial Policy Action Plan.
3. Strategic Investment Programme.

1.1.8 A high standard of living is directly related to …

1. good education.
2. low economic growth.
3. a decrease in expenditure. (8 x 2)
   (16)

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 (1.2.1–1.2.8) in the ANSWER BOOK.

(8 x 1)
(8)
1.3 Give ONE term for each of the following descriptions. Write only the term next to the question number (1.3.1–1.3.6) in the ANSWER BOOK.
1.3.1 An account in the balance of payments that shows records of investments by South Africans in other countries
1.3.2 Primary participants and owners of the factors of production
1.3.3 The worldwide interaction of economies
1.3.4 An indicator that measures the number of babies who die before the age of one
1.3.5 Spatial areas that offer particular advantages to mining and other businesses along a particular trade route
1.3.6 The government's plan for revenue and expenditure for the coming fiscal year (6 x 1) (6)
TOTAL SECTION A: 30

SECTION B
Answer any TWO of the three questions in this section in the ANSWER BOOK.
QUESTION 2: MACROECONOMICS 40 MARKS – 30 MINUTES
2.1 Answer the following questions.
2.1.1 Name TWO macroeconomic objectives of the state. (2 x 1) (2)
2.1.2 How can the Reserve Bank use interest rates to stimulate the economy? (1 x 2) (2)
2.2 Study the graph below and answer the questions that follow.

2.2.1 Which institution published the information in the graph above? (1)
2.2.2 During which quarter of 2014 did South Africa experience a positive change in the GDP? (1)
2.2.3 What are the implications of recent trends in the GDP between 2011 and 2014? (2 x 2) (4)
2.2.4 Explain the importance of the GDP as economic indicator. (2 x 2) (4)
2.3 Study the extract below and answer the questions that follow.

2.3.1 Identify TWO parastatals (SOEs) in the extract. (2 x 1) (2)
2.3.2 Explain the term privatisation. (2)
2.3.3 How does the poor financial health of parastatals (SOEs) threaten South Africa's economy? (1 x 2) (2)
2.3.4 Explain how the privatisation of state-owned enterprises (SOEs) can secure our fiscal future. (2 x 2) (4)
2.4 Distinguish between leading and lagging indicators. (2 x 4) (8)
2.5 How can inefficiencies that contributed towards public sector failure be solved?(8)
[40]

QUESTION 3: ECONOMIC PURSUITS 40 MARKS – 30 MINUTES
3.1 Answer the following questions.
3.1.1 State TWO redress methods used by the government to correct the imbalances of the past. (2 x 1) (2)
3.1.2 How are developing countries challenged by globalisation? (1 x 2) (2)
3.2 Study the information below and answer the questions that follow.

SA STEEL INDUSTRY IN CRISIS ArcelorMittal SA became the latest casualty of falling steel prices and slowing demand. Some of the reasons are: cheap imports, the devaluation of China's currency, frequent power outages, violent industrial action, inadequate infrastructure and increasing production costs. The steel industry is seeing a crisis; the media is talking about a job bloodbath, especially in smaller companies. These companies are highly indebted and are battling to survive.

3.2.1 Give ONE reason for the falling steel prices. (1)
3.2.2 Who is Africa's largest steel producer? (1)
3.2.3 Why do you think China devalued its currency? (2)
3.2.4 What was the effect of China's currency devaluation on South Africa's steel industry? (2)
3.2.5 In your opinion, what can the South African government do to reduce the negative effects of this crisis? (2 x 2) (4)
3.3 Study the information below and answer the questions that follow.

3.3.1 Identify ONE country that forms part of BRICS. (1)
3.3.2 Which member country is interested in signing a nuclear power deal with South Africa? (1)
3.3.3 Explain the concept emerging economies. (2 x 2) (4)
3.3.4 How can South Africa benefit from the New Development Bank BRICS? (2 x 2) (4)
3.4 Distinguish between economic growth and economic development. (2 x 4) (8)
3.5 How can special economic zones (SEZs) contribute to regional development? (4 x 2)
(8)
[40]

QUESTION 4: MACROECONOMICS AND ECONOMIC PURSUITS 40 MARKS – 30 MINUTES
4.1 Answer the following questions.
4.1.1 Name TWO import substitution methods. (2 x 1) (2)
4.1.2 Why is industrial development a necessity in South Africa? (1 x 2) (2)
4.2 Study the information below and answer the questions that follow.

4.2.1 What tax scale is referred to in the heading of the extract? (1)
4.2.2 What important element of redress is found in the extract? (1)
4.2.3 Explain the negative impact of high tax rates. (2 x 2) (4)
4.2.4 Calculate the tax payable by a person whose taxable income is R200 000 per year. Show ALL calculations. (4)
4.3 Study the information below and answer the questions that follow.

POVERTY AND WEALTH DISTRIBUTION

According to World Bank statistics, the percentage of South Africans living under the poverty line had fallen from 38 per cent in 2000 to 23 per cent by 2006. But income inequality has gone in the other direction. South Africa's Gini coefficient, which was already quite high – mainly due to the legacy of apartheid, has seen income disparity drastically increase since 2009. South Africa has one of the highest rates of inequality in the world. While much focus has traditionally centered on the disparities between the races, inequality has risen within each racial group.

4.3.1 Which international institution provided the data in the extract? (1)
4.3.2 When did the income disparities in South Africa increase drastically? (1)
4.3.3 Which index describes the percentage of the population living below the poverty-line income? (2)
4.3.4 Give a reason why poverty in South Africa declined between 2000 and 2006. (2)
4.3.5 What is the relationship between the Lorenz curve and the Gini coefficient? (2 x 2) (4)
4.4 Distinguish between the money market and the capital market. (2 x 4) (8)
4.5 In your opinion, how can South Africa's monetary policy contribute to a higher economic growth rate? (4 x 2) (8)
[40]
TOTAL SECTION B: 80

SECTION C
Answer any ONE of the two questions in this section in the ANSWER BOOK.
Your answer will be assessed as follows:

QUESTION 5: MACROECONOMICS 40 MARKS – 40 MINUTES
In the global economy countries strive to export more than they import to maximise the benefits of international trade.

• Examine the supply reasons for international trade.(26)
• Use a graph and explain how an increase in exports to the USA will affect the value of the rand. (10)

[40]

QUESTION 6: ECONOMIC PURSUITS 40 MARKS – 40 MINUTES
The annual analysis of the economic performances of countries is very important. This is done by international institutions and governments to determine how countries performed in comparison with others.

• Analyse the following economic indicators that are used to measure the performance of the economy:
  • Productivity (maximum 10 marks)
  • Foreign trade (maximum 16 marks)(26)
• Why are comparisons of economic performances of countries important?(10)

[40]
TOTAL SECTION C:40
GRAND TOTAL: 150