2021 2023 GR12 Economics P1 Essays Final

MADIBENG AND MOSES KOTANE SUB-DISTRICTS GRADE 12 ECONOMICS P1ESSAYS COMPILED BY: MKHIZE P. A (ECONOMICS SES: N.W) EMAIL ADDRESS: kingbhebhe808@gmail.com This manual consists of 35 pages. 2021-2023 PAPER 1 & 2 ESSAYS PER TOPIC AND PER QUESTIONS WITHOUT ADDITIONAL PARTS PAPER ONE QUESTION 5: MACRO-ECONOMICS TOPIC NO. ESSAY LAST YEAR ASSESSED CIRCULAR FLOW 1 Discuss in detail the role of various DBE Nov 2020

EMAIL ADDRESS: kingbhebhe808@gmail.com This manual consists of 35 pages. 2021-2023 PAPER 1 & 2 ESSAYS PER TOPIC AND PER QUESTIONS WITHOUT ADDITIONAL PARTS PAPER ONE QUESTION 5: MACRO-ECONOMICS TOPIC NO. ESSAY LAST YEAR ASSESSED CIRCULAR FLOW 1. Discuss in detail the role of various DBE Nov 2020 markets within the FOUR-SECTOR model. BUSINESS 2. Discuss in detail the features DBE Nov 2018 CYCLES underpinning the business cycle forecasting. 3. Discuss in detail the new economic DBE Nov- 2021 paradigm in smoothing-out business (To be studied cycles. for section B ONLY in 2022) PUBLIC SECTOR 4. Discuss in detail the main objectives DBE May- 2021 of the public sector in the economy. 5. Discuss in detail the reasons for DBE May-2022 public sector failure. FOREIN 6. Discuss in detail the reasons for * NOT YET EXCHANGE international trade. ASSESSED MARKET PAPER ONE QUESTION 6: ECONOMIC PURSUITS TOPIC NO. ESSAY LAST YEAR ASSESSED PROTECTIONISM 1. Examine South Africa's export DBE Nov-2019 & FREE TRADE promotion trade policy. 2. Discuss the arguments in favour of DBE Nov-2021 protectionism. (To be studied for section B ONLY in 2022) ECONOMIC 3. Discuss in detail the demand-side DBE May 2022 GROWTH & approach in promoting economic DEVELOPMENT growth and development in South Africa. 4. Discuss in detail the South African * NOT YET growth and development policies and ASSESSED strategic initiatives REGIONAL 5. Discuss in detail South Africa’s DBE NOV 2019 DEVELOPMENT initiatives (endeavours) in regional development ECONOMIC & 6. Discuss the various economic DBE May-2021 SOCIAL indicators in detail. INDICATORS 7. Discuss the various social indicators DBE May- 2019 in detail. 2 PAPER ONE ESSAYS QUESTION 5: MACRO-ECONOMICS 1. Discuss the role of markets in the circular flow. INTRODUCTION

SOCIAL indicators in detail. INDICATORS 7. Discuss the various social indicators DBE May- 2019 in detail. 2 PAPER ONE ESSAYS QUESTION 5: MACRO-ECONOMICS 1. Discuss the role of markets in the circular flow. INTRODUCTION • Markets coordinate economic activities and determine prices for goods and services • The circular flow model is a simplified representation of the interaction between the participants of the economy MAIN PART Goods/Product/Output markets • These are markets for consumer goods and services. In economics a distinction is made between goods and services: • Goods are defined as any tangible items such as food, clothing and cars that satisfy some human wants or need • Buying and selling of goods that are produced in markets, include: - Capital goods market for trading of buildings and machinery - Consumer goods market for trading of durable consumer goods, semi- durable consumer goods and non-durable consumer goods. • Services are defined as non-tangible actions and includes wholesale and retail, transport and financial markets • Flows of private and public goods and services are real flows and they are accompanied by counter flows of expenditures and taxes on the product market Factors/Resources/Input markets • Factors of production are bought and sold in the factor market • The factor market includes the labour, property and financial markets • Factor services are real flows and they are accompanied by counter flows of income on the factor market. Financial markets • They are not directly involved in production of goods and services, but act as a link between households, the business sector and other participants with surplus funds • Banks, insurance companies and pension funds form part of the financial market 3 Money markets • In the money market, short-term loans and very short-term funds (less than 3 years) are saved and borrowed by consumers and business enterprises • Products sold in this market are bank debentures, treasury bills and government bonds • The SARB is the key institution in the money market

3 Money markets • In the money market, short-term loans and very short-term funds (less than 3 years) are saved and borrowed by consumers and business enterprises • Products sold in this market are bank debentures, treasury bills and government bonds • The SARB is the key institution in the money market Capital markets • In the capital market long-term funds (3 years or longer) are borrowed and saved by consumers and business enterprises • The Johannesburg Security Exchange is a key institution in the capital market • Products sold in this market are mortgage bonds and shares Foreign exchange markets • On the foreign exchange market businesses buy/sell foreign currencies to pay for imported goods and services • These transactions occur in banks and consists of an electronic money transfer from one account to another • The most important foreign exchange markets are in London/New York/Tokyo • The SA rand is traded freely in these markets when a person buys travellers' cheques to travel abroad • Imports and exports are real flows and they are accompanied by counter flows of expenditure and revenue on the foreign exchange market (Accept any other correct relevant response) (Max 26) BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION Markets are critically important institutions in our economic system because they regulate the market, to safeguard price stability and general business confidence. (2) 2. Discuss in detail the new economic paradigm in smoothing-out business cycles. INTRODUCTION • The new economic paradigm suggests that it is possible to implement measures to promote economic growth and reduce unemployment without provoking inflation. • The new economic paradigm is embedded in both demand-side and supply-side policies. (Accept any other relevant introduction) (Max 2) BODY: MAIN PART Demand-side policies: • Traditional monetary and fiscal policies focus on aggregate demand. Monetary policy: • When the level of economic activity is depressed the SARB can use expansionary measures to stimulate economic activities. • An expansionary monetary policy is implemented when the economy is in recession in order to stimulate economic activities. 4 • Interest rates can be reduced to make borrowing cheaper and encourage spending by households and businesses. • The increased spending increases the level of economic activity. Investment will increase and more factors of production will be employed. • Higher levels of production and income and expenditure will be achieved. • If the supply of goods and services does not increase in line with increase in demand,

measures to stimulate economic activities. • An expansionary monetary policy is implemented when the economy is in recession in order to stimulate economic activities. 4 • Interest rates can be reduced to make borrowing cheaper and encourage spending by households and businesses. • The increased spending increases the level of economic activity. Investment will increase and more factors of production will be employed. • Higher levels of production and income and expenditure will be achieved. • If the supply of goods and services does not increase in line with increase in demand, inflation will increase. Fiscal policy: • When the level of economic activity is low the minister of finance can use expansionary fiscal measures to stimulate growth and reduce unemployment. • An expansionary fiscal policy can be implemented when the economy is in recession in order to stimulate economic activities. • An increase in government expenditure will increase aggregate demand. • When there is an increase in injection in the economy, production which will result in a higher employment of factors of production. • The result will be higher income and higher expenditure. • Taxes can be reduced, which will lead to an increase in disposable income. • This will increase consumer spending and investments, stimulating aggregate demand Inflation: ❖ When the demand increases, the supply will react in the same way. ❖ If the supply does not react to an increase in demand, prices will increase (a new equilibrium). ❖ Aggregate demand and supply are in equilibrium where AD = AS at point C, and again where AD1 = AS1 at point E. ❖ When the demand increases, the supply will react in the same way. ❖ Fig (a) below illustrates that if AD1 increases and AS does not respond, the new equilibrium will be at point F. Therefore, real production will increase and prices will also increase. Inflation will prevail. 5 Unemployment: ❖ Demand-side policies are effective in stimulating economic growth. ❖ The demand for labour will increase due to economic growth, and that leads to reduced unemployment. ❖ A decrease in unemployment results in an increase in inflation because more people are employed, which causes an increase in demand for labour.

5 Unemployment: ❖ Demand-side policies are effective in stimulating economic growth. ❖ The demand for labour will increase due to economic growth, and that leads to reduced unemployment. ❖ A decrease in unemployment results in an increase in inflation because more people are employed, which causes an increase in demand for labour. ❖ This relationship between unemployment and inflation is illustrated using the Phillips curve. • The Phillips curve shows the relationship between unemployment and inflation. • PC shows the initial situation, where at point C the PC curve intersects x/axis i.e. natural rate of unemployment is 14%. • If unemployment falls to D i.e. 9% causes wages to increase, thus inverse relationship between unemployment and inflation. • Supply-side measures that can relocate the Phillips curve to shift to the left, due to improved education, effective training and fewer restrictions on immigration of skilled workers, • Demand-side policies are effective in stimulating economic growth. • Economic growth can lead to an increase in demand for labour. • As a result, more people will be employed and unemployment will decrease. • As unemployment decreases inflation is likely to increase. Supply-side policies: • A demand-side approach does not render desirable outcome because growth has to be cut due to problems in inflation. • Aggregate supply needs to be managed as well by focusing on increased flexibility of supply components. • If the cost of increasing production is completely flexible, a greater output can be supplied at any given price level. • The governments can arrange things in the economy in a way that is cooperative to changes in demand. • Reduction of costs allows greater output to be supplied at any given price level. Document continues below 6 Discover more from: Economics 260 documents

changes in demand. • Reduction of costs allows greater output to be supplied at any given price level. Document continues below 6 Discover more from: Economics 260 documents Go to course Inflation - notes 16 Economics 96% (77) Chapter 1-The circular flow model, national account aggregates and the multiplier 20 Economics 97% (33) Economics Grade 12 Notes 42 Economics 100% (21) Economics Grade 12 Notes 46 Economics 100% (33) Economics Grade 11 Notes 13 Economics 100% (12) Grade 12 Economics Core notes Paper 1 103 Economics Government measures that can reduce costs 99% (80) • Infrastructural services like communication, transport and energy costs. • Administrative costs like inspections and regulations add to overall costs. • Cash incentives such as subsidies lower the production cost. • Compensation to exporters to encourage increased production aimed at foreign markets.

Grade 12 Economics Core notes Paper 1 103 Economics Government measures that can reduce costs 99% (80) • Infrastructural services like communication, transport and energy costs. • Administrative costs like inspections and regulations add to overall costs. • Cash incentives such as subsidies lower the production cost. • Compensation to exporters to encourage increased production aimed at foreign markets. Measures to improve efficiency of inputs: • Lower rates of personal income tax are incentives for high productivity and increase aggregate supply. • Capital consumption by replacing capital goods on a regular basis that will create opportunities for businesses to keep up with technological development. • Human resources development where the quality of labour can be improved by improving health care, education and training which will increase the efficiency of businesses. • Free advisory services to promote opportunities to export and establish business activities in foreign countries which includes weather forecasts, veterinary services and research. Measures to improve efficiency of markets: • Deregulation where laws and regulations are removed to make markets free. • Competition is encouraged to establish new businesses, invite foreign direct investment and remove power imbalances. • Levelling the economic playing fields because private businesses cannot compete with public enterprises due to legislative protection. (Max 26) (Accept any other correct relevant response) (Allocate a maximum of 8 marks for mere listing of facts / examples) BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION It is critically important for the government to focus on both demand-side and supply-side measures to ensure stability in the economy. (Accept any other correct higher order, relevant conclusion) (Max 2) 3. Discuss ALL the features underpinning forecasting of business cycles, excluding the economic indicators. INTRODUCTION • There are a number of techniques available to help economists to forecast business cycles like economic indicators • A business cycle can be described as successive periods of contraction and expansion of economic activities • The pattern of expansion and contraction of aggregate economic activity, measured as real Gross Domestic Product, displays around its overall trend • The process of making predictions about changing conditions of future events that may significantly affect the economy 7 BODY: MAIN PART Extrapolation • Past data is used, where predictions are made about the future based on assumptions related to trends • Extrapolation means to estimate something unknown from the facts and information that is known

• The process of making predictions about changing conditions of future events that may significantly affect the economy 7 BODY: MAIN PART Extrapolation • Past data is used, where predictions are made about the future based on assumptions related to trends • Extrapolation means to estimate something unknown from the facts and information that is known • Extending a trend into the future may provide information on what is likely to happen • If a business cycle has passed through a trough and entered into a boom phase, forecasters may predict that the economy will grow in the months to follow • Extrapolation techniques are sometimes used to predict future share prices • The trend of the curve must be followed to complement the completed section • Take a calculated decision to continue beyond the level of a resistance point Amplitude • It is the difference between the value of total output between peak and trough measured from the trend line to the peak and trough • Amplitude reflects the intensity of the upswing and downswing in economic activity • The amplitude shows two things: - ❖ The power of the underlying forces, e.g., interest rates, exports or consumer spending ❖ A large amplitude during the upswing signifies strong underlying forces – which result in longer cycles ❖ The extent of change: the larger the amplitude, the more extreme the changes that may occur ❖ During an upswing, unemployment may decrease from 20% to 10% (a decrease of 50%) / inflation may increase from 3% to 6% (i.e. 100%) / a surplus on the current account (BOP) can change from a surplus to a deficit. Trend ❖ The trend indicates the general direction in which the indexes that were used in the business cycle, moves. ❖ When the economy is growing, there is an upward trend, but when the economy is decreasing, there is a downward trend. ❖ The trend will change when the time series data change their behaviour patterns of the past. ❖ Resistance points indicates forces in the economy preventing it from repeating the performance – unfavourable forces need to change or be removed for growth to exceed previous tendencies. ❖ It normally has a positive slope because the production capacity of the economy increases over time. ❖ Channels are formed when output growth reaches successive higher turning points (upward channel). 8 Length ❖ Length is measured from peak to peak or from trough to trough. ❖ Longer cycles show strength and shorter cycles show weakness with regard to economic activities. ❖ Cycles may overshoot with the effect that some composite indicators increase to beyond its normal level.

p ( p ) 8 Length ❖ Length is measured from peak to peak or from trough to trough. ❖ Longer cycles show strength and shorter cycles show weakness with regard to economic activities. ❖ Cycles may overshoot with the effect that some composite indicators increase to beyond its normal level. Moving averages ❖ This method is repeatedly calculating a series of different average values along a time series to produce a smooth curve ❖ It is used to analyse the changes in a series of data over a certain period of time ❖ To eliminate the effect of sharp fluctuations in the business cycle, economists use moving averages to smooth out the business cycle so that it looks more like a straight of slightly curved line(Accept any other correct relevant response) (A maximum of 8 marks may be allocated for mere listing of facts/examples) (Candidates would receive 2 marks if they indicated the amplitude, length and trend line on a graph) BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION Policy makers should closely watch all these indicators because external factors are very significant for South African business cycles. Different methods can be used in forecasting like the quantitative method that is based on mathematical models or qualitative methods being used in long term forecasting. (Accept any other correct relevant higher order response) (Max. 2) 4. Discuss in detail the objectives of the public sector. INTRODUCTION The government responds to market failure by establishing and maintaining state-owned enterprises to provide public goods and services. (Accept any other correct relevant response) (Max 2) BODY: MAIN PART 1. ECONOMIC GROWTH • An increase in the production of goods and services by the economy. • It is measured in terms of an increase in the real gross domestic product. • Real GDP is the value of goods produced in the country after the effects of inflation have been taken into account. • For economic development to occur, the economic growth rate must be higher than the population growth rate. • A high economic growth rate also means there will be fewer people who are dependent on the state to satisfy their basic needs. • The state tries to ensure that there is continual growth in this capacity because it leads to an improvement in the standard of living. 9 2. FULL EMPLOYMENT • Attaining high levels of employment is one of the most important economic objectives for all governments. • Full employment means that all persons who would like to work and who are looking for work, should be able to find work or create work for themselves.

g g p p p on the state to satisfy their basic needs. • The state tries to ensure that there is continual growth in this capacity because it leads to an improvement in the standard of living. 9 2. FULL EMPLOYMENT • Attaining high levels of employment is one of the most important economic objectives for all governments. • Full employment means that all persons who would like to work and who are looking for work, should be able to find work or create work for themselves. • The unemployment rate increased over the past few years and above 30% after Covid- 19 pandemic. • Informal sector activities must be promoted because it is an area where employment increases. • In the short-run, the state accelerates employment creation through direct employment schemes, targeted subsidies and expansionary macroeconomic packages. • Over the medium term the state support labour-intensive activities in the agricultural and light manufacturing sectors. • Over the longer run, as full employment is achieved, the state supports knowledge- intensive and capital-intensive sectors to remain competitive. 3. EXCHANGE RATE STABILITY / BALANCE OF PAYMENTS (BoP) EQUILIBRIUM • Depreciation and appreciation of a currency create uncertainty for producers and traders and should therefore be limited. • Government uses its monetary and fiscal policies to ensure that the exchange rate remains relatively stable for as long as possible. • BoP equilibrium influences the flow of goods, services and capital in a country. • Exchange rate stability has a strong impact on the inflation rate and other macroeconomic variables. • The choice and management of an exchange rate system forms a critical aspect of economic management to protect and encourage competitiveness, macroeconomic stability and growth. • More money inflows into a country result in a surplus on the Balance of Payments account. • The SARB changed the Exchange rate from a Managed floating to a Free-floating exchange rate. • Promoting domestic production will increase exports. 4. PRICE STABILITY • Market economies produce better results in terms of economic growth and employment when prices are relatively stable. • In South Africa relative price stability means that the inflation rate remains within the inflation target of 3–6%. • Interest Rates, based on the Repo Rate are the main instruments used to achieve price stability. • The benefit of the inflation target is a greater degree of transparency in monetary policy. • If inflation exceeds the upper limit of the range, the Reserve Bank must consider increasing the interest rate to cool down the heated economy. 10 5. ECONOMIC EQUITY • A redistribution of income and wealth is essential in market economies. • There are sections of society that earn a large amount of money while others earn very little. • Progressive income tax and tax on profits, wealth and expenditure are used to finance free social services.

y • The benefit of the inflation target is a greater degree of transparency in monetary policy. • If inflation exceeds the upper limit of the range, the Reserve Bank must consider increasing the interest rate to cool down the heated economy. 10 5. ECONOMIC EQUITY • A redistribution of income and wealth is essential in market economies. • There are sections of society that earn a large amount of money while others earn very little. • Progressive income tax and tax on profits, wealth and expenditure are used to finance free social services. • Basic education, primary healthcare, basic economic services and cash grants to poor and other vulnerable people, will enhance economic equity. (Accept any other correct relevant response) (Max 26) BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION The state plays a significant role in achieving the macroeconomic objectives by guiding the economy through the national budget. (Accept any other correct relevant higher order conclusion) (Max 2) 5. Discuss in detail the reasons for public sector failure. INTRODUCTION • Public sector failure occurs when the government fails to manage the economy and the resources under its control optimally. • Public sector failure can be regarded as a failure of government to achieve its objectives. (Accept any other correct relevant introduction.) (Max 2) BODY: MAIN PART Management failure • Ignorance leads to the implementation of conflicting or wrong policies. • Incompetence in the public sector may be due to improper qualifications, lack of training, experience and an attitude of apathy. • Lack of skills may lead to wrong decisions and low productivity. • Corruption exists when government official exploits their positions for personal gain. • Taking bribes, committing fraud, nepotism, behaving dishonestly and committing discrimination. • Allowing rent-seeking, which is behaviour that improves the welfare of someone at the expense of the welfare of others. Apathy • Government officials show little or no interest in delivering an efficient service to the public. • It is not always easy to hold the public sector officials accountable because of the huge workforce in various departments. • Corruption and poor service delivery are some of the symptoms of apathy • People employed by the state do not always serve the interests of the public. 11 • Public sector officials seek to maximise their salaries, status and power and are not required to produce a profit and loss statement. • Poor accountability is the result of low motivation, poor training, and lack of competence. Lack of motivation • Frontline workers rarely receive incentives for successful service delivery but are only monitored on inputs and following procedures and processes

workforce in various departments. • Corruption and poor service delivery are some of the symptoms of apathy • People employed by the state do not always serve the interests of the public. 11 • Public sector officials seek to maximise their salaries, status and power and are not required to produce a profit and loss statement. • Poor accountability is the result of low motivation, poor training, and lack of competence. Lack of motivation • Frontline workers rarely receive incentives for successful service delivery but are only monitored on inputs and following procedures and processes. • Lack of motivation leads to limited services, high cost and low-quality service delivery • There is no measurement of effectiveness or productivity and few rewards for outstanding performance and penalties for poor performance. • There are not enough systems in place to evaluate the services that government employees give. Bureaucracy • Bureaucracy makes policies take long to be implemented or it is not implemented successfully. for example, official rules and procedures . • Bureaucrats tend to obey rules and procedures without judgements. • Government officials tend to be more interested in obeying rules than the efficient delivery of goods and services to the people. • Bureaucrats can manipulate policies to benefit themselves at the expense of the people Politicians • Politicians tend to promote policies and spend money on projects as long as they get votes in return. • These policies might involve an inefficient allocation of resources. • Politicians can also serve their own interests through corruption, personal and hidden agendas and suspicious motives. Structural weaknesses • Objectives are not met, such as full employment and houses for all are not realistic and attainable objectives. • Too aggressive redistribution of income and wealth may cause the government not to reach their macroeconomic objectives. Special interest groups • Groups such as labour unions and business groups can also cause government failure. • Trade unions can influence the government to pass certain laws to favour their members. • Business groups can influence the government to provide them with profitable contracts and favourable regulations. • Businesses may influence the government to distribute resources so that they can benefit at the expense of the country. A maximum of 8 marks may be allocated for headings/examples. (Max 26) BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION South Africa requires a creative and competitive private sector with new technologies that can help entrepreneurs to enter industries where the state dominates. (Accept any other relevant higher order conclusion.) (Max 2) 12 6. Discuss, in detail, the reasons for international trade. INTRODUCTION There are many reasons for international trade. Countries may have a surplus of some goods and a shortage of other goods, and they will trade in order to correct h i b l

South Africa requires a creative and competitive private sector with new technologies that can help entrepreneurs to enter industries where the state dominates. (Accept any other relevant higher order conclusion.) (Max 2) 12 6. Discuss, in detail, the reasons for international trade. INTRODUCTION There are many reasons for international trade. Countries may have a surplus of some goods and a shortage of other goods, and they will trade in order to correct these imbalances. Trade that takes place between different countries of the world. (Accept any other correct relevant answer) (Max 2) BODY: MAIN PART DEMAND REASONS The size of the population • If there is an increase in population growth, it causes an increase in demand, as more people’s needs must be satisfied. • Local suppliers may not be able to satisfy this demand. Income levels • Changes in income cause a change in the demand for goods and services. • Consumable income for example may increase due to a decrease in tax, or increased employment of factors of production which may lead to increased consumption expenditure. • Higher income creates more needs, wants, and subsequently greater demand for a greater variety of goods even if it necessary to get the goods from abroad • An increase in the per capita income of people results in more disposable income that can be spent on local goods and services, some of which may then have to be imported Change in the wealth of the population • An increase in the wealth of the population leads to greater demand for goods. • People have access to loans and can spend more on luxury goods, many of which are produced in other countries. Preferences and taste • Not all the goods wanted are produced in a country • Consumer preferences and taste play a decisive role in demand of goods from foreign countries • If consumers in China have a preference for tea and consumers in America have a preference for coffee, the relative prices of tea and coffee will differ between these countries • This is influenced by international migration in terms of religion and lifestyles The difference in consumption patterns • This is determined by the level of economic development in the country. e.g. a poorly developed country will have a high demand for basic goods and services but a lower demand for luxury goods. 13 SUPPLY REASONS Natural resources • These resources are not evenly distributed across all countries of the world. • They vary from country to country and can only be exploited in places where these resources exist. • South Africa is well endowed with different natural resources but less well endowed with skilled labour and capital

13 SUPPLY REASONS Natural resources • These resources are not evenly distributed across all countries of the world. • They vary from country to country and can only be exploited in places where these resources exist. • South Africa is well endowed with different natural resources but less well endowed with skilled labour and capital. • whilst Japan and Ireland have relative abundance of skilled labour but they lack natural resources Climatic conditions • These conditions make it possible for some countries to produce certain goods at a lower price than other countries. E.g. Brazil is the biggest producer of coffee • Countries have different climatic conditions and are therefore able to produce different products. Labour resources • Labour differs from country to country in terms of skills, knowledge, training, quality, quantity and cost between them. • Some countries have highly skilled, well-paid workers and high productivity levels. E.g. Switzerland Technological resources • The development levels and innovation processes of countries will always differ and as a result other countries may have them in abundance while others may not. • Countries like Germany, the United States, are able to use capital that embodies high levels of technology while other countries do not have access to the latest technology. • These countries that have high technological labour force are able to produce certain goods and services at a low unit cost . E.g., US and Germany Specialisation • The production of certain goods and services allows some countries to produce them at a lower cost than others. E.g. Japan produces electronic goods and sells these at a lower price • International trade enables countries to specialize in the production of goods and services in which they have a comparative advantage . • Most of such surplus production gets exported to other countries and the revenue earned from these exports can be used to finance imports. Capital • Some countries need to modernize their industries and economies with advanced machinery, equipment and plant but cannot manufacture this equipment because they lack capital to do so. • This has then increased the need for international trade . (Accept any other correct relevant answer) (Max 26) BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION While the Russia-Ukraine conflict is ongoing, the South African government has to look at other ways of strengthening its infrastructure to take advantage of future gains in commodity trade✓✓ (Accept any other correct and relevant higher order response) (Max. 2) 14 QUESTION 6 ESSAYS 1. Examine South Africa's export promotion trade policy. INTRODUCTION • Export promotion involves providing incentives to encourage local businesses to produce d f

While the Russia-Ukraine conflict is ongoing, the South African government has to look at other ways of strengthening its infrastructure to take advantage of future gains in commodity trade✓✓ (Accept any other correct and relevant higher order response) (Max. 2) 14 QUESTION 6 ESSAYS 1. Examine South Africa's export promotion trade policy. INTRODUCTION • Export promotion involves providing incentives to encourage local businesses to produce goods for export. • When government pay incentives to encourage the production of goods that can be exported. (Accept any other correct relevant response) (Max 2) BODY: MAIN PART Methods of export promotion: • Incentives: − Involves a programme administered by EMIA, aiming to compensate exporters for costs incurred in developing export markets for South Africa. − Also participation in National Pavilion exhibitions, where government ministers conclude future trade agreements for business. − Providing support in credit facilities, such as government assisting businesses to get low interest loans by signing surety on certain loan agreements. − The DTI is providing Business Intelligence by providing market research as well as export opportunities overseas − Technical advice and expertise is provided by the DTI on matters such as product specification, advertising and marketing. - To provide insurance contracts for export transactions. Other grants - Tax concessions on earnings from exports - Tax concessions on capital investments to produced export goods − Implementing Export-Processing Zones (EPZs) to attract export investment firms to such zones by offering tax exemptions and less labour restrictions. − The government supplies information on export markets in order to stimulate exports. − Other examples are research on new markets, concessions on transport charges, export credit. • Subsidies: − Incentives to encourage exporters to increase the amount of their production − It includes direct and indirect subsidies: o Direct subsidies: Cash payments to exporters o Indirect subsidies: Refunds on import tariffs and general tax rebates • Trade neutrality: − Subsidies, equal in size to import duties, are paid − Neutrality can be achieved through trade liberalisation. − Experience growth in exports if cost-raising effects of protection are neutralized by Subsidies. 15 Reasons for export promotion: • Exports helps to pay for the goods we need to import, and thus improves the BOP/it earns foreign exchange. • Export promotion can provide the financial assistance required by domestic efficient firms b ii

trade liberalisation. − Experience growth in exports if cost-raising effects of protection are neutralized by Subsidies. 15 Reasons for export promotion: • Exports helps to pay for the goods we need to import, and thus improves the BOP/it earns foreign exchange. • Export promotion can provide the financial assistance required by domestic efficient firms to become more competitive. • Export promotion can also lead to an increase in South Africa’s trade globally. • It stimulates industrial development, which is very important for economic growth and development in the country. • The country achieves significant export-led economic growth. • Export promotion enlarges the production capacity of the country because more manufacturing industries are established. • Export markets are much bigger than local markets and to capture them many greater volumes need to be produced. • More workers will be employed due to the increased volumes produced. • Prices will be reduced due to larger volumes of goods being produced. Advantages • No limitations of size of scale since world market is very large. • Production is based on cost and efficiency organized according to comparative advantages. • Increased domestic production leads to growth in exports and imports (supply foreign exchange to pay for necessary imports). • Exchange rates would be realistic  no exchange control or quantitative limitations exists. • Increased employment opportunities, which could improve income and skills. • The increased size of domestic businesses and the increase in the number of producers will result in increased competition, more efficient output, lower prices and larger variety of goods/inflation could be reduced. Disadvantages of export promotion • The real cost of production is hidden: − It reduces the total costs by subsidies and incentives. − The real cost of production is concealed by the subsidies. − The product may thus never be able to compete in the open market. • Lack of competition: − Incentives and subsidies reduce prices and force competitors who may be able to create sustainable and profitable businesses out of the market − Total potential trade is therefore reduced with subsidies rather than without Subsidies. • Increased tariffs and quotas: − Overseas countries may retaliate with tariffs and even quotas when similar goods are sold domestically below their real cost of production. 16 − Powerful overseas businesses can afford to offer similar products at much lower prices. − Compared to their production, the subsidised business's domestic market may be so small that it will destroy the business who received the subsidy • Protection of labour-intensive industries: − Developed countries often maintain high levels of effective protection for their

• Increased tariffs and quotas: − Overseas countries may retaliate with tariffs and even quotas when similar goods are sold domestically below their real cost of production. 16 − Powerful overseas businesses can afford to offer similar products at much lower prices. − Compared to their production, the subsidised business's domestic market may be so small that it will destroy the business who received the subsidy • Protection of labour-intensive industries: − Developed countries often maintain high levels of effective protection for their industries that produce labour-intensive goods in which developing countries already have or can achieve comparative advantage. − Export promotion results in the protection of labour-intensive industries by developed countries. − Increased exports could be seen as dumping, which enables foreign firms to obtain a larger market share and force local producers out of the market. (Max 26) BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION World economies grow and develop on better international relations with other countries by applying different trade policies such as import substitution and free trade. (Accept any other correct relevant response) (Max 2) 2. Discuss the arguments in favour of protectionism. INTRODUCTION A trade policy whereby state implements measures to protect local industries against unfair competition from abroad. (Max 2) (Accept any other correct relevant response) BODY: MAIN PART Industrial development • Some developing countries are suitable for establishing certain kinds of industries • Free trade makes it impossible to compete with well-established older countries, due to the first few years of existence of an industry being the most difficult. • Older industries use unfair methods of price-cutting and dumping – therefore young industries need protection until properly established. • Protection will prevent competition, because it is difficult to do away with, once applied. Infant industries • It is difficult for a young industry to survive, due to their average costs being higher than well-established foreign competitors. • If they are given protection in their early years, they may grow and take advantage of economies of scale/lower their average costs/become competitive. Stable wage levels and high standard of living • A country with high wages has a view that standard of living will be undermined if cheaper goods are imported from countries with low wages. • In reality, high wages are paid to workers with high productivity. 17 Increased employment • Local industries cannot find profitable markets, may stop production and cause unemployment. • Protection will result in less unemployment. Economic self-sufficiency and strategic key industries War causes cut off or friction between countries depression shifts in demand all factors

• A country with high wages has a view that standard of living will be undermined if cheaper goods are imported from countries with low wages. • In reality, high wages are paid to workers with high productivity. 17 Increased employment • Local industries cannot find profitable markets, may stop production and cause unemployment. • Protection will result in less unemployment. Economic self-sufficiency and strategic key industries • War causes cut off, or friction between countries, depression, shifts in demand, all factors that are vital to be self-supporting. • Protection is granted especially to key industries to ensure survival. Maintaining domestic employment, to reduce unemployment and provide more job opportunities. • Countries with high levels of unemployment are pressured to stimulate employment creation. • Protectionism policies are used to stimulate industrialisation. • Domestic employment is encouraged through imposing import restrictions. • Domestic employment creation at the expense of other countries is known as “Beggar thy neighbour” policies. Prevent dumping • Countries selling goods in a foreign country at lower prices than cost of production in home country. • Dumping is used to capture new markets and forces financially weaker industries out of competition. • Foreign enterprises may engage in dumping because government subsidies permit them to sell goods at very low prices or below cost or because they are seeking to raise profits through price discrimination. • The initial reason for exporting products at a low price may be to dispose of accumulated stocks of goods. • In the short term, consumers in the importing country will benefit. • However, their long-term objective may be to drive out domestic producers and gain a strong market position. • In this case consumers are likely to lose out as a result of the reduction in choice and the higher prices that the exporters will be able to charge. • Protectionism prevents foreign industries from dumping their surpluses and out of season goods at low prices, which may be harmful to home industries. Stabilising exchange rates and balance of payments. • Traders buy on cheapest markets and sell on most expensive ones. • Countries export primary products and import manufactured goods causing a disrupted balance of payments and exchange rates. • Prices of imports increase through tariffs and quotas. • A stable exchange rate and BoP increases government revenue/prevents harmful goods from entering the country/develop greater technical skills. 18 Protection of natural resources. • Free trade will exhaust resources because the world shares. • Protection ensures that industries survive. Ensures greater economic stability • Over-specialisation is a result of free trade and is harmful in times of war and friction (more g ns than food)

• A stable exchange rate and BoP increases government revenue/prevents harmful goods from entering the country/develop greater technical skills. 18 Protection of natural resources. • Free trade will exhaust resources because the world shares. • Protection ensures that industries survive. Ensures greater economic stability • Over-specialisation is a result of free trade and is harmful in times of war and friction (more guns than food). • Protection prevents over-specialisation, thereby creating a more differentiated economy and greater stability. • It also promotes secondary industries and the welfare of people dependent on protected industries. • If imports are greater than exports, a country may introduce import controls such as customs duty and quotas eliminate the deficit on the balance of payments. • Developing countries rely on the export of primary products. Selling processed goods is more beneficial to a country as more foreign exchange can be earned. • Protection ensures the processing of primary goods until completion. (Accept any other correct relevant response) (Max 26) (Allocate a maximum of 8 marks for mere listing of facts/examples) BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION The policy of restriction of international trade (protectionism) with the aim of preventing unemployment or capital losses in industries threatened by imports, might not affect the internal distribution of income sufficiently or improve the country's terms of trade, because it is not based on international monopoly power and expert knowledge. (Accept any other correct, higher order, relevant response) (Max 2) 3. Discuss in detail the demand-side approach in promoting economic growth and development in South Africa. INTRODUCTION The demand-side approach involves discretionary changes in monetary and fiscal policies with the aim of changing the level of aggregate demand and therefore output. (Accept any other correct relevant introduction.) (Max 2) BODY: MAIN PART MONETARY POLICY • The SARB is co-responsible for formulating and implementing South Africa's monetary policy. • Its primary goal is to protect the value of the currency by stabilising prices in terms of inflation targets. 19 It uses mainly three monetary policy instruments: 1. Interest rate changes • These are used to influence credit creation by making credit more expensive or cheaper. • Interest rate changes are also used to stabilise the exchange rate by encouraging capital inflows or outflows in order to take care of a deficit or a surplus on the current

19 It uses mainly three monetary policy instruments: 1. Interest rate changes • These are used to influence credit creation by making credit more expensive or cheaper. • Interest rate changes are also used to stabilise the exchange rate by encouraging capital inflows or outflows in order to take care of a deficit or a surplus on the current account of the balance of payments. 2. Open market transactions • To restrict bank credit, the SARB sells securities. • When banks buy these securities, money flows from the banks to the SARB. • The banks then have less money to lend and cannot extend as much credit as before. • To encourage credit creation, the SARB buys securities in the open market. • Money then flows into the banking system. • The banks use the money to create credit. 3. Moral suasion • The SARB consults with banks and persuades them to act in a manner that is desirable in terms of the economic conditions that prevail at the time. • The persuasion is often linked to transactions of the SARB in the money market. • The SARB can call on banks to be less lenient when they are too generous in extending credit. • Government securities may be sold on open markets to drain excess liquidity so that banks have less money to lend. 4. Cash reserves requirement • The SARB may increase the balance that commercials are required to maintain in order to increase money creation. • This will increase money supply and stimulate aggregate demand thereby encouraging businesses to produce more. 5. Exchange rate policy. • The SARB uses the free-floating exchange rate system to allow forces of demand and supply to determine the exchange rate. • This allows local prices to be linked to international prices. • Exchange rates adjust themselves with minimum government intervention. FISCAL POLICY • The National Treasury is responsible for the formulation and implementation of fiscal policy in South Africa. • The main purpose of fiscal policy in South Africa is to stimulate macroeconomic growth and employment, and to ensure a desirable redistribution of income (economic equity). • The stability objective, in terms of prices and exchange rates, is left for the most part to monetary policy. • Government compiles and times its expenditure and taxation in a way that enhances its chances of achieving its macroeconomic objectives. 1. Progressive personal income tax • Higher-income earners are taxed at higher rates than lower-income earners. • The taxes are used to finance social development. • The poor benefit more than those with higher incomes. Examples are the social wage and social allowances such as pensions. 20 2. Wealth taxes • Properties such as houses, offices and factory buildings in urban areas are taxed annually. • Transfer duties are paid when properties are bought. • Securities (shares and bonds) are taxed when they are traded. • Capital gains tax (CGT) is levied on gains earned on the sale of capital goods, such as properties and shares

p • The poor benefit more than those with higher incomes. Examples are the social wage and social allowances such as pensions. 20 2. Wealth taxes • Properties such as houses, offices and factory buildings in urban areas are taxed annually. • Transfer duties are paid when properties are bought. • Securities (shares and bonds) are taxed when they are traded. • Capital gains tax (CGT) is levied on gains earned on the sale of capital goods, such as properties and shares. • Estate duties are levied on the estates of deceased persons. • Taxes are used to finance development expenditures which benefit the poor more than those who are not poor. 3. Cash benefits • Old-age pensions, disability grants, child support grants and unemployment insurance are important cash grants. 4. Benefits in kind • These include the provision of healthcare, education and school meals, protection, municipal services and infrastructure. • Where user-fees are charged, poor people and low-income earners benefit more than others because they pay nothing or less than higher-income earners. • Limited quantities of free electricity and water are provided. 5. Other redistributions • Some macroeconomic policies have advantages that favour poor and low income earners. • Public work programmes, for example, provide employment and Strategic Investment projects (SIPs) provide employment subsidies and a number of other cash and financial benefits to SMMEs. • Previously disadvantaged persons receive preference. 6. Land restitution and land redistribution • The purpose of land restitution is to return land (or pay cash compensation) to those who lost their land because of discriminatory laws. • Land redistribution focuses on land for residential (town) and productive (farm) use. • The aim is to redistribute 30% of the country's agricultural land to previously disadvantaged persons. • The money for these redress and redistribution programmes is provided for in the main budget. 7. Property subsidies • Subsidies help beneficiaries to acquire ownership of fixed residential property. • The government's housing subsidy scheme provides funding options to all eligible persons earning less than R3 500 per month. • The money for this scheme comes from the main budget. A maximum of 8 marks may be allocated for headings/examples (Max 26) BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION 21 • To achieve economic development, economic growth rate should exceed population growth rate. (Accept any other relevant higher-order conclusion.) (Max 2) 4. Discuss in detail the South African growth and development policies and strategic initiatives.

BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION 21 • To achieve economic development, economic growth rate should exceed population growth rate. (Accept any other relevant higher-order conclusion.) (Max 2) 4. Discuss in detail the South African growth and development policies and strategic initiatives. INTRODUCTION Almost 30% of the South African population is poor, therefore poverty is a serious policy matter for the government. Any other relevant definition. (Max. 2) 1. Reconstruction and Development policy (RDP) • The policy implemented in 1994 in South Africa to redress inequalities of the past. • The RDP programme became the original route map for economic growth and development of the country. • The introduction of the RDP programme shot the economy from negative four per cent (-4%) to about 3%. • The housing infrastructure of the majority of the people started to improve. • More electrification of the rural communities was put in place 2. Growth, Employment and Redistribution Programme (GEAR) • It was launched in 1996 and abandoned in 2001. • It was built on the strategic vision set out in the RDP. • It improved the economy from a 3% point growth to 6%. • The resultant growth in the economy trickled down to more social welfare of the communities. • The trade deficit of the country decreased. • It was also committed government to specific macro-objectives/targets. • Continue service delivery to the poor, and to increase spending on this. • Improve infrastructure to improve service delivery. • Stabilise inflation through monetary policy. • Reduce national budget deficit through a more effective fiscal policy. 3. National Skills Development Strategy (NSDS) • This policy provides the framework for skills development in the workplace. • JIPSA is a short- to medium term mechanism to fast track the objectives of the NSDS • and to prioritise the acquisition of skills necessary for accelerated and shared growth Three processes for implementation: ❖ It focuses on productive citizens ❖ Focuses on equity ❖ quality training and skills development in workplace ❖ Focuses on institutional learning  22 4. Accelerated and Shared Growth Initiative for South Africa (AsgiSA) • It was launched in 2006. • It was committed to halve unemployment and poverty by 2014. • Improve economic development. • Overcome constraints to economic growth. Why did AsgiSA fail?

22 4. Accelerated and Shared Growth Initiative for South Africa (AsgiSA) • It was launched in 2006. • It was committed to halve unemployment and poverty by 2014. • Improve economic development. • Overcome constraints to economic growth. Why did AsgiSA fail? ❖ AsgiSA failed because it did not achieve its goal of halving unemployment and poverty by 2014 because: ➢ an average growth rate of 6% has not been achieved although certain economic sectors were targeted. ➢ stable exchange rate was not achieved. ➢ shortfall in skills development. ➢ good governance (public administration) was not achieved. ➢ a massive investment in infrastructure was an important strategy of government, although a massive degrading of roads is evident. ➢ focus on building small businesses to bridge the gap between the formal and informal economies did not solve unemployment . 5. Joint Initiative on Priority Skills Acquisition (JIPSA) • It is the skills empowerment arm of AsgiSA. • The initiative was launched in 2006 to address the country’s chronic problem areas: unemployment and the skills shortage. 6. Expanded Public Works Programme (EPWP) • It is a nationwide government intervention to create employment using labour-intensive methods. • and to give people the skills they can use to find jobs when their work in the EPWP is done. 7. The New Growth Path (NGP It aims to: ❖ enhance growth ❖ create employment ❖ and greater equity ❖ It was announced in October 2010 and the main focus was to create 5 million jobs over the next 10 years. Key areas where jobs can be created: ❖ Infrastructure expansion with investments in five key physical and social infrastructure areas, namely energy, transport, communication, water and housing. ❖ The agricultural value chain by addressing the high costs of fertilisers and other inputs and by promoting processing and export marketing. ❖ The mining value chain by increasing mineral extraction, improving infrastructure and skills development and supporting the beneficiation on the final manufacture of consumers and capital goods whereby minerals are processed into higher value products locally rather than exporting raw minerals to be processed thus creating employment and generating wealth 23 ❖ The green economy by expanding construction and production of technologies for solar energy, wind energy and biofuels. ❖ Manufacturing sectors through innovation, strong skills development, reduced input costs and increased research and development investment. ❖ Tourism and certain high level services. 8 National Development Plan (NDP)

consumers and capital goods whereby minerals are processed into higher value products locally rather than exporting raw minerals to be processed thus creating employment and generating wealth 23 ❖ The green economy by expanding construction and production of technologies for solar energy, wind energy and biofuels. ❖ Manufacturing sectors through innovation, strong skills development, reduced input costs and increased research and development investment. ❖ Tourism and certain high level services. 8. National Development Plan (NDP) Aims to eliminate poverty and reduce inequality by 2030. Goals are: ❖ To reduce poverty ❖ Economic growth/grow an inclusive economy – build capabilities. ❖ Economic transformation/enhancing the capability of the state and leaders working together to solve complex problems. ❖ Job creation/reduce unemployment to 14 % by 2020 and 6% by 2030. ❖ Uniting all South Africans around a common programme to achieve prosperity and equity. ❖ Promoting active citizenry strengthen development, democracy and accountability. ❖ Faster economic growth, high investment and greater labour absorption. ❖ Focusing on key capabilities of people and the state. ❖ Building a capable and developmental state. ❖ Encouraging strong leadership throughout society to work together to solve problems. The process in the implementation of the plan includes the following: ❖ The NDP and its proposal will need to be implemented in the right order over the next 17 years, it will shape the budget allocation during the period. ❖ Government has already started a process to align the long-term plans of the departments with the NDP and to identify areas where policy change is required for smooth implementation. ❖ Government will also engage with all sectors to understand how they are contributing to the implementation process. ❖ The President and the Deputy President will be the lead champions of the plan with the cabinet, in government and throughout the country, Premiers and Mayors will be active champions of the plan with their offices driving implementation at provincial and municipal levels. ❖ The plan identifies the task of improving the quality of public services as critical to achieving transformation. ❖ Planning and implementation should be informed by evidence-based monitoring and evaluation. Critical actions: ❖ A social compact to reduce poverty and inequality and raise employment and investment. ❖ A strategy to address poverty and its impacts by broadening access to employment, strengthening the social wage, improving public transport and raising rural incomes. ❖ Steps by the state to professionalise the public service, strengthen accountability, improve coordination and prosecute corruption. ❖ Boost private investment in labour-intensive areas, competitiveness and exports with adjustments to lower the risk of hiring younger workers. ❖ An education accountability chain with lines of responsibility from state to classroom 24 ❖ Phase in national health insurance, with a focus on upgrading public health facilities, producing more health professionals and reducing the relative cost of health care. ❖ Public infrastructure investment at 10% of GDP financed through tariffs, public-private partnerships, taxes and loans and focused on transport, energy and water. ❖ Interventions to ensure environmental sustainability and resilience to future shocks. ❖ New spatial norms and standards – densifying cities, improving transport, locating jobs where people live upgrading informal settlements and fixing housing market gaps

improve coordination and prosecute corruption. ❖ Boost private investment in labour-intensive areas, competitiveness and exports with adjustments to lower the risk of hiring younger workers. ❖ An education accountability chain with lines of responsibility from state to classroom 24 ❖ Phase in national health insurance, with a focus on upgrading public health facilities, producing more health professionals and reducing the relative cost of health care. ❖ Public infrastructure investment at 10% of GDP financed through tariffs, public-private partnerships, taxes and loans and focused on transport, energy and water. ❖ Interventions to ensure environmental sustainability and resilience to future shocks. ❖ New spatial norms and standards – densifying cities, improving transport, locating jobs where people live, upgrading informal settlements and fixing housing market gaps. ❖ Reduce crime by strengthening criminal justice and improving community environments 9. Small Business Development Promotion Programme • It acquires and improves business management skills. • Help to broaden the employment base. • SMMEs receive a tax-free cash grant for investment in industries. • New or expanding businesses will receive the grant for three years, after which the company is expected to be self-sustaining. • Provision of business advise and related services. • They access platforms which provide the business infrastructure support and a regulatory environment that enable entrepreneurs to thrive. • They access platforms which provide the business infrastructure support and a regulatory environment that enable entrepreneurs to thrive. 10. Black Economic Empowerment Programmes • BEE is a measure to redress inequalities of the past. Motivate your answer. • There are many previously disadvantaged people participating in the economy of the country than before. • The focus of the BEE policy instrument is: to eradicate inequality, stimulate further economic growth, create employment and to Broaden the economic base. • There is more participation and competition in the market /business environment. • IPAP will play a positive role in black economic empowerment by: focusing on many sectors (clothing, textiles, motor, tourist) which gives an opportunity to the disadvantaged to partake actively in the economy • Supporting new BEE business ventures through giving advice and give them access to finance. • Providing skills development programmes to BEE entrepreneurs especially in the labour- intensive industries • However, there are still many previously disadvantaged people who are excluded from economic participation. • In some industries there is still a shortage of previously disadvantaged role players. • BEE should focus on ALL the sectors and levels of the economy. • The government should establish more charters/agreements between the Department of Trade and Industry (DTI) and industries in private sector. • BBBEE faces the following challenges: ❖ the majority of people do not have finances to buy shares to participate in the ownership / shareholding of companies. ❖ rural and local communities do not all have access to economic opportunities. ❖ corruption in the awarding of contracts, resulted in few people benefitting from BBBEE. ❖ fronting resulted in many people failing to benefit from the policy. 25 ❖ a lack of skills and necessary knowledge led to many black women and youth not being able to occupy top management strategic positions in companies. BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION It is debatable whether the new strategies implemented will be successful in addressing the

❖ rural and local communities do not all have access to economic opportunities. ❖ corruption in the awarding of contracts, resulted in few people benefitting from BBBEE. ❖ fronting resulted in many people failing to benefit from the policy. 25 ❖ a lack of skills and necessary knowledge led to many black women and youth not being able to occupy top management strategic positions in companies. BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION It is debatable whether the new strategies implemented will be successful in addressing the various economic objectives because past policies have failed to meet their targets, e.g. Asgisa (Max. 2) Accept any other relevant higher order conclusion. 5. Discuss in detail South Africa's initiatives (endeavours) in regional development. INTRODUCTION • Regional development refers to policies which are aimed at increasing the economic livelihood of specific areas or regions. (Any other correct relevant introduction) (Max 2) BODY: MAIN PART SPATIAL DEVELOPMENT INITIATIVES(SDI): • SDI is a policy to promote sustainable industrial development in areas where poverty and unemployment are at their highest. • It can be defined as a link between important economic hubs and regions in a country. • The intention was to grow the SDI's mostly through private sector investment. • The state was to enhance inward investment through the granting of incentives. • The Public Private Partnerships, promotes the economic potential of underdeveloped areas. • In a PPP a private business may provide the capital to build the factory and to buy raw materials and employ labour, while the government provides the capital for the infrastructure e.g. roads and water. • There are 2 types of PPPs which are compensated differently: unitary payments and user-fees. • The SDI involves an interdepartmental investment strategy that the DTI and the Department of Transport (DOT) lead. • Government’s industrial policy strives towards balance between openness and in promoting local competitiveness by opening up the domestic economy to international competition. • DTI is driving force behind industrial and spatial development. • Relies on networking with other central provincial government departments, IDC, parastatals (like Telkom, Eskom and Transnet) and research institutions to plan and monitor development. • Key policy remains sustainable industrial development in areas where poverty and unemployment are at their highest. • SDI’s focus on high-level support on areas where socio-economic conditions require concentrated government assistance and inherent economic potential exists. • SDI goal to fast-track investment and maximize synergies between various types of investments. 26 Objectives of Spatial Development Initiatives • Develop physical infrastructure such as roads and harbours. • Stimulate economic activities in the underdeveloped areas. • Create employment and stimulate economic growth in the underdeveloped areas. • Develop inherent economic potential in the underdeveloped areas. • Attract private sector and foreign direct investment (FDI). Establish P blic Pri ate Partnerships (PPP)

concentrated government assistance and inherent economic potential exists. • SDI goal to fast-track investment and maximize synergies between various types of investments. 26 Objectives of Spatial Development Initiatives • Develop physical infrastructure such as roads and harbours. • Stimulate economic activities in the underdeveloped areas. • Create employment and stimulate economic growth in the underdeveloped areas. • Develop inherent economic potential in the underdeveloped areas. • Attract private sector and foreign direct investment (FDI). • Establish Public Private Partnerships (PPP) INDUSTRIAL DEVELOPMENT ZONES (IDZs) • They are purpose-built industrial estates, physically enclosed and linked to a port or airport. • They are in duty-free import areas. • This strategy was aimed at making exports internationally competitive. • They focus on creating jobs and promoting exports. • Goods produced in these zones should be exported to foreign countries. • As services are provided from outside, the economy in the areas should be stimulated. • An IDZ offers a world-class infrastructure, enjoys a zero rate of VAT on supplies from South African sources and reduced taxation on some products. • IDZs were located to benefit: - investing companies through support - access to transport for exporting purposes - products produced for export by wavering import duties - skills training for employees by providing subsidies • Each IDZ is designed to: - provide location for establishment of strategic investments - promote and develop links between domestic and zone-based industries - enable exploitation of resource-intensive industries (Accept any other correct relevant response) (Max 26) BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION Economic decentralisation would guarantee that greater emphasis of the development of the country and comprehensive use of resources are used effectively for the improvement of the well-being of the country. (Accept any other correct relevant higher order response) (Max 2) 27 6. Discuss the various economic indicators in detail. INTRODUCTION Governments use different statistical data to predict economic trends and formulate suitable developmental strategies toward influencing the direction that the economy should take / Economic indicators are used to establish the performance of an economy in terms of the b i i bj i (A h l ) (M 2)

27 6. Discuss the various economic indicators in detail. INTRODUCTION Governments use different statistical data to predict economic trends and formulate suitable developmental strategies toward influencing the direction that the economy should take / Economic indicators are used to establish the performance of an economy in terms of the basic economic objectives (Accept any other relevant response) (Max. 2) BODY: MAIN PART 1. THE INFLATION RATE Inflation can be described as an increase in the general level of prices in an economy that is sustained over a period of time. SARB aims to keep the inflation rate stable between 3 and 6%. The following instruments measure inflation: Consumer prices/CPI • This is the weighted average of the prices of a general basket of goods and services likely to be bought by consumers. Production prices /PPI • Measures prices of locally produced goods when they leave the factory and imported goods when they enter the country. • Serves as an indicator to predict consumer inflation (CPI). 2. FOREIGN TRADE INDICATORS The terms of trade • Changes in terms of trade serve as indicator of changes that may spill over into the balance of payments and may lead to a deficit. • Terms of trade will deteriorate, if a greater volume of exports must be produced to keep export earnings constant. The exchange rate • Changes in an exchange rate affect the prices for imports and prices of exports. • A depreciation of the rand against the dollar will result in US goods and services becoming more expensive domestically and earnings from exports to the US increasing. 3. EMPLOYMENT The economically active population (EAP / labour force) • The official employment ages in South Africa are between 15 and 65 who are willing to work and it includes workers in the formal sector, informal sector, employers, self- employed persons and unemployed persons. Employment rate. • The number of employed persons expressed as percentage of the EAP gives the employment rate. • The South African employment rate was 70,9% during 2019 and is not accompanied by a similar growth in employment numbers. 28 Unemployment rate • The unemployment rate is expressed as the percentage of unemployed persons out of the total number of people willing and able to work. • In South Africa the official unemployment rate was 29,1 % in 2019 and is the most important cause of poverty. 4 PRODUCTIVITY INDICATORS

p y • The South African employment rate was 70,9% during 2019 and is not accompanied by a similar growth in employment numbers. 28 Unemployment rate • The unemployment rate is expressed as the percentage of unemployed persons out of the total number of people willing and able to work. • In South Africa the official unemployment rate was 29,1 % in 2019 and is the most important cause of poverty. 4. PRODUCTIVITY INDICATORS Labour productivity • Watched most closely, particularly in relation to real wage increases. • In South Africa productivity increased less than labour remuneration. • Labour productivity is measured by dividing the real GDP by the number of workers employed. Remuneration per worker • If productivity increases are lower than the real wage increases, inflationary pressures will occur. • The relationship between productivity and wages is crucial for employers survive in vigorous markets and workers to survive on their salaries. (Accept analysis of other kind of productivity) 5. INTEREST RATES Repo rate • Repo rate is the rate at which the SARB provides loans to commercial banks. • effective utilization of the decisions made on the change of the repo rate by the Monetary Policy Committee (MPC). • When the MPC lower the repo rate, banks should likewise reduce their interest rates in order to produce increased consumption spending by consumers. • When the MPC increases its repo rate, banks would increase their interest rates and this would have a negative effect or decline in the consumption spending by consumers. • If interest rates increase, debt of households and businesses increase and repayment of debt becomes larger too. • It may signal that a downturn in the business may occur and thus the welfare of consumers becomes affected 6. MONEY SUPPLY • Money supply is of critical importance to give early warning of likely changes in inflation • The SARB is currently focusing on targeting inflation rather than the money supply • South African Reserve Bank defines money in different categories: ❖ M1 - coins and notes ❖ M2 - equal to M1 plus all short- and medium-term deposits. ❖ M3 - equal to M2 plus all long-term deposits of domestic private sector with monetary institutions. BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION The use of economic indicators is important because analysts use the data to interpret current or future investment possibilities. (Max 2) 29 7. Discuss social indicators in detail 1. DEMOGRAPHICS Demographics refers to data collected relating to the composition of the population of a country, such as size race age sex income geographic distribution language education occupation

( ) CONCLUSION The use of economic indicators is important because analysts use the data to interpret current or future investment possibilities. (Max 2) 29 7. Discuss social indicators in detail 1. DEMOGRAPHICS Demographics refers to data collected relating to the composition of the population of a country, such as size, race, age, sex, income, geographic distribution, language, education, occupation, religion, birth rate, fertility rate, life expectancy at birth, infant mortality rate, death rate. Demographics consist of population growth and life expectancy. Population growth • Currently the South Africa's population is approximately 60.6 million. • Census is done every few years in order to determine the population growth. • The population growth rate is an important indicator to the government in terms of the number of social services that are needed. • The size and the change in the population indicate the future labour force and the needed infrastructure. • The Human Development Index represents an intention to define human well-being more broadly. It provides a combined measure of three basic dimensions of human development: health, education and income. Life expectancy • Life expectancy refers to the number of years that an individual is expected to live. • It reflects the average age at which people in the country die. • In South Africa life expectancy is low due to AIDS or other pandemics. • Other demographic indicators include migration rates, population density, mortality rates and birth rates. • Assurance companies are interested in life expectancy reductions because it has an impact on premiums and service delivery. 2. Nutrition and health indicators Nutrition and health: These are two related social indicators. • Nutrition: This is an important indicator for the well-being of infants and young children two important conditions of nutrition in child malnutrition and overweight which are both particularly important for children under the age of five years of age: - Child malnutrition: ❖ Malnutrition is expressed in two ways, namely weight for age (underweight) and height for weight (stunted or dwarfism). ❖ the proportion of children who are underweight is the most important indicator of malnutrition. ❖ it is important to monitor malnutrition and weight because being overweight increases the risk of death and inhibits cognitive development in children. 30 - Overweight children (obesity): ❖ the prevalence of overweight children is growing concern in South Africa. ❖ there is an association between obesity in children and the high prevalence of diabetes, respiratory diseases, high blood pressure, and psychological and orthopaedic disorders. ❖ being overweight can lead to numerous adverse health conditions which affect

30 - Overweight children (obesity): ❖ the prevalence of overweight children is growing concern in South Africa. ❖ there is an association between obesity in children and the high prevalence of diabetes, respiratory diseases, high blood pressure, and psychological and orthopaedic disorders. ❖ being overweight can lead to numerous adverse health conditions which affect people's ability to work and take care of themselves, obesity is a killer. ❖ governments often legislate that health supplements such as vitamin A be added to basic food stuffs such as bread while the health department also encourage breast feeding. ❖ malnutrition and obesity in children are indicators taken into account when deciding on feeding schemes and their extent • HEALTH: A number of indicators are used both nationally and internationally to monitor the health of a population ❖ Infant mortality: This is measured in terms of the number of infants who die before reaching one year of age per thousand live births in a given year. In South Africa in 2010, it was at 34% per thousand. ❖ Under five mortality: This is measured in terms of the probability that a new born baby will die before reaching the age of five years, if subject to present age-specific mortality rates. The probability is expressed is a number per thousand and in South Africa it was at 50 per thousand in 2010. ❖ Spending on health: This is measured in terms of the amount of public and private expenditure on healthcare as a percentage of GDP. In 2009 South Africa's expenditure was 8,4% compared to the 6,6% in the Sub-Saharan Africa and 5,3% in the North Africa. ❖ Access to safe and drinking water: This is measure in terms of the percentage of the population that a reasonable access to safe and drinking water (treated or uncontaminated) - in 2009 91% of the South African population had access compared to 60% in Sub Saharan Africa and 92% of North Africa. ❖ Access to sanitation facilities: This is measured in terms of the percentage of a population with at least adequate sanitation facilities that can effectively prevent human/animal/and insect contact. In 2009, 77% of the South African population had access to improved sanitation, compared to 31% in sub-Saharan Africa and 89% in North Africa. A healthy population saves on medical and other costs, produces income and contributes to a stronger economy. 3. EDUCATION • People’s standard of living is directly related to their level of education. • Five or Six years of schooling is essential for the achievement of sustainable literacy and numeracy skills. • Public expenditure percentage. This shows the percentage of public expenditure that is directed towards education. • Secondary enrolment percentage. This shows the percentage of the designated age group attending secondary education. ❖ In high-income countries, learners of a younger age attend secondary education. • Primary completion. This shows the percentage of the designated age group that completed primary education. It serves as indication for efficiency. 31 • Youth literacy rate. This shows the percentage of the designated age group (15 - 24 years) that are literate. It serves as indication for the outcome of the education system. 4. SERVICES • Services are vital to enhance people's lifestyles and level of economic and social development In South Africa, in terms of the Constitution's requirements of human dignity and social justice

❖ In high income countries, learners of a younger age attend secondary education. • Primary completion. This shows the percentage of the designated age group that completed primary education. It serves as indication for efficiency. 31 • Youth literacy rate. This shows the percentage of the designated age group (15 - 24 years) that are literate. It serves as indication for the outcome of the education system. 4. SERVICES • Services are vital to enhance people's lifestyles and level of economic and social development In South Africa, in terms of the Constitution's requirements of human dignity and social justice. • The following are identified: ❖ Electricity: The national Electricity Regulator reports that 84% of households has access to electricity in 2020 despite the loadshedding challenges. ❖ Refuse removal: Some 61% of households in South Africa had access to refuse removal by the local authorities once a week. ❖ Water supply: Some 89% of households had access to clean water in 2020. This is the average of urban and rural access to improved water schemes. Improved water resources refers to an adequate amount of water from sources like households' connections / taps inside the yard / public taps / boreholes / protected springs / and rainwater collection 5. Housing and urbanisation Housing: • A significant proportion (39.9%) of South Africans are poor and cannot afford to buy residential property. • In order to secure the social advantages (for example family life) and economic (for example productive) advantages of suitable housing, the government facilitates home ownership by means of a subsidy system and loans from the private sector. • More than 20 million subsidised houses have been handed over since 1994. • The number of houses completed, as measured by the Department of Human Settlement, is a very important indicator of the delivery of services to the disadvantaged population. Urbanisation • refers to the movement of people from the rural areas into the urban areas. • The founding of new towns. • The natural growth of the urban population. • The percentage of the population living in urban areas  BODY: ADDITIONAL PART (NOT TO BE PREDICTED) CONCLUSION Social indicators are the most important instrument to check on the health and education of the people and assist government in allocation of funds to improve the health and education that will ensure sound human development. (Max. 2) (Accept any other correct relevant higher order response) 32 PAPER TWO QUESTION 5: MICRO-ECONOMICS TOPIC NO. ESSAY LAST YEAR ASSESSED PERFECT MARKET 1. Discuss in detail the various equilibrium DBE Nov 2017 positions of a perfect market with the aid of graphs (normal profit economic profit

32 PAPER TWO QUESTION 5: MICRO-ECONOMICS TOPIC NO. ESSAY LAST YEAR ASSESSED PERFECT MARKET 1. Discuss in detail the various equilibrium DBE Nov 2017 positions of a perfect market with the aid of graphs (normal profit, economic profit &economic loss) IMPERFECT 2. Discuss, with/without graphs, monopoly as a DBE Nov 2019 with MARKET market structure in detail the aid of graphs. 3. Discuss oligopoly as a market structure in DBE May 2022 detail MARKET 4. Compare and contrast perfect and imperfect STRUCTURE market structure OR imperfect and imperfect MARKET FAILURE 5. Discuss the causes of market failure in DBE May-June detail SCE 2021 6. Discuss, in detail, with/without drawing DBE Nov-Dec graphs, state intervention as a consequence 2021 without of market failures. graphs PAPER TWO QUESTION 6: CONTEMPORARY ECONOMIC ISSUES TOPIC NO. ESSAY LAST YEAR ASSESSED INFLATION 1. Discuss the consequences of inflation. DBE Nov- 2021 2. Discuss measures to combat inflation DBE May-2022 TOURISM 3. Discuss in detail the benefits of tourism. DBE Nov-2021 4. Discuss in detail the effects of tourism. DBE Nov-2018 ENVIROMENTAL 5. Discuss in detail the measures used by DBE JUN- 2018 SUSTAINABILITY government to ensure sustainable development. 6. Discuss the major environmental problems DBE Nov-2020 that affect countries globally. 33