ECONOMICS P1
GRADE 12
JUNE 2016
NATIONAL SENIOR CERTIFICATE

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. Write the question number above each answer.
3. Number the answers correctly according to the numbering system used in this question paper.
4. Read the questions carefully and start each question on a NEW page.
5. Leave 2−3 lines between subsections of questions.
6. Answer questions in full sentences and ensure that the format, content and context of your responses comply with the cognitive levels of the questions.
7. Write neatly and legibly.
8. Only the required number of questions will be marked in the order in which they appear in the ANSWER BOOK.
9. Use only black or blue ink.
10. Non-programmable pocket calculators may be used.
    
    

SECTION A (COMPULSORY)
QUESTION 1 30 MARKS − 20 MINUTES
1.1 Various options are provided as possible answers to the following questions. Choose the correct answer and write only the letter (A–C) next to the question number (1.1.1–1.1.8) in the ANSWER BOOK.
1.1.1 The transfer of ownership from the public to the private sector is known as …

1. decentralisation.
2. nationalisation.
3. privatisation.

1.1.2 In a business cycle, estimating something known from information that is unknown, is called …

1. amplitude.
2. extrapolation.
3. trend.

1.1.3 The money market in the RSA is a market for … savings and loans.

1. short-term
2. medium-term
3. long and short term

1.1.4 A tax paid on goods to reduce imports is known as an/a ...

1. embargo.
2. quota.
3. tariffs.

1.1.5 Which ONE of the following can cause a deficit on the balance of payments?

1. Inward foreign investments
2. Increase in foreign currency reserves
3. Decline in mineral exports

1.1.6 The process to increase production of goods and services in the economy.

1. Economic development
2. Economic growth
3. Economic indicator

1.1.7 During the ... phase, the economy experiences high inflation.

1. prosperity.
2. recovery.
3. recession.

1.1.8 A trade agreement between a group of emerging markets.

1. BRICS
2. AGOA
3. MERCUSOR (8 x 2)

 (16)

1.2 Choose the correct 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 trade policy whereby a country encourages the local production of goods, rather than importing the goods
1.3.2 The largest contributor to the government revenue
1.3.3 A statement of a country’s trade and financial transactions with the rest of the world, over a particular time period
1.3.4 The ratio between the imports and exports index
1.3.5 A curve that illustrates the relationship between unemployment and inflation
1.3.6 The withdrawal of money from the circular flow (6 x 1) (6)
TOTAL SECTION A: 30

SECTION B
Answer 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 an example each of a lagging and a coincident indicator. (2 x 1) (2)
2.1.2 What effect will corruption have on the efficiency of the government? (1 x 2) (2)
2.2 Study the table below and answer the questions that follow.

2.2.1 Identify the method used in the above table to calculate GVA. (2)
2.2.2 Classify any activity under the tertiary sector. (2)
2.2.3 Calculate the contribution of the secondary sector to the GDP (C). (2)
2.2.4 Highlight the importance of National Account Aggregates. (4)
2.3 Study the information below and answer the questions that follow.

E-TOLL IS HERE TO STAY!
	“E-toll tariffs will be adjusted downwards but government remains committed to the principle of road users funding improvements to keep Sanral solvent,” the National Treasury said on Wednesday.
In his 2015/16 budget speech in the National Assembly, Finance Minister Nhlanhla Nene said. “Concerns regarding the socio-economic impact of toll tariffs have been heard, and revised monthly ceilings will shortly be proposed.”

2.3.1 Explain the term e-toll. (2)
2.3.2 What does the acronym SANRAL stand for? (2)
2.3.3 What negative socio-economic impact can e-toll tariffs have on the South African economy? (2)
2.3.4 In your opinion what is the most important cause of public sector failure in SA? Motivate your answer. (4)
2.4 Explain the exogenous cause (monetarism) for a business cycle. (4 x 2) (8)
2.5 How effective is international trade for South Africa? (4 x 2) (8)
[40]

QUESTION 3: ECONOMIC PURSUITS 40 MARKS – 30 MINUTES
3.1 Answer the following questions.
3.1.1 Give TWO methods to promote exports. (2 x 1) (2)
3.1.2 What effect will an increase in investment have on the economy? (1 x 2) (2)
3.2 Study the graph below and answer the questions that follow.

3.2.1At what point on the graph does equilibrium for exchange originally occur? (2)
3.2.2 Give TWO reasons for the shift of the demand curve from DD to D1D1. (4)
3.2.3 What happens to the value of the rand, when DD shifts to D1D1? Motivate your answer. (4)
3.3 Study the following graph and answer the questions that follow.

3.3.1 What do dotted lines a and b represent? (2 x 1) (2)
3.3.2 Define the term real (actual) business cycle. (2)
3.3.3 What is the importance of the length (T2 T3) of the business cycle?(2)
3.3.4 What can government do to ensure that high inflation does not occur during peaks of business cycles? (2 x 2) (4)
3.4 Argue in favour of import substitution. (4 x 2) (8)
3.5 How are interest rates and taxation influenced in expansionary and contractionary situations? (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 models that are used to explain economics. (2 x 1) (2)
4.1.2 What effect will a weak rand have on foreign trade? (1 x 2) (2)
4.2 Study the table below and answer the questions that follow.

4.2.1 What does the abbreviation MTEF stand for? (2)
4.2.2 The deficit on the budget should NOT exceed which percentage of GDP? (2)
4.2.3 Calculate the budget deficit as a percentage of GDP (A). (2)
4.2.4 In your opinion, what can the government do to reduce the budget deficit? (4)
[10]
4.3 Study the extract below and answer the questions that follow.

4.3.1 Name TWO items in the financial account of the balance of payment. (1 x 2) (2)
4.3.2 Which institution gives guidelines in the compilation of payments? (1 x 2) (2)
4.3.3 According to the BPM6, how many accounts does the balance of payments have? (1 x 2) (2)
4.3.4 Briefly explain how disequilibrium in the balance of payments can be corrected using borrowing and lending. (2 x 2) (4)
4.4 Explain the new economic paradigm. (4 x 2) (8)
4.5 How is the economy negatively affected by public sector failure? (4 x 2) (8)
[40]
TOTAL SECTION B: 80

SECTION C
Answer ONE of the two questions in this section.

QUESTION 5: MACROECONOMICS 40 MARKS – 40 MINUTES
Economists present the economy as a simplified circular flow model to show how the different participants interact with each other.

• Discuss in detail, without the use of a graph, the interaction of all participants in an open economy circular flow model. (26)
• Draw and explain the multiplier process by using a fully labelled graph. (10)

[40]

QUESTION 6: ECONOMIC PURSUITS 40 MARKS – 40 MINUTES
To be internationally competitive, a country needs to have suitable trade policies in place. They have to grow their industries if they want to increase the standard of living.

• Discuss, in detail, the arguments in favour of protectionism. (26)
• In your opinion, how can the government use subsidies to ensure that local industries are protected against unfair competition from abroad. (10)
  [40]

TOTAL SECTION C: 40
GRAND TOTAL: 150