# Economics Grade 12 KZN March 2022 Paper & Memo

> Grade 12 Economics question paper and memo from the KZN March 2022, 25 pages. Read online or get the free PDF download.

- Page: https://www.hlayiso.com/library/eco-gr12-march-2022-qp-and-memo/0a00f263-64ca-485a-b95f-d2ac536df6d8
- Updated: 2026-09-27
- Subject: Economics
- Grade: Grade 12
- Document type: Question paper and memo
- Year: 2022
- Exam period: KZN March
- Curriculum: CAPS
- Pages: 25

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Economics · Grade 12 · KZN March · 2022. Question paper and memorandum, 25 pages. Read online or download the PDF.

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EDUCATION
REPUBLIC OF SOUTH AFRICA

|. NATIONAL
SENIOR CERTIFICATE

i" ECONOMICS -
" MARCH COMMON TEST ;
; MARCH 2022 :

MARKS: 100

TIME: 1% hours

This question paper consists of 10 pages.

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INSTRUCTIONS AND INFORMATION

1. Answer THREE questions as follows:

e@ SECTION A: COMPULSORY
e SECTION B: Answer any ONE question from this section.
e SECTION C: Answer any ONE of the two questions.

= 2: Number the answers correctly according to the numbering system used in this question

paper.

3.. Write the number of each question above each answer.

4, ‘Read the questions carefully and start EACH question on a new page.

5. Leave at least ONE line between subsections of each question. }
6. Start each question on a new page.

Th Answer questions in full sentences and ensure that the format, content and context of

your responses comply with the cognitive requirements of the questions.

8. Answer ONLY the required number of questions. Answers in excess of the required
number will NOT be marked.

9. Use ONLY blue or black ink.

10. | Non-programmable pocket calculators may be used.

11. Write legibly and present your work neatly.

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Economics 3 March 2022 Common Test
NSC

SECTION A: COMPULSORY

QUESTION 1 20 MARKS — 15 MINUTES

4.1. Various options are provided as possible answers to the following questions.
Choose the correct answer and write only the letter (A-D) next to the question
number (1.1.1-1.1.8) in the ANSWER BOOK, for example 1.1.9. D.

4.44 The total value of all spending by households on goods and services is
known as ... spending.

A. government
“te B. investment
Cc. export
} D. consumption

1.1.2 Business cycles that are caused by the changes in the building and
construction industry are called ... cycles.

Kitchin
Jugler
Kuznets
Kondratief

COMW>

1.1.3. The public sector that is responsible for the overall running of the country
is called ... government.

1 provincial

B. national

Cc. local

D. international

1.1.4 The difference between merchandise imports and exports is referred to
as trade ...

A. balance
B. surplus
Cc. deficit

D. neutrality

1.1.5 A tax system that is used in South African to ensure equitable
distribution of income is known as...tax system

A. regressive

B. proportional

Cc. flat

D. progressive : (5 x 2)(10)

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1.2. Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the letter (A-l) next to the question numbers (1.2.1. to 1.2.8) in the

ANSWER BOOK.

COLUMN A

COLUMN B

1.2.1. Injections
1.2.2. Real flow

“4.2.3. Economic depression
he,

1.2.4. Parastatals
1.2.5. Exchange rate

1.2.6. Absolute advantage

A contraction in the level of economic activity.

Factors that originate outside the market
system.

State-owned enterprises that provide public
goods on behalf of government.

A country produces a good or service at
lowest costs than other countries.

The movement of goods and services from
firms to households.

The introduction of income into the economy
in the form of investment, government
spending and exports.

The price of one national currency in
terms of another currency.

(6 x1)

1.3. Give ONE term for EACH of the following descriptions. Write only the term next
to the question numbers (1.3.1 to 1.3.6) in the ANSWER BOOK. Abbreviations,
acronyms and examples WILL NOT be accepted.

1.3.1. Asmall initial increase in spending produces a proportionately larger
increase in aggregate national income.

1.3.2 The price of an alternative that must be forgone to pursue a certain action.

1.3.3 An attempt by interest groups to influence government behaviour to their

advantage.

1.3.4. Independent factors that can influence the business cycle from outside

economy.

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(1X4) (4)
TOTAL SECTION A: 20

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Economics § March 2022 Common Test

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SECTION B

Answer any ONE of the two questions in this section in the ANSWER BOOK.

QUESTION 2: MACROECONOMICS 40 MARKS ~ 30 MINUTES

2.1. Answer the following questions. ;

2.1.1. Name TWO instruments of the fiscal poli¢y..~ o” (2x1)

2.1.2. What is the impact of a recession on the economy? (1x2)

2.2. Study the picture below and answer the questions that follow.

(2)

CAN'T SEE
WHAT'S NEXT, BUT
IT SURE AIN'T
STRAIGHT UP!

ent

2.2.1. Identify the example of lagging indicators shown above.

2.2.2. Which economic trend is depicted on the above cartoon?
2.2.3. Briefly describe the term business cycle.

2.2.4. Explain the impact of decreasing taxes on the economy.

2.2.5 Why is it important for the government to forecast the economy
of the country? (2x2)

(4)

[10]

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

BUDGET 2022 IN A NUTSHELL

| The Minister of Finance warned that government debt was dangerous. It has reached R4.3

| trillion and is projected to rise to R5.4 trillion over the medium term. On average , 20 cents of
every rand collected in government revenue is now being spent on debt repayments, which is

| crowding out spending on health and basic education.

Adopted from : Fin 24 February 2022

|
|

2.3.1. Identify the fiscal instrument that is discussed above. (1)

2.3.2. Name the government department that is responsible for

budgeting. (1)
2.3.3. Briefly describe the term Medium-term Expenditure Framework. (2)
2.3.4. What is the negative impact of a budget deficit on service delivery? (2)

2.3.5. Why is it important for government departments to account for

the use of public funds? : (2x2) (4)
: [10]
2.4. Discuss exchange rate. stability.and equitable distribution of income as
macroeconomic objectives of the state. _ “~ (4x2) (8)
2.5. Howcan the government use supply-side policies to smooth out
fluctuation in the economy? (8)
[40]
pei ©

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Economics Ve March 2022 Common Test
QUESTION 3: MACRO-ECONOMICS 40 MARKS — 30 MINUTES
3.1. Answer the following questions.

3.1.1. Name TWO turning point of business cycle. (2x1) (2)

3.1 2. What is the impact of high tax rate on tax payers? (2)

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

. RESERVE BANK REPO RATE TO 3, 75%

fhe REPO rate will increase by 25 basis to 3, 75%, South African Reserve Bank
governor announced. This means that the prime lending rate of commercial banks
will increase to 7, 25%. The move to hike the rate comes with an increasing
concerns around higher inflation and follows the conclusion of the SARSs last
Monetary Policy Committee (MPC) meeting of the year.

Adopted from: News24, 18 November 2021

3.2.1 Identify the morietary instrument discussed on the extract above. (1)
3.2.2 Name the institution that is responsible for monetary policies. (1)
3.2.3 Briefly describe the term cash reserve requirements. (2)

3.2.4 What is the positive impact of increasing money supply in the
economy? (2)

3.2.5 What role does the government play in discouraging the use of
demerit goods? (2x2) (4)

[10]

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

ELECTRICITY: THE CHALLENGES OF THE SOUTH AFRICAN

GOVERNMENT?

Cette te

Adapted from Business Day

3.3.1. Identify the parastatal shown above (1)

3.3.2. Name the government department responsible for the provision of
electricity. (1)

3.3.3. Briefly describe the term community goods. (2)

3.3.4. Explain the negative impact of giving bailouts to state-owned

enterprises on the economy. (2)
3.3.5. How does bureaucracy contribute to public sector failure? (2x2) (4)
[10]
3.4. Discuss moving averages and length as tools to smoothen economic
fluctuations. (4x2) (8)
3.5. How can full employment be achieved as a macroeconomic objective
of the state ? (8)
[40]
TOTAL SECTION B: 40

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Economics March 2022 Common Test

SECTION C

Answer any ONE of the two questions in this section in the ANSWER BOOK.
Ensure that your answer follows the structure indicated below in order to obtain
maximum marks:

MARK
STRUCTUTURE OF ESSAY ALLOCATION

Introduction

.

The introduction is a lower order-response Max. 2

“,

e Agood starting point would be to define the main concept related to
the question topic.

Do not include any part of the question in your introduction.

@ Do not include any part of the introduction in your body.

e Avoid saying in the introduction what you are going to discuss in the
body.

Body

Main part: Discuss in detail/ in depth discussion/ Examine/ Critically Max. 26
discuss/ Analyse/ Compare/ Evaluate/ Distinguish/Differentiate/
Explain.

Additional part: Give own opinion/ Critically discuss/ Evaluate/
Critically evaluate/ Draw a graph and explain/ Use the graph given and
explain/ Complete the given graph/ Calculate/ Deduce/ Compare/
Explain/ Distinguish/ Interpret/ Briefly debate/ How/ Suggest Max. 10

Conclusion
Any high-order conclusion should include: Max. 2

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

¢ Any opinion or value judgment on the facts discussed.

@ Additional support information to strengthen the discussion/
analysis.

e Acontradictory viewpoint with motivation, if required.

e Recommendations.

TOTAL 40

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NSU

QUESTION 4: MACRO-ECONOMICS MARKS -— 40

e Discuss in detail the markets within the four sector model.

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MINUTES

e Howcan government use fiscal policy to stimulate economy?

4

-QUESTION.5: MACRO-ECONOMICS MARKS - 40

e Discuss in detail the reasons for international trade.

MINUTES

e _« Howcan the South African government promote trade?

Ym,

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TOTAL SECTION C:
GRAND TOTAL:

(26)
(10)

[40]

(26)
(10)

[40]

40
100

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¥ KWAZULU-NATAL PROVINCE

EDUCATION |
REPUBLIC OF SOUTH AFRICA

NATIONAL
SENIOR CERTIFICATE

%» __MARCH 2022 :
____ MARKING GUIDELINES :

MARKS: 100

This marking guideline consists of 15 pages.

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Economics 2 March 2022 Common Test

NSC

SECTION A: COMPULSORY

QUESTION 1 20 MARKS - 15 MINUTES

14.

1.2

1.3

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MULTIPLE CHOICE

1.1.1. D (consumption) W YW

1.1.2 C (Kuznets) VY

1.1.3. B (national) WV

1.1.4 A(balance) VY

1.1.5 D (progressive) WY (5 x 2) (10)
MATCHING ITEMS

1.2.1. F - The introduction of income into the economy in the form of
investment, government spending and exports. W

1.2.2 E-The movement of goods and services from firms to households. W
1.2.3. A-Acontraction in the level of economic activity. W

1.2.4 C - State-owned enterprises that provide public goods on behalf of
government.

1.2.5 G- The price of one national currency in terms of another currency. W

1.2.6 D-A country produces a good or service at lowest cost than other
countries. W

(6 x1) (6)
CONCEPTS
1.3.1 MultiplierW
1.3.2 Opportunity cost W
1.3.3. Rent-seeking¥
1.3.4 Exogenous explanation W (1x4) (4)

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Economics 3 March 2022 Common Test
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SECTION B

Answer any ONE of the two questions in this section in the ANSWER BOOK.

QUESTION 2: MACROECONOMICS 40 MARKS - 30 MINUTES

2.1. Answer the following questions.

2.1.1. Name TWO instruments of the fiscal policy. (2 x 1) (2)

e Government spendingY
e Taxation’
e Public debt

2.1.2. What is the impact of a recession on the economy? (1x 2) (2)

e Recession is associated with a high unemployment rate hence
lowering the standard of living and increased dependency rate
to the government./V

e During a recession consumer spending decreases thereby
resulting to businesses becoming less profitable and consequently
shutting-down. /V

(Accept any other relevant and correct response)

2.2. _DATA-RESPONSE

2.2.1. Identify the example of lagging indicators shown above. (1)

Real GDPV / Q2 GDPV/GDP

2.2.2. Which economic trend that is depicted on the above cartoon? (1)

Downturn// downswingV// downwards// negative// declinev/
Contraction/Recession

2.2.3. Briefly describe the term business cycle. (2)

Business cycle is a successive periods of increasing or decreasing
economic activities. /V
(Accept any other relevant and correct response)

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Economics 4 March 2022 Common Test
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2.2.4. Explain the impact of decreasing taxes in the economy? (2)

e Consumers will have a larger part to their income available to
spend on goods and services thereby increasing aggregate
demand.//

e Producers will spend more on capital goods thereby stimulating the
economy.//

(Accept any other relevant and correct response)

2.2.5. Why is it important for the government to forecast the economy
of the country? (2 x 2) (4)

e The government use predictions to make informed decisions when
undertaking policy planning. /V
e Economic forecasting is used by the government to determine how
to allocate the resources of the state. /V
e Economic forecasting help the government to determine the financial
state of the country. /V
(Accept any other relevant and correct response)

[10]
2.3. DATA-RESPONSE

2.3.1. Identify the fiscal instrument that is discussed above. (1)
State debt / government debt// public debtV

2.3.2. Name the government department that is responsible for
budgeting. (1)
National treasuryV/ Department of financeY

2.3.3. Briefly describe the term Medium-term Expenditure Framework (2)

The Medium-term Expenditure Framework is a system of budgeting
which require the state to use a rolling budget and set budgets fora
three-year period. //V

(Accept any other relevant and correct response)

2.3.4. What is the negative impact of a budget deficit on service delivery? (2)

e A budget deficit comes with a high level of debt for the government
thus retarding the efficiency of the state when it comes to the
provision of public goods and services.//

e A shortfall in government revenue means that some public servants
lose their jobs which slow down service delivery thus causing
community members to become disgruntled and consequently

service delivery protests may arise. /V
(Accept any other relevant and correct response)

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Economics 5 March 2022 Common Test
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2.3.5. Why is it important for government departments to account for
the use of public funds? (2 x 2) (4)

e Government departments are there to serve the people and

therefore they have the responsibility to show that they are acting

in the interest of the people they serve.//
e Government departments need to be transparent about state

funds so that a good relationship with the public can be maintained. /V
e Accountability sessions by government departments are used to

monitor whether the state is able to achieve its objectives. //

(Accept any other relevant and correct response)

2.4. Discuss exchange rate stability and equitable distribution of income
as macroeconomic objectives of the state. (4 x 2) (8)

Exchange rate stability
e The state tries to protect the country’s currency from excess depreciation
and appreciation. /V

e Depreciation and appreciation creates uncertainty for producers and
investors and should therefore be limited. /V

e Monetary and fiscal policies are used to ensure that exchange rates remain
relatively stable for as long as possible. /V

(Accept any other relevant and correct response)

Equitable distribution of income

e 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.//

e Free social services are basic education; primary health and to finance
basic economic services e.g. Cash grant to the poor, child grants and
cash grants to vulnerable people, disability grants. /V

e Progressive taxation means that the higher income earners pay
higher/more taxation. /V

(Accept any other relevant and correct response)

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2.5. How can the government use supply-side policies to smooth out
fluctuations in the economy? (8)

e The government can reduce the cost of production by cutting taxes and
giving subsidies thus allowing producers to generate income and creating
new jobs. V/V

e Government spending can be channelled towards infrastructural
development and technological development thereby improving economic
growth. WV

e The government can improve the quality of human resources by

implementing training and education programmes which will consequently
increase the overall efficiency of resources. W /It can promote exportation
of goods and services thus earning foreign
income for the country. WV
e The government can promote competition by implementing competition laws
therefore making markets accessible to everyone. WV
(Accept any other relevant and correct response)

[40]
QUESTION 3: MACRO-ECONOMICS 40 MARKS - 30 MINUTES
3.1. Answer the following questions.
3.1.1. Name TWO turning point of business cycle. (2x1) (2)
e Trough¥
e Peak¥
3.1.2. What is.the impact of high tax rate on tax payers? (2)

e A high tax rate will promote tax evasion. WW
© High tax rate discourage people from entering the labour market
or accepting promotions. W ¥
(Accept any other relevant and correct response)

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|
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Economics if March 2022 Common Test
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3.2. DATA-RESPONSE

3.2.1. Identify the monetary instrument discussed on the extract above. (1)
Repo rate “/ Repurchase ratew

3.2.2. Name the institution that is responsible for monetary policies. (1)
South African Reserve bank ¥ / SARBY

3.2.3. Briefly describe the term cash reserve requirements. (2)
Cash reserve requirements are the amount of funds that a bank holds
in reserve to ensure that it is able to meet liabilities in case of sudden
withdrawal. 4 W

(Accept any other relevant and correct response)

3.2.4. What is the positive impact of increasing money supply on the
economy? (2)

e An increase in the supply of money will consequently result to an
increase in aggregate demand hence a concurrent increase in profit
earnings of businesses. ¥ W

e When money supply increases, the economy is stimulated thereby
causing efficiency of the markets and a fast economic growth rate
can be experienced. ¥ YW

(Accept any other relevant and correct response)

3.2.5. What role does the government play in discouraging the use of
demerit goods? (2 x 2)(4)

e The government reduce consumption of demerit goods by levying
of excise duties on demerit goods ¥ W

e The government raise awareness about the negative impact on the
use of demerit goods through campaigns. W YW

e The government pass laws and regulations to limit consumption of
these goods to decrease their harmful effect on society.
ACA

(Accept any other relevant and correct response)

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Economics 8 March 2022 Common Test
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3.3. DATA-RESPONSE

3.3.1. Identify the parastatal shown above. (1)
ESKOMY

3.3.2. Name the government department responsible for the provision

of electricity. (1)
Department of energyW
3.3.3. Briefly describe the term community goods. (2)

Community goods refer to non-excludable goods that everyone can
use whether they are prepared to pay for them or not. WW
(Accept any other relevant and correct response)

3.3.4. Explain the negative impact of giving bail-outs to state-owned
enterprises on the economy. (2)

e Bail-outs that the government give to state owned enterprises
increase government expenditure thus retarding the ability of the
state to focus on its macroeconomic objectives. ¥W W

e Giving bail-outs to state owned enterprises shift the focus of state
resources away from development. ¥ 4

(Accept any other relevant and correct response)

3.3.5. How does bureaucracy contribute to public sector failure? (4)

e The prevalence of bureaucracy allows certain individuals

(bureaucrats) to obey rules and regulations and compromise

service delivery. VW W
e Official rules and procedures which are time consuming and hamper

productivity are put to place as red tape to benefit certain individuals. v¥ W
e Individuals and enterprises influence government to act in their

interests and not of that of the public that they serve. vW 4

(Accept any other relevant and correct response)

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Economics 9 March 2022 Common Test
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3.4. Discuss moving averages and length as tools to smoothen economic
fluctuations.

Moving averages

e Moving averages are statistical tools used to analyse the changes
that occur in a series of data over a certain period of time. WW
e lt repeatedly calculates a series of different average values over a long
time series. ¥ W
e By calculating a moving average, a forecaster is able to smooth out
minor fluctuations in a data series thus making it easy to spot trends. ¥ vw
(Accept any other relevant and correct response)

Length
e The length refers to the amount of time it takes to move through one

complete cycle. 4 YW
e Itis a horizontal measurement of business cycles from peak to peak or
trough to trough. W ¥
e Itis important to know the length as it indicates the strength of the
economy. v7 7
(Accept any other relevant and correct response)

3.5. How can full-employment be achieved as a macroeconomic objective of

the state?

e The state can invest on capacity building by implementing skills
development projects which will equip communities with skills which
make them to be employable. ¥ W

e The government can use incentives such as tax reduction and subsidies
to encourage the business sector to create jobs. WW

e It can implement initiatives meant to inspire small business development
which will create job opportunities for local communities. WW

e Government spending can be focused on infrastructural development
while strategically creating job opportunities e.g. EPWP. WY

e The state can initiate youth employment programs to promote the
employment of young people. WW

(Accept any other relevant and correct response)
[40]
TOTAL SECTIONB: 40

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Economics 10 March 2022 Common Test
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SECTION C

QUESTION 4: MACRO-ECONOMICS MARKS - 40 MINUTES

Discuss in detail the markets within the four-sector model. (26)

Introduction:

A market is defined as any contact or communication between actual or potential
buyers and actual and potential sellers of goods and services. W W
(Accept any other relevant correct introduction) (2)

Body
Main part:

1. The Product/ goods market ¥

e Goods and services are traded in the product market. All participants
purchase these goods and services in the product market. ~W YW

e Goods are defined as tangible items (such as food, clothing and cars) that
satisfy some human wants or need. ¥W W

e Services are non-tangible actions (such as cleaning services, medical care, etc.)
that satisfy human wants or need. W W

e Non-durable goods are those items which are used up when they are
consumed and cannot be re-used, for example, cool drink, petrol and electricity. WW

e Semi-durable goods lasts a short period of time and can be used more than
once. ¥ YW

e Durable goods can be used over again and do not wear out very easily
e.g. vehiclesVW W

e Households purchase consumer goods for consumption and businesses
purchase capital goods for use in the production process. WW

2. The Factor/ Resources market W

e The four factors of production are traded for income in form of wages/ salaries,
interest, economic rent and profit in this market. WW

e Businesses purchase the factors of production from the households in the factor
market. VV

e The price and quantity traded is also determined by interaction between supply
and demand. Vv

e The factor market can be further sub-divided into markets in which different
factors of production like labour, property and financial market. WW

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1 March 2022 Common Test
NSC

3. The financial market W

The financial market serves those who wish to save and those who wish to
borrow. WW

The money, capital and foreign exchange markets are part of the financial
market. ¥ 4

This sector represents financial institutions who are not directly involved in the
production of goods and services but are a link between participants in the
economy with surplus money and participants who require funds. W W
Households make their financial capital available to the financial sector in the
form of savings. ¥ W

The financial sector in turn makes financial capital available to firms through
investments. V 4

a.) Money market W

This is used by participants as a means for borrowing and lending in short term,
from a few days to just less than 3 years. VW
The South African Reserve Bank is a key institution in the money market. ¥W W

b.) Capital market W

This is a financial market where individuals and institutions trade financial securities
in the long-term, which is 3 years and above. ¥W W
The JSE is the key institution in the capital market. ¥ W

4. The foreign exchange market YW

In an open economy, foreign currency is needed to facilitate transaction between
countries. VW 4

It is on this market that one currency can be exchanged for another. ¥ W
The amount that is received in this exchange is known as exchange rate. W YW

The exchange rates are normally determined by the interaction between supply and
demand. v¥ ¥

They are sometimes influenced by the Reserve bank. ¥ W
Foreign currency can be acquired through commercial banks. ¥W YW

(Accept any other relevant and correct response)
(Max. 26)

(Mark sub-headings and examples to a maximum of 8 marks)

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Economics 12
NSC

March 2022 Common Test

Additional part:

How can government use fiscal policy to stimulate the economy?
The government can increase government spending thereby creating jobs

through the development of infrastructure and this stimulates the aggregate
demand and level of production. W¥ ¥

e The government can provide-public goods and services to kick the multiplier
thus stimulating economic growth. ¥ ¥

e South African government spends large sums of money on education to improve
the quality of labour and productive capacity of the country. W Ww

e The government revenue can be used to provide incentives to promote new and
developing businesses, this improves efficiency of markets. W W

e Security grants (transfer payments) given to households increase disposable
income then increase aggregate demand. W W

e The government can influence the total demand and spending by cutting taxes to
increase disposable income. WW

(Accept any other relevant and correct response)
(10)

Conclusion:
Markets play a significant role in the circular flow as they determine prices and have
signals to participants about the scarcity of resources. W W

(Accept any other relevant correct conclusion) (2)

[40]

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QUESTION 5: MACRO-ECONOMICS MARKS - 40 MINUTES

Discuss in detail the reasons for international trade. (26)

How can the South African government promote trade? (10)

Introduction:

Countries may have a surplus of some goods and a shortage of other goods and they
will trade in order to correct the imbalances. W W
(Accept any other relevant and correct introduction)

Body:
Main part:

al Supply reasons

1.1 The availability of natural resources W
e Natural resources are unevenly distributed across all countries in the
world. Vv
e They vary from country to country and can only be exploited in places
where these resources exist. ¥W YW
e Acountry may be richly endowed with different natural resources but
less endowed with skilled labour and capital ¥ YW

1.2. Availability of labour resources W

e Labour differs from country to country in terms of skills, knowledge,
training, quality and cost between them. ¥

e Some countries have highly skilled, well-paid workers and high productivity
levels. VW

e Skills drain occurs when the labour force migrate to countries where labour
resources are highly remunerated. ¥ W

1.3. Availability of capitaly
e Some countries need to modernise their industries and economies with
advanced machinery, equipment and plant but cannot manufacture this
equipment because they lack capital to do so. W~vW
e This has increased the need for international trade. ¥ W

1.4 Lack of entrepreneurship W
e Countries that have good entrepreneurship skills offer more goods and
services for trade. W W
e Efficiency determines the supply of goods and services produced at lower

prices and reduce the opportunity cost of acquiring them. WW
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Economics 14 March 2022 Common Test

1.5

1.6

17

NSC

Climatic conditions ¥

e Climatic conditions make it possible for some countries to produce certain
goods at a lower price than other countries. WW

e Eg. Brazil is the biggest producer of coffee. W

¢ Countries have different climatic conditions and are therefore able to produce
different products. ¥ 4

Technological resources W
e The development levels and innovation processes of countries will always
differ as a result other countries may have them in abundance while others
are not. Vv
e Countries like Germany are able to use capital that embodies high levels of
technology while other countries do not have access to the latest technology. W W
e These countries that have high technological labour force are able to produce
certain goods and services at a low unit cost. WW

Specialisation YW

e The production of certain goods and services allows some countries to
produce them at a lower cost than others. ¥ W

e .g. Japan produces electronic goods and sells them at a lower price. ¥W W

e International trade enables countries to specialise in the production of goods
and services in which they have a comparative advantage. V W

e Most of such surplus production gets exported to other countries and the
revenue earned from these exports can be used to finance imports. ~W W

(Accept any other relevant and correct response)

2. Demand reasons

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2.1 The size of the populationW
e An increase in population growth may result to an increase in demand. ¥ 4
e@ Local producers may not be able to satisfy this demand. vw ¥

e This therefore means that goods and services must be imported from other
countries. WW

2.2 The population’s income levels affect demand¥v
e Changes in income cause a change in the demand for goods and
services. VW YW
e 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. ¥ YW

2.3 Anincrease in the wealthW
e An increase in the wealth of the population leads to greater demand for
goods. ¥ ¥
e People have access to loans and can spend more on luxury goods, many
of which are produced in other countries. ¥ W

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Economics 15 March 2022 Common Test
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2.4 Preferences and tastesW
e Tastes and preferences can play a significant role in determining prices of
goods and services. ¥ ¥
e Consumers can have preference over a specific product which is not
produced in their country. W Ww
e The particular product will have to be imported and sold at a higher price. WW

2.5 The difference in consumption patterns YW
e Consumption patterns are determined by the level of economic
development in the country. YW W
e Poorly developed countries will have a high demand for basic goods

and services but a lower demand for luxury goods. W W
(Accept any other relevant and correct response)

How can the South African government promote trade?

e Trade can be promoted through improving the infrastructure of the country
so that overall efficiency can be achieved. WW

e@ The government can improve international relations so that other countries
will be attracted to the country. WW

e The country can participate in economic integrations so as to increase
demand for exports. WW

@ The government can enforce the improvement in the quality and quantity
of exports. W YW

e South Africa can adopt policies that promote trade and offer incentives to
those who participate. WV YW

e Marketing and promotion of locally manufactured products can improve
the image of the country in the international market. W W

(Accept any other relevant and correct response)

(10)
Conclusion
The need to integrate shall never become superseded as nations of the world need
each other for survival of all and for development purposes. ¥W YW
(Accept any other relevant and correct conclusion)
[40]
TOTAL SECTION C: 40
GRAND TOTAL: 100

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