ECONOMICS
PAPER ONE (P1)
GRADE 12 
NSC EXAM PAPERS AND MEMOS
NOVEMBER 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.

QUESTIONS 

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–C) of your choice in the ANSWER BOOK. 
EXAMPLE: 
EXAMPLE FOR 1

1.1.1 Goods characterised by non-rivalry and non-excludability are known as … goods. 

    1. public
    2. common
    3. private 

1.1.2 The national aggregate that represents the value added in each  phase of production is called the gross domestic … 

    1. expenditure.
    2. product.
    3. income. 

1.1.3 Large public corporations or business entities in the public sector  are known as … 

    1.  corporates.
    2. enterprises.
    3. parastatals. 

1.1.4 An exchange rate system where the forces of supply and demand  entirely establish the value of a currency is called a … exchange  rate system. 

    1. fixed
    2. managed 
    3. free-floating 

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

    1. balance of trade.
    2. per capita income.
    3. inflation rate. 

1.1.6 Monetary policy focuses on … and the aggregate money supply. 

    1. income
    2. interest rates
    3. taxation

1.1.7 The process whereby people move from rural areas to towns and  cities is called … 

    1. urbanisation.
    2. immigration.
    3. emigration. 

1.1.8 A piece of land that forms a passageway that allows access from  one area to another and is part of regional development is called  a … 

    1. custom.
    2. corridor.
    3. freeway. (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. 

COLUMN A 

COLUMN B

1.2.1 Globalisation 
1.2.2 Export promotion 
1.2.3 Economy of scale 
1.2.4 Bureaucracy 
1.2.5  Repo rate 
1.2.6  Production price index  
1.2.7  Commodities 
1.2.8  Malnutrition

A the rate banks are paying for lending  money from the central bank  
B products traded in their basic form, for example coal and timber 
C hampers the cognitive development   of children  
D a common argument in favour of free  trade   
E a trade policy that encourages the production of locally manufactured  goods to be sold abroad
F worldwide interaction of economies  with trade as a common element 
G a system of government that does not  approve rules and therefore causes delays 
H measures prices of locally  manufactured goods at factory level 
I also known as intermediate goods

 (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 fluctuation in economic activities over a period of time 
1.3.2 The distance from the trend line to the peak and the trough 
1.3.3 A tariff imposed as a percentage of the value of goods imported 
1.3.4 The Act that promotes equal job opportunities for all 
1.3.5 Compares a country's export prices to its import prices by means  of indexes 
1.3.6 People within the economically active population who are willing  and able to work but cannot find a job (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 types of business cycles. (2 x 1) (2) 
2.1.2 How will foreign direct investment benefit the South African economy? (1 x 2) (2) 

2.2 Study the cartoon below and answer the questions that follow. 
P2 2.2
[Source: Business Times, February 2016] 

2.2.1 Identify TWO indirect taxes in the cartoon above. (2 x 1) (2) 
2.2.2 Name the fiscal instrument represented by the scale in the cartoon above. (2) 
2.2.3 What is the 'surprise' depicted in the cartoon above? (2) 
2.2.4 In your opinion, why did the Minister of Finance decide to keep  income tax and VAT at the same levels? (2 x 2) (4)

2.3 Study the extract below and answer the questions that follow. 

SOUTH AFRICA OPENS DOORS FOR CHICKEN IMPORTS FROM THE UNITED STATES 

The Minister of Trade and Industry said South Africa will end punishing duties  on US chicken and renew imports.  
South Africa imposed 100% duties on the dumping of certain chicken  portions. Removing those import barriers opened a market that had been  closed for the past 15 years. This decision was within the tolerance of the  South African poultry industry. 
The products to be imported will be mainly the cuts that are not favoured by  the US consumer. South Africans consume more chicken than people in any  other African country and local producers have struggled to keep up with the  rising demand.  
The agreement, which would see the US emerge as one of the top poultry  exporters to South Africa, should help smooth the passage of the (American)  African Growth and Opportunity Act (AGOA). AGOA is a trade initiative  providing duty-free treatment of US imports of certain products. 

 [Adapted from Mail & Guardian, February 2016]

Related Items

2.3.1 Identify the reason in the extract why South Africa agreed to import  chicken from the US. (1)   
2.3.2 Name the trade initiative mentioned above. (1) 2.3.3 Briefly describe the term dumping. (2) 
2.3.4 What will be the effect of population growth in South Africa on  chicken imports from the US? (2) 
2.3.5 What negative impact could this deal have on the local poultry  industry? (2 x 2) (4) 

2.4 Distinguish between exogenous approaches and endogenous approaches  to business cycles. (2 x 4) (8) 
2.5 How can imports be targeted to reduce the deficit on the balance of trade in  South Africa? (8)

[40]

QUESTION 3: ECONOMIC PURSUITS 40 MARKS – 30 MINUTES 
3.1 Answer the following questions. 

3.1.1 Name TWO social indicators related to income distribution. (2 x 1) (2) 
3.1.2 How can deregulation benefit the business sector of South Africa?  (1 x 2) (2) 
3.2 Study the information below and answer the questions that follow. 

P2 3.2
NDP HELPS SA TO FOCUS    

Though the NDP, which outlines a plan to address issues in SA, is not perfect, it provides  a road map to where government would like us to be in 2030. The NDP provides an  opportunity for South Africans to work together to confront our challenges and build a  better future for ourselves and future generations. Let us not squander this opportunity. 

[Adapted from NDP and Mail & Guardian, February 2015] 

3.2.1 Identify any TWO previous strategies in the information above that  were used to improve economic growth in South Africa. (2 x 1) (2) 
3.2.2 State the main aim of the NDP. (2)
3.2.3 What negative impact will the NDP have on taxpayers? (2) 
3.2.4 In your opinion, how successful will the implementation of the NDP  be in the South African economy? (4)

3.3 Study the extract below and answer the questions that follow. 

LIVING STANDARDS – SOUTH AFRICA 

     HOUSEHOLDS  
  FORMAL HOUSING   USE ELECTRICITY     PIPED WATER 
 1996  2015  1996  2015  1996  2015
 5,8 million  12,4 million    5,2 million  14,1 million   7 million   14 million 

The data shows the relative success of the government's service delivery  efforts despite continuing backlogs and the fact that in many cases the quality  of services delivered should have been higher.  
Another conclusion is that state-driven service delivery efforts have probably  gone as far as they can conceivably go and future improvements in living  standards will be driven more by labour market access and levels of  economic growth than by the efforts of state planners. 

[Adapted from Institute of Race Relations, February 2016]

3.3.1 What happened to the standard of living of South Africans between  1996 and 2015? (1)   
3.3.2 Identify an element of the Human Development Index (HDI) in the  information above. (1) 
3.3.3 What can the government do to improve the quality of service  delivery even further? (2) 
3.3.4 How can the private sector get involved through public-private  partnerships to strengthen the efforts of government? (2) 
3.3.5 In your opinion, how can labour market access drive future  improvement in living standards? (2 x 2) (4) 

3.4 Briefly discuss growth and trade as globalisation challenges that face  developing countries. (2 x 4) (8) 
3.5 How does South Africa comply with various international bodies that require  them to standardise their indicators? (8)

[40]

QUESTION 4: MACROECONOMICS AND ECONOMIC PURSUITS  
 40 MARKS – 30 MINUTES
4.1 Answer the following questions. 

4.1.1 Give TWO reasons for public sector failure. (2 x 1) (2) 
4.1.2 How will a decrease in export prices affect our country's terms  of trade? (1 x 2) (2) 

4.2 Study the graph below and answer the questions that follow.   
P2 4.2

4.2.1 What market is depicted in the graph above? (1) 
4.2.2 What effect does the shift in the demand curve have on the price  of dollars? (1) 
4.2.3 Briefly describe the term exchange rate. (2) 
4.2.4 What will the effect of the new price for dollars be on export trade between South Africa and the United States? (2) 
4.2.5 Explain how an increase in the number of US tourists to  South Africa will influence the value of the rand. (2 x 2) (4) 

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

SA ECONOMY CLOSING IN ON A RECESSION 

South Africa's economy is at risk of falling into a recession, the World Bank  said, as it cut the nation's growth forecast for this year to 0,8%. 
Growth in Africa's third-largest economy is under pressure, following a slump  in commodity prices, weakening demand from China and the worst drought in  more than a century.  
The rand has plunged 14% against the dollar in the past three months as  sentiment worsened and credit-rating companies (Moody's, Standard & Poor's and Fitch) downgraded the country's credit rating because of growth risks. 
South Africa is projected to remain largely below the average growth rate of  4,5% for sub-Saharan Africa in 2016 to 2017. 
Against this backdrop, poverty in South Africa is set to rise as incomes fall. 

[Adapted from Fin24, February 2016]

4.3.1 Give TWO factors in the extract above that contributed to the poor  performance of the South African economy. (2) 
4.3.2 When is a country officially in a recession? (2)   
4.3.3 What impact will a downgrading of South Africa's credit rating have  on its economy? (2) 
4.3.4 In your opinion, what can government do to stabilise the business  cycle? (2 x 2) (4) 

4.4 Briefly discuss any TWO arguments in favour of privatisation. (2 x 4) (8) 
4.5 How will subsidies influence export-orientated businesses negatively? (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: 

STRUCTURE OF ESSAY 

MARK  

ALLOCATION

Introduction 

Max. 2

Body 
Main part: Discuss in detail/In-depth discussion/Examine/Critically  discuss/Analyse/Compare/Evaluate/Distinguish/Differentiate/Explain/ Assess/Debate 
Additional part: Give own opinion/Critically discuss/Evaluate/Critically  evaluate/Draw a graph and explain/Use the graph given and explain/ Complete the given graph/Calculate/Deduce/Compare/Explain/ Distinguish/Interpret/Briefly debate/How?/Suggest

Max. 26 

Max. 10

Conclusion 
Any higher-order conclusion should include: 

  • A brief summary of what has been discussed without repeating facts  already mentioned 
  •  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

Max. 2

TOTAL 

40

QUESTION 5: MACROECONOMICS 40 MARKS – 40 MINUTES 
The circular-flow model shows how the economy works via the various markets. 

  • Discuss the role of the various markets in the circular flow without the use of a  diagram. (26 marks)
  • Explain the multiplier concept with the aid of a well-labelled graph. (10 marks)

[40] 

QUESTION 6: ECONOMIC PURSUITS 40 MARKS – 40 MINUTES  
Government actions encourage operations and new investments to boost industrial  development. 

  • Discuss South Africa's Spatial Development Initiatives (SDIs), highlighting its  initiatives, objectives and Industrial Development Zones (IDZs). (26 marks)
  • What advice would you give government to promote industrial development in  South Africa? (10 marks)

[40] 

TOTAL SECTION C: 40
GRAND TOTAL: 150

Last modified on Tuesday, 15 June 2021 07:23