ECONOMICS PAPER 1
GRADE 12
SENIOR CERTIFICATE EXAMINATIONS
MAY/JUNE2017

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. Write down the question number (1.1.1–1.1.8), choose the answer and make a cross (X) over the letter (A–D) of your choice in the ANSWER BOOK.

1.1.1 The circular-flow model of an open economy shows the functioning of an economy that includes the … sector.

1. public
2. business
3. foreign
4. domestic

1.1.2 A diagram that shows expansion and contraction periods of economic activities is called a(n) … cycle.

1. business
2. economic
3. productivity
4. inflationary

1.1.3 The removal of unnecessary restrictions by legislation is known as …

1. regulation.
2. deregulation.
3. centralisation.
4. decentralisation.

1.1.4 The term used to compare a country's export prices with its import prices by means of indices is called the …

1. balance of payments.
2. terms of trade.
3. balance of trade.
4. exchange rate.

1.1.5 An example of a social indicator is …

1. education.
2. business confidence.
3. employment.
4. production.

1.1.6 An increase in the real value of production in a country is known as economic …

1. development.
2. growth.
3. integration.
4. prosperity.

1.1.7 Which strategy failed in its objective to halve poverty and unemployment by 2014?

1. New Growth Path (NGP)
2. Reconstruction and Development Plan (RDP)
3. Accelerated and Shared Growth Initiative for South Africa (AsgiSA)
4. National Development Plan (NDP)

1.1.8 A purpose-built industrial estate physically enclosed and linked to an international harbour or airport is known as a (n)…

1. corridor.
2. special economic zone (SEZ).
3. industrial development zone (IDZ).
4. integrated development plan (IDP) (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 A business owned wholly or partly by the state and run by a public authority
1.3.2 The strategy used by the Reserve Bank that focuses on the amount of money in the economy
1.3.3 The value of a country's currency exchanged for another currency
1.3.4 The process whereby people move from rural areas into towns and cities
1.3.5 Labour force from the age of 16 to 60 years
1.3.6 Worldwide interaction of economies with trade as an important element (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 leakages from the economic circular flow. (2 x 1) (2)
2.1.2 What benefit will government enjoy from selling non-profitable state-owned enterprises? (1 x 2) (2)
2.2 Study the table below and answer the questions that follow.

2.2.1 Name the method used to calculate the GDP in the table above. (2 x 1) (2)
2.2.2 Briefly describe the term gross domestic product. (2)
2.2.3 What is the main purpose of subsidies on production? (2)
2.2.4 Calculate the consumption of fixed capital as a percentage of the GDP at factor cost. Show ALL calculations. (4)
2.3 Study the information below and answer the questions that follow.

SOUTH AFRICA'S NATIONAL BUDGET – 2016/17

2.3.1 Identify ONE form of an indirect tax in the information above. (1)
2.3.2 What type of tax will contribute most to state revenue during the 2016/17 financial year? (1)
2.3.3 Briefly describe the term budget. (2)
2.3.4 Give ONE reason why the government increased taxation (excise duties) on demerit goods during the 2016/17 financial year. (2)
2.3.5 How will an increase in corporate income tax impact negatively on economic growth? (2 x 2) (4)
2.4 Explain natural resources and specialisation as causes of international trade. (2 x 4) (8)
2.5 An international company invests R5 million in a business enterprise in South Africa. Calculate the multiplier effect of this investment on our economy if the marginal propensity to save (mps) is 0,6. Show ALL calculations.
(8)
[40]

QUESTION 3: ECONOMIC PURSUITS 40 MARKS – 30 MINUTES
3.1 Answer the following questions.
3.1.1 Name TWO indicators related to production. (2 x 1) (2)
3.1.2 Why does the South African government focus on small businesses to promote economic growth? (1 x 2) (2)
3.2 Study the information below and answer the questions that follow.

'The development gap between the North and South has become a problem for the whole world to manage.' This statement has become somewhat outdated as the gap between the rich and the poor countries is closing. Opportunities for more equal trade and flow of capital have allowed for some developing countries to develop faster. The availability and use of modern technology in agriculture and manufacturing and trade agreements, like the Africa Growth and Opportunity Act (AGOA), have added further value to the overall change.

3.2.1 Which trade agreement has given developing countries favourable export opportunities? (1)
3.2.2 Identify, in the data above, how technology may be used to combat poverty. (1)
3.2.3 Briefly describe the impact of activities in the North (North-South divide) on the world environment. (4)
3.2.4 In your opinion, how can countries in the South solve the problem of underdevelopment? (2 x 2) (4)
3.3 Study the extract below and answer the questions that follow.

3.3.1 According to the extract above, which sector created the most jobs in 2014? (1)
3.3.2 Identify the most important cause of poverty in the extract. (1)
3.3.3 Briefly describe the concept unemployment. (2)
3.3.4 Why is the high employment rate by the public sector sometimes viewed as a problem? (2)
3.3.5 What can the private sector do to increase employment in South Africa? (2 x 2) (4)
3.4 Briefly discuss regional development in South Africa using competitiveness and sustainability as benchmark criteria. (2 x 4) (8)
3.5 How do the International Monetary Fund and the United Nations, as international organisations, play a role in the standardisation of the indicators of member countries? (8)
[40]

QUESTION 4: MACROECONOMICS AND ECONOMIC PURSUITS
40 MARKS – 30 MINUTES
4.1 Answer the following questions.
4.1.1 Name TWO markets that form part of the economic circular flow. (2 x 1) (2)
4.1.2 What would be the impact on economic development if the population increased without an increase in the real gross domestic product (GDP)? (1 x 2) (2)
4.2 Study the cartoon and answer the questions that follow.

4.2.1 Identify TWO economic indicators in the cartoon above. (2 x 1) (2)
4.2.2 Briefly describe the term recession. (2)
4.2.3 How will the initial stages in an economic downturn influence interest rates in South Africa? (2)
4.2.4 What can the South African Reserve Bank do to increase economic growth in the country? (2 x 2) (4)
4.3 Study the extract below and answer the questions that follow.

4.3.1 Identify ONE key policy initiative developed by the Department of Trade and Industry in the extract above. (1)
4.3.2 According to the extract, what is the main purpose of the Department of Trade and Industry? (1)
4.3.3 Briefly describe the aims of the National Industrial Policy Framework. (2 x 2) (4)
4.3.4 How would these key policy initiatives support the growth of the South African economy? (2 x 2) (4)
4.4 Briefly discuss distribution of income (economic equity) and price stability as macroeconomic objectives. (2 x 4) (8)
4.5 How can the government use incentives to encourage industrial development? (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
South Africa's international trade policy consists of export promotion and import substitution.

• Discuss export promotion as part of South Africa's international trade policy under the following headings:
  
  • Reasons (8)
  • Methods (8)
  • Disadvantages (10) (26)
• Analyse the arguments in favour of a free-trade policy. (10)

[40]

QUESTION 6: ECONOMIC PURSUITS 40 MARKS – 40 MINUTES
In order to achieve economic growth and development the right approach is required.

• Examine the demand-side approach to growth and development in South Africa. (26)
• Evaluate the success of AsgiSA and Black Economic Empowerment (BEE) as government initiatives to promote growth and development. (10)
  [40]

TOTAL SECTION C: 40
GRAND TOTAL: 150