GRADE 12 EKONOMICS TERM 3 PRELIMINARY EXAM PAPER 1 - MEMORANDUM

Transcription

1 GRADE 12 EKONOMICS TERM 3 PRELIMINARY EXAM PAPER 1 - MEMORANDUM -1-

2 ECONOMICS PAPER 1 AUXILIO cc MEMORANDUM PRELIMINARY EXAMINATION TOTAL: 150 THIS DOCUMENT CONSISTS OF 14 PAGES -2-

3 SECTION A: QUESTION 1: 1.1 Various options are provided as answers to the following questions. Choose the correct answer and write down only the letter (A, B or C) next to the question number ( ) in the answer book B (investment) A (amplitudes) C (collective) B (assets and liabilities) C (dumping) B (medium) A (subsidies) A (mortality rate) (8 x 2) (16) 1.2 Choose an item in Column B that matches a description in column A. Write down only the letter (A-H) next to the question number ( ) in the answer book I Buying and selling equities F Give advance warning of change in economic activity H Shows income and expenditure estimates for three years A Price of one country s currency in terms of another country s currency C A trade policy that leads to an increase in local production B Rich industrial countries of the world E Education and health D Aims to reduce the centralisation of industries (8 x 1) (8) -3-

4 1.3 Provide the correct term or concept for the following description. Write down only the answer next to the question number ( ) in the answer book Open economy / four sector economy Money market Laffer curve Globalisation / free trade / international trade / foreign trade Repo rate / repurchase rate Deregulation (6 x 1) (6) TOTAL SECTION A: 30 SECTION B ANSWER ANY TWO QUESTIONS FROM THIS SECTION IN THE ANSWER BOOK. QUESTION 2 MACROECONOMICS 2.1 Answer the questions Food Fuel Any other relevant answer. (2 x 1) (2) Tourists need to exchange their own currency in order to buy goods and services in other countries. Accept any relevant response. (1 x 2) (2) 2.2 Study the diagram and answer the questions that follow Two sector economy/model Circular flow model Economic equilibrium (1) Exports Government expenditure (Any 1 x 1) (1) -4-

5 2.2.3 A = Households/consumers B = Business sector/producers/firms (2 x 1) (2) National income will increase because (investments) J exceeds (savings) L (2) M = 1/1-mpc = 1/ = 4 Effect: R120m x 4 = R480m (4) 2.3 Study the table and answer the questions that follow Increasing deficit in the balance on the current account (1 x 2) (2) It is the difference between goods exported and goods imported. (1 x 2) (2) Due to the historic importance of gold as a strategic export product of South Africa. (1 x 2) (2) The government can devalue the rand This will make our goods cheaper to foreign countries which will promote exports Accept any other relevant response. (2 x 2) (4) 2.4 Specialisation: The effect of increasing living standards result in the trading of more goods and services Allows industries that have a comparative advantage with a lower opportunity cost It increases economic efficiency and prevent wasting resources Each country that is best suited for specific goods and services will engage in producing more of those goods or services (2 x 2) (4) Economies of scale: Allows industries to maximise economies of scale and this will lead to cost reduction and enhance competitiveness in world markets Global economies benefit effective labour distribution and creation of economic efficiency World production and economic welfare increase and markets grow Producers compete to find the best production methods that cut costs and improve the quality of goods that will stimulate innovation and creativity (2 x 2) (4) [8] -5-

6 2.5 It will promote employment Trade protection is a measure to control unemployment Restricting foreign goods entering the country, domestic businesses not only produce more and employ more people, but new businesses will be able to enter the market, thus creating more jobs (2 x 2) (4) It prevents dumping With dumping products are sold at prices so low that they undercut both the cost of production in the country of origin and the domestic prices This makes it very difficult for local producers to compete Eventually it will force weak industries out of the market (2 x 2) (4) It gives temporary protection to infant industries New businesses have very high costs and low revenue when they start up They will need protection against well-established competition from abroad Once the business has been through the infant stage and is competitive, the need for protection reduces (2 x 2) (4) Self-sufficiency and strategic industries Some industries, such as iron and steel, agriculture and energy amongst others are often regarded as strategic industries Developing countries may feel that they need to develop these industries in order to become self-sufficient (2 x 2) (4) Accept any other relevant answer (Any 2 x 4) [8] QUESTION 3: ECONOMIC PURSUITS [40] Progressive personal income tax Wealth taxes Cash benefits - grants Benefits in kind food parcels/user fee charge/school meals/ Land reform programmes land restitution and land redistribution Property subsidies Youth wage subsidies (Any 2 x 1) (2) -6-

7 3.1.2 Increased sales of locally produced clothing Expansion of local industries Increased employment (Accept any relevant answer) (Any 1 x 2) (2) IPAP is predicated on the need to bring about significant structural change to the South Africa economy. (2) Stronger domestic growth in the manufacturing sector. High employment levels (4) Creation of employment. NGP envisage the creation of 5 million new jobs by (4) North/South divide or developed/developing countries (2) USA, Canada, UK, France, Germany, Japan, Italy, Russia (2 x 1) (2) Developing countries: mainly export raw to developed countries and import manufactured products from developed countries. Developed countries: continue to subsidise production of their agricultural goods, making it difficult for developing countries to compete, while insisting that developing countries eliminate their tariffs on manufactured goods. Most developing countries have very little foreign trade. (6) 3.4 The main focus was on developing the global competitiveness of the SA manufacturing enterprises (implemented by the DTI) It is a strategy that applies to all processes that transforms natural products into manufactured products It involve cross cutting issues such as technology, human resource development, access to finance and infrastructure It also concentrate on key input sectors like transport, telecommunications and energy The IMS prioritise certain growth sectors like tourism, agriculture, information technology and cultural industries (4 x 2) (8) -7-

8 3.5 The SARB is using interest rates to manipulate the market The repo rate is the key interest rate. This is the rate at which the SARB lends money to banks for short periods of time The SARB will lower the interest rate if it wants to stimulate the demand for credit. Many people will be encouraged to buy more at lower interest rates. This will lead to a higher demand for goods and services (4 x 2) (8) [40] QUESTION 4: MACROECONOMICS AND ECONOMIC PURSUITS 4.1 Answer the questions: Natural resources Climatic conditions Labour resources Technological resources Specialisation Capital Accept any other relevant reason. (Any 2 x 1) (2) Create employment using labour intensive methods / Give people skills that they can use to find jobs (1 x 2) (2) 4.2 Study the cartoon and answer the questions that follow An agreement (trade rules or guidelines) between countries on how to trade with each other The other members of BRICS are using SA to exploit the resources of Africa Any other relevant message (1 x 2) (2) South Africa's developed infrastructure South Africa's political stability Financially and economically stable The largest / second-largest economy in Sub-Saharan Africa Investment in South Africa will give countries access to markets in Africa Any other relevant answer (Any 1 x 2) (2) -8-

9 4.2.4 to advance its national interests to promote its regional integration programme and related continental infrastructure programmes to partner with key players of the South on issues related to global governance and reform. South Africa's membership of this body has expanded BRICS' geographic and intercontinental reach Any other relevant answer (Any 2 x 2) (4) 4.3 Study the table and answer the questions that follow Gross Value Added / GDP at basic prices (1 x 2) (2) The total value of all final goods and services produced within the boundaries of the country for a specific period, e.g. a year (2) Cost of using capital e.g. machinery/equipment used in production / Depreciation on the use of fixed assets / Diminishing value of an asset (1 x 2) (2) Minus 1 for any irrelevant/faulty item (double counting) (4 x 1) (4) 4.4 Labour productivity - To measure labour productivity real GDP should be divided by the number of workers employed for a number of years to construct an index number for each year - Changes in the index indicate changes in labour productivity - Productivity is the ratio between output and input of resources in the economy (2 x 2) (4) Capital productivity - Refers to a change in output in relation to an increase in capital investment (2 x 2) (4) -9-

10 Multi-factor productivity 4.5 Remuneration per worker - If labour productivity increases by less than wages, inflationary pressure will occur and the business cycle may turn unfavourable,e.g. unemployment may increase - The relationship between productivity and wages is crucial for employers and workers, and they are therefore important indicators - For workers it relates to improvement in their standard of living for those who are able to remain employed Any other relevant fact (2 x 2) (4) Under free trade economies of scale will exist due to increased trade and lower unit cost whereas in protectionism decreased trade and higher unit cost might lead to diseconomies of scale Under free trade countries will benefit from comparative advantage through specialization while protectionism will reduce the ability of other countries to enter the local markets Free trade promotes innovation through competition Protectionism limits competition and thus reduces innovation Free trade helps to satisfy a greater variety of wants by increasing the choice of consumers while protectionism limits the choices of consumers, thereby reducing welfare Accept if in tabular form. Accept any other relevant argument. (Any 2 x 4) (8) (8) [40] TOTAL SECTION B: 80 --

11 SECTION C Answer only ONE of the two questions in this section in the ANSWER BOOK. QUESTION 5: MACROECONOMICS INTRODUCTION: The government provides goods and services that are under supplied by the market and therefore plays a major role in regulating economic activity and guiding and shaping the economy (Max. 2) Accept any other relevant introduction. BODY: MAIN PART Objectives: Economic growth Refer to an increase in the production of goods and services Measured in terms of Real GDP For economic growth to occur, the economic growth rate must be higher than population growth Growth and development in a country benefit its citizens because it often leads to a higher standard of living Formula used: Full employment It is when all the people who want to work, who are looking for a job must be able to get a job High levels of employment is the most important economic objective of the government The unemployment rate increased over the past few years Disabled persons have disadvantaged status in South Africa -11-

12 Informal sector activities must be promoted because it is an area where employment increase For employment to increase, production needs to increase Formula: Exchange rate stability The economy must be managed effectively and effective fiscal and monetary policy must be used to keep the exchange rate relatively stable Depreciation and appreciation of the currency create uncertainties for producers and traders and should be limited The SARB changed the exchange rate system from a managed floating to a free floating exchange rate system Price stability Stable prices cause better results in terms of job creation and economic growth The SARB inflation target is 3-6% Interest rates, based on the repo rate are the main instruments used in the stabilisation policy The stable budget deficit also has a stabilizing effect on the inflation rate Economic equity / Economic fairness Redistribution of income and wealth is essential South Africa uses a progressive income tax system taxation on profits, taxation on wealth, capital gains tax and taxation on spending, are used to finance free services Free social services are basic education; primary health and to finance basic economic services E.g. cash grants to the poor, e.g. child grants and cash grants to vulnerable people, e.g. disability grants Progressive taxation means that the higher income earners pay higher/more taxation Balance of Payments equilibrium: The surplus or deficit on the trade balance should be minimised by limiting imports and promoting exports It can be done by a foreign trade policy which focuses on export promotion, import substitution and protection Domestic industries, with special focus on the secondary sector, must also be developed (Max. 26) BODY: ADDITIONAL PART -12-

13 Economic Growth: SA targets 4 5% economic growth. Previously SA had a 5% growth rate In recent years the growth rate decreased steadily Presently the economic growth rate is 1.4% Full Employment: Compared to foreign countries unemployment is very high. Expanded over 30% currently 25,5 % unemployment in SA for age group of years of age current figures exceed 36.3% Efforts by SA government to reduce these figures includes the GEAR strategy, focus on small business enterprises, Public Works Programme Exchange rate stability: SA now operates on a free floating exchange rate system in line with international benchmarks Unfortunately our currency has lost its value, with a general trend of depreciation over the last few years Price stability: For the past few years South Africa has managed to remain within the 3 6% target The current increase in the repo rate has put constraints on the inflation rate Economic equity: Economic equity has improved in many areas E.g. BEE, affirmative action, gender equity, progressive income tax Balance of Payments equilibrium: The deficit on the trade balance shows a much bigger increase of imports compared to exports (Any 5 x 2) (Max.) CONCLUSION: While some successes have been achieved by government, the fulfilling of some of the objectives are compromised by factors like a lack of accountability, corruption, budgeting, nepotism and incompetence. Accept any other relevant higher order conclusion. (Max. 2) [40] -13-

14 QUESTION 6 (ECONOMIC PURSUITS) INTRODUCTION Regional development is the process of uplifting areas or regions of a country which are less developed than they could or should be. This upliftment process focusses on economic improvement. The intention is to promote economic growth and development in regions where poverty, unemployment and income inequality are high. Accept any relevant introduction (MAX 2) BODY MAIN PART SPATIAL DEVELOPMENT INITIATIVES A Spatial Development Initiative (SDI) is an inter-departmental investment strategy led by the Department of Trade and Industry and the Department of Transport (DoT). The initiative was introduced in 1997 as part of restructuring the economy. The intention was to grow SDI s mostly through private sector investments. The state wants to enhance inward investment through the granting of incentives. A further feature of the SDI programme is the Public Private Partnerships, which combines state and private funding. (Max ) Objectives Develop physical infrastructure such as roads, harbours and rails. Stimulate economic activity in underdeveloped areas. Create employment in underdeveloped areas. Develop inherent economic potential in underdeveloped areas. Restructure the apartheid economy. Attract private sector and foreign direct investments. Establish Public Private Partnerships (PPP s). (Max 8) SDI s currently in place Maputo Development Corridor Lubombo SDI Richards Bay SDI Durban and Pietermaritzburg zones Wild Coast SDI Fish River SDI West Coast Investment Initiative Platinum SDI -14-

15 Phalaborwa SDI Coast to Coast Corridor Gauteng Special Economic Zone (Max 4) INDUSTRIAL DEVELOPMENT ZONES An Industrial Development Zone (IDZ) is an SDI that focusses on creating jobs and promoting exports. This strategy was approved by the cabinet in 1999 as part of the policy to make export internationally competitive. The idea is that goods produced in these zones should be exported to foreign countries. As services are provided from outside, the economy in these areas should be stimulated. Characteristics IDZ are: Purpose-built industrial estates. Physically enclosed. Strategically linked to a port or airport. Duty-free import areas. IDZ s offer attractive opportunities to new businesses because of Good basic infrastructure Easy access to a port and/or airport. Duty-free imports of raw materials and inputs to reduce the cost of production. (Max 14) Examples of IDZ s OR Thambo International airport Richards Bay Coega Saldanha Bay East London (Max 4) (MAX 26) -15-

16 ADDITIONAL PART In your opinion why is industrial development important in South Africa? To intensify the industrialisation of the South African economy increasing the movement towards a knowledge economy. To contribute to the industrial development of the African continent building the productive capabilities and capacity of South Africa and the rest of Africa and increasing regional trade and regional economic integration. To promote broad-based industrial path increasing participation of historically disadvantaged people and marginalised regions in the mainstream of the industrial economy. To promote a more labour intensive industry using production processes that will create employment. To facilitate diversification of the economy increasing the production of value-added products instead of importing. ANY RELEVANT FACT (MAX ) CONCLUSION South Africa s manufacturing economy depends on the role of industrial policies and economic development strategies. When working on boosting a sector in the country s economy, any government would provide facilities and incentives. ANY RELEVANT CONCLUSION (MAX 2) [40] TOTAL SECTION C: 40 GRAND TOTAL:

17 Directing/Producing / Regie/Vervaardig Planning / Beplanning Devising / Deurdink Making / Maak Inventing / Uitvinding Constructing / Konstruktireer Designing / Ontwerp Validating / Bekragtiging Refelcting / Weerspieëling Reviewing / Hersiening Critiquing / Kritiekkriteria Experimenting / Eksperimenteer Testing / Toetsing Hypothesising / Veronderstelling Nagaan, oordeel / Checking, Judging Mind-mapping / Breinkaarte Analyse / Analiseer Structuring / Strukturering Organising / Organiseer Attributing / Gekenmerk Comparing / Vergelyk Differentiate / Differensieer Using / Toepas Carrying out / Uitvoer Implementing / Implementeer Exemplifying / Voorbeelde Explaining / Verduideliking Drawing / Illustreer Factorise / Faktoriseer Discuss / Bespreek Problem solving\ Probleemoplossing Paraphrasing / Parafraseer Classifying / Klassifiseer Interpret / Interpreteer Infer / Lei Define / Definieer State / Stel Name \ Noem Describe / Beskryf Listing / Lys inligting Identify / Identifiseer Examination Question Enter the question number below Remembering/ Onthou Level/Vlak 1: 30% (Low / Laag) BLOOM: COGNITIVE LEVELS / KOGNITIEWE VLAKKE: ECONOMICS / EKONOMIE Gr 12 Prelim Exam Paper Understanding / Begrip Level/Vlak 2 : 40% (Middle / Middel) Applying/ Toepassing Analysing/ Analiseer Evaluating / Evaluering Level/Vlak 3: 30% (High / Hoog) Creating / Skepping Eksamenvraag Tik die vraagnommer in die kolom hieronder /3/4 5/6 Total/Totaal % - QP/VS 33% 40% 27%