# Economics Grade 12 Eastern Cape Mock 2012 Memo

> Grade 12 Economics memorandum from the Eastern Cape Mock Exam 2012, 19 pages. Read online or get the free PDF download, question paper linked when available.

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- Updated: 2026-09-27
- Subject: Economics
- Grade: Grade 12
- Document type: Memorandum
- Year: 2012
- Exam period: Eastern Cape Mock Exam
- Curriculum: CAPS
- Pages: 19

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Economics · Grade 12 · Eastern Cape Mock Exam · 2012. Memorandum, 19 pages. Read online or download the PDF.

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                  Province of the
                  EASTERN CAPE
                  EDUCATION

                           NATIONAL
                      SENIOR CERTIFICATE

                            GRADE 12

                      SEPTEMBER 2012

                           ECONOMICS

                         MEMORANDUM

MARKS:   300

                   This memorandum consists of 19 pages.

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2                                ECONOMICS                            (SEPTEMBER 2012)

SECTION A

QUESTION 1         (LO1 – LO4)

1.1
LO1   1.1.1    C       business cycle
      1.1.2    B       public
      1.1.3    A       terms of trade
LO2   1.1.4    B       demand and supply.
      1.1.5    C       Subsidy
      1.1.6    A       economic profit
LO3   1.1.7    C       RDP
      1.1.8    A       SDI
      1.1.9    C       free trade.
LO4   1.1.10   B       benefits debtors.
      1.1.11   B       ecotourists.
      1.1.12   A       CITES                                         (12 x 2)    (24)

1.2   1.2.1    Real flow 
      1.2.2    Managed floating 
      1.2.3    Oligopoly 
      1.2.4    North-South divide 
      1.2.5    Stagflation                                            (5 x 2)    (10)

1.3   1.3.1    C  Direct or indirect compulsory payments to the government.
      1.3.2    H  Shows the relationship between tax revenue and tax rate.
      1.3.3    I  Profit maximisation.
      1.3.4    F  An example of a negative externality.
      1.3.5    A  Removal of restrictive laws and regulations.
      1.3.6    D  Incentives to increase sales abroad.
      1.3.7    E  A cause of cost-push inflation.
      1.3.8    B  Resource that can be replenished or replaced.       (8 x 2)    (16)

                                                          TOTAL SECTION A:           50

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(SEPTEMBER 2012)                            ECONOMICS                                         3

 SECTION B (Answer any THREE questions from this section.)

 QUESTION 2               (LO1 AS1 – AS4)

 2.1 2.1.1          real 
     2.1.2          Kondratieff 
     2.1.3          Auditor-General 
     2.1.4          decrease                                                      (4 x 2)   (8)

 2.2 List the THREE types of exchange rate systems
        Fixed rate 
        Free floating 
        Controlled / managed floating                                            (3 x 2)    (6)

 2.3   DATA RESPONSE

       2.3.1       Refers to a small increase in spending leading to a proportionally
                   larger increase in national income.                                      (2)

       2.3.2       The higher the mpc, the higher the multiplier will be. 
                   Multiplier is directly proportional to mpc.               (Any 1 x 2)    (2)

       2.3.3       Multiplier =     1 .
                                  1 – mpc
                              =       1 
                                  1 – 0,6
                              =        1 
                                     0,4
                              =       2,5   
                   Multiplier effect = R1 bn x 2,5 = R2,5 billion                           (6)

 2.4   DATA RESPONSE

       2.4.1       Shows the income and expenditure for a three year period.                (2)

       2.4.2       Education                                                                (2)

       2.4.3          Informs the parliament of changes in the economy since the main
                      budget. 
                      Indicates the developments in public policy that will shape the next
                      budget.                                                               (4)

       2.4.4       Mr Pravin Gordhan                                                        (2)

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4                                 ECONOMICS                                (SEPTEMBER 2012)

2.5 Discuss ‘extrapolation’ as a feature underpinning forecasting.
       Technique used to predict the future by using past data. 
       It involves the extension of the curve assuming structural variables remain
       the same. 
       Extending a trend may give information about what is likely to happen. 
       Trend line can be extended for the length of a cycle. 
       Channel lines and resistance points must be considered for the trend of a
       curve. 
       Predicting economic behaviour using extrapolation is unreliable. 
                                                                        (Any 4 x 2)      (8)

2.6   Briefly explain the ‘flows’ in a circular flow.
          Flows are economic variables that happen over time. 
          There are two flows: money flow and real flow. 
          Flow of goods and services and factors of production are referred to as
          the real flow.
          Income and expenditure are referred to as the money flow. 
          For every real flow there is money flow in opposite direction. 
                                                                          (Any 4 x 2)    (8)
                                                                                        [50]

QUESTION 3              (LO2 AS1 – AS3)

3.1   3.1.1   perfect 
      3.1.2   internal 
      3.1.3   artificial 
      3.1.4   independent                                                   (4 x 2)    (8)

3.2 List any THREE characteristics of a monopoly.
         Faced with demand curves 
         Decide on their production levels 
         Are exposed to market forces. 
         No close substitutes.
         Only one seller. 
         Price makers. 
         Exploit consumers.
         Protected by barriers of entry. 
         Enjoy favourable circumstances.                               (Any 3 x 2)     (6)

3.3 DATA RESPONSE

      3.3.1   To save SA consumers from price fixing (pricing predators).              (2)

      3.3.2     To prevent the abuse of monopoly power. 
                To regulate the market power through mergers and takeovers. 
                To prevent price fixing and collusion.             (Any 2 x 2)         (4)

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        3.3.3        The Competition Commission 
                     The Competition Tribunal 
                     The Competition Appeal Court                          (Any 2 x 2)    (4)

 3.4 DATA RESPONSE

       3.4.1       Failure of markets to produce the quantities of goods and services
                   that consumers want at a price that reflect marginal utilities and
                   relative scarcities.                                                   (2)

       3.4.2         Externalities 
                     Public goods 
                     Merit and demerit goods 
                     Imperfect competition 
                     Lack of information 
                     Advertising 
                     Immobility of factors of production 
                     Imperfect distribution of income and wealth           (Any 3 x 2)    (6)

       3.4.3          Externalities                                                       (2)

 3.5 Briefly explain ‘shut-down point’ in a perfectly competitive market.
          Profit maximisation is where MR = MC. 
          The firm should consider shutting down when TR<Total cost of
          production. 
          If TR<TVC, it should consider closing down. 
          If price is below MR/MC, the business will not cover its AVC. 
          If the business is not able to cover AVC, it is better to close down. 
         This point where price is less than AVC is known as closing down
         point.                                                           (Any 4 x 2)     (8)

 3.6 Discuss ‘product differentiation’ as a characteristic of monopolistic
     competition
         Products are not identical.
         Differentiated products are similar in many ways. 
         Similarity means that they can satisfy the same need.
         Differences are imaginary. 
         May have different brand names but contains the same ingredients. 
         Services of sellers make the product different. 
         Differences in packaging. 
         Packaging of a product makes it different from other products. 
                                                                         (Any 4 x 2)        (8)
                                                                                           [50]

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6                               ECONOMICS                                (SEPTEMBER 2012)

QUESTION 4         (LO3 AS1 – AS4)

4.1 4.1.1    development 
    4.1.2    IDZ 
    4.1.3    advalorem 
    4.1.4    economic                                                    (4 x 2)     (8)

4.2 THREE examples of cash benefits to ensure redistribution of income.
       Unemployment insurance 
       Disability grant 
       Child support grant 
       Old-age pension                                            (Any 3 x 2)        (6)

4.3 DATA RESPONSE

     4.3.1   The replacement of goods that was previously imported.                  (2)

     4.3.2   Industrial Development Corporation.                                     (2)

     4.3.3     Iscor 
               Sasol 
               Armscor                                             (Any 1 x 2)       (2)

     4.3.4     To develop local industries. 
               To increase job opportunities. 
               To improve the balance of payments.                  (Any 2 x 2)      (4)

4.4 DATA RESPONSE

     4.4.1   The number of infants who die before reaching one year of age per
             thousand live births.                                                   (2)

     4.4.2     Sanitation 
               Electricity 
               Refuse removal 
               Water supply                                        (Any 2 x 2)       (4)

     4.4.3     Infant mortality 
               Under-five mortality 
               Health expenditure 
               Access to safe drinking water 
               Access to sanitation facilities                     (Any 2 x 2)       (4)

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 4.5 Discuss any TWO monetary policy instruments used as South African
     approach for growth and development.

       1.    Changes in interest rates. 
               To make credit more expensive or cheaper. 
               To stabilise exchange rate by encouraging capital inflows or
               outflows. 

       2.    Open market transactions.
               Buying of securities in the open market to encourage credit
               creation. 
               Selling of securities in the open market to restrict credit creation. 

       3.    Moral persuasion 
               Persuading banks to act in a desirable manner according to the
               economic conditions in the economy.              (Any 2 x (2 x 2))        (8)

 4.6 Briefly explain ‘Skills Support Programme’ as an incentive offered by DTI.
          Cash grant for skills development. 
          To encourage greater investment in training. 
          To encourage the development of new advanced skills. 
          Manufacturing businesses qualifying for SMEDP can apply. 
          Lasts up to three years. 
          Maximum of 50% of training costs.                                              (8)
                                                                                          [50]

 QUESTION 5              (LO4 AS1 – AS3)

 5.1 5.1.1         price indexes 
     5.1.2         headline 
     5.1.3         physical 
     5.1.4         conservation                                               (4 x 2)    (8)

 5.2 List any THREE reasons for the growth of worldwide tourism.
          Increase in disposable income. 
          Reduction in working hours 
          Awareness of leisure and recreation 
          Improved infrastructure 
          Increased advertising and promotion 
          Awareness of the benefits of tourism 
          Ease of obtaining foreign exchange                              (Any 3 x 2)    (6)

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8                                  ECONOMICS                                  (SEPTEMBER 2012)

5.3 DATA RESPONSE

     5.3.1    CPI:
              Measures the cost of a representative basket of goods to the
              consumer. 
              PPI:
              Measures the cost of production of the representative basket of goods
              when they leave the factory.                                                (4)

     5.3.2       Subdued local demand. 
                 Appreciation in the external value of the rand.                          (4)

     5.3.3    6%                                                                          (2)

5.4 DATA RESPONSE

     5.4.1    The ability of the environment to survive economic activity.                (2)

     5.4.2       A source of income 
                 Save millions from municipal budgets 
                 Three times more revenue than landfills 
                 Creates six times more jobs                              (Any 3 x 2)     (6)

     5.4.3       Charging for the use of the environment. 
                 Environmental taxes 
                 Environmental subsidies 
                 Marketable permits                                       (Any 1 x 2)     (2)

5.5 Briefly describe ‘inflation’ as an economic concept.
          It is a process – not a single non-recurrent activity. 
          Sustained condition – prices continue to rise. 
          The rise in the price must be considerable. 
          There is a general rise in the prices. 
          Increase in the price of isolated goods does not indicate inflation. 
          There is a decline in the purchasing power of money.           (Any 4 x 2)      (8)

5.6 Discuss ‘property rights’ as a public sector intervention for environmental
    sustainability.
       To prevent flora and fauna species from becoming extinct. 
       Ensures that owners take proper care of the things that belong to
       them. 
       Owners will try to use them profitably as long as possible. 
       Property rights will help in the preservation at little costs to the tax
       payers. 
       But property right is not possible in all instances.                (Any 4 x 2)    (8)
                                                                                           [50]

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(SEPTEMBER 2012)                            ECONOMICS                                      9

 QUESTION 6              (LO1 and LO2)

 6.1 6.1.1         leakage 
     6.1.2         privatisation 
     6.1.3         perfect competition 
     6.1.4         demerit                                                     (4 x 2)   (8)

 6.2 List the THREE government approaches to reduce the impact of negative
     externalities.
        Persuasion 
        The price mechanism 
        Direct controls                                           (Any 3 x 2)            (6)

 6.3 DATA RESPONSE

       6.3.1       Business cycle                                                        (2)

       6.3.2         B to C = Depression 
                     D to E = Prosperity / Boom                                          (4)

       6.3.3       Trend line                                                            (2)

       6.3.4       Technique used to predict the future by using past data.              (2)

 6.4 DATA RESPONSE

       6.4.1       When collusion between oligopolists occur openly and formally.        (2)

       6.4.2       Oligopoly                                                             (2)

       6.4.3           Higher profits 
                       Less uncertainty 
                       Difficult for new businesses to enter              (Any 2 x 2)    (4)

       6.4.4       OPEC                                                                  (2)

 6.5 Briefly explain any TWO demand reasons for international trade.

       1.   Effective wants 
              There are differences in the demands for individuals. 
              Taste plays an important role. 

       2.   Income 
              When income increases, there will be an increase in the demand
              for local as well as imported goods. 

       3.   International migration 
              Immigrants usually demand goods from their country of origin. 

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10                                 ECONOMICS                                  (SEPTEMBER 2012)

     4.   Religious, cultural, sociological and life style differences 
            Differences between countries will determine the consumption
            patterns. 

     5.   Levels of economic development 
            Less developed countries spend more on food while developed
            countries spend more on luxuries                      (Any 2 x 4)             (8)

6.6 Discuss the rationale of ‘cost-benefit analysis’.
        CBA is a valuable tool that helps to make informed decisions. 
        It helps in the efficient allocation of resources. 
        It is a technique used to measure and compare the costs and benefits of
        an economic activity. 
        It is to find the rate of return on the project. 
        It is also used to find the future costs and benefits as well as its present
        value. 
        This technique brings greater objectivity in decision making. 
                                                                           (Any 4 x 2)      (8)
                                                                                           [50]

SECTION C (Answer any TWO questions from this section.)

QUESTION 7           (LO1 AS3)

Discuss the objectives of the public sector and conclude your discussion by
explaining the effects of fiscal policy.

INTRODUCTION

The state applies fiscal policy with a view to achieve government’s macroeconomic
objectives.                                     (accept any appropriate introduction)    (3)

BODY

Objectives of the Public sector

1.     Economic growth
         Increase in the production of goods and services in the economy. 
         Measured in terms of real GDP. 
         Economic growth must be higher than population growth. 
         Higher growth and development leads to higher standard of living.

2.     Full employment 
         An important aim of all governments. 
         Means all individuals who are looking for work must find work. 

3.     Exchange rate stability / Balance of payment stability 
         Depreciations and appreciations create uncertainty. 
         Fluctuations in the value of a currency should be limited. 
         Government should see that the exchange rate remains stable. 

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 4.     Price stability
           Economic growth and employment will improve when prices are
           stable. 
           In RSA, price stability is achieved when the inflation rate is between 3%
           and 6%. 

 5.     Economic equity / Fair distribution of income 
          Redistribution of income and wealth is necessary. 
          Progressive tax rates are used to achieve this. 
          Income from tax is used to finance public and social services. 
                                                                       (Max. 10 x 2)       (20)

 Effects of Fiscal policy

 1.     Income distribution 
           Progressive taxation make income more evenly distributed. 
           Spending on social and welfare payments increases the income of the
           poor people. 

 2.     Consumption 
          Changes in the rate of taxation will affect consumer spending. 
          Consumption also depends on the level of savings and the propensity to
          consume. 

 3.     Price level 
           Increase in direct taxes reduces inflationary pressure and aggregate
           demand. 
           Increase in indirect taxes will raise the price level. 

 4.     Incentives 
           Increase in income tax and company tax reduces the incentives to work,
           save and invest. 
           High and progressive rate of taxation discourages people from working
           hard. 

 5.     Laffer curve 
          Laffer curve explains the relationship between revenue and tax rate.
          High rate of taxation discourages labour force. 
          According to the Laffer curve, tax revenue increases only up to a certain
          point. 
          At a certain rate tax revenue peaks and then declines. 
          A reduction in the rate of income tax will encourage more people to work
          and the tax revenue will increase. 
          At a lower rate of taxation the tax revenue will be higher than at a higher
          tax rate. 

 6.     Discretion 
           Minister can use discretion with regard to a number of fiscal policy
           decisions. 
           Certain rules are in place – deficit-, lending- and debt rule. 
                                                                           (Max. 10 x 2)   (20)

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12                                  ECONOMICS                                 (SEPTEMBER 2012)

      CONCLUSION

      The direction of the fiscal policy depends on the specific stage of the
      business cycle.                        (accept any appropriate conclusion)          (2)

      Use the following assessment grid together with the above to assess the
      discussion.
      MARKS                       INTERPRETATION OF TOPIC
          0      Candidate has shown no understanding of the topic.
          1      Candidate has shown some understanding of topic but missed
                 important aspects of topic.                         (1 – 15 marks)
          3      Candidate has interpreted topic correctly but has not linked facts
                 to topic.                                         (16 – 30 marks)
          5      Candidate has interpreted topic correctly and has linked facts to
                 topic.                                            (31 – 45 marks)          (5)
                                                                                           [50]

QUESTION 8            (LO2: AS2)

Write a formal letter to the Minister of Local Government explaining government
intervention as an effect of market failures.

                                                                        S. Tshabalala
                                                                        P.O. Box 1000
                                                                        Mthatha 
                                                                        5100

                                                                        Date 

        To:
        The Minister
        Ministry of Local Government 
        Pretoria                                                                            (3)

        Sir

        Re: Government intervention                                                       (2)

        A.       Preventing the misallocation of resources                                (2)

        1. Incomplete Markets 

              Market failures misrepresent the allocation of resources. 
              This results in less than optimal production. 
              Community goods and services prevent competitive markets from
              supplying them efficiently. 
              In most cases it is impossible to determine a price or force users to
              pay. 
              Collective goods and services have some characteristics of public
              goods. 

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              These goods can be supplied by competitive markets, but the quantity
              or the price may not be appropriate. 
              Government must supply these goods directly by raising taxes. 
                                                                        (Max. 3 x 2)    (6)

          2. Negative Externalities 

             Governments have used different methods to reduce the impact of
             negative externalities. 
             Persuasion 
             o Changing the behaviour of people needs public relations
                 campaigns by the government 
             Price mechanism
             o Levying a tax to recover the external cost 
             Direct controls
             o Government can use laws to reduce negative externalities 
                                                                           (Max.)       (4)
          3. Positive externalities

               Price Mechanism
               o Merit goods provided by private sector must be subsidised. 
               o Subsidies will improve the consumption of these goods by
                    reducing the cost. 
               Direct controls
               o Compulsory education, inoculations and treatment of certain
                    diseases are examples 
               Artificial monopolies () operate where perfect competition is
               prevented by entry restrictions. 
               Natural monopolies () develop in industries that need large capital
               outlay. 
               Government can use various methods to correct the situation 
               Competition from abroad can be used. 
               Local competition can be promoted 
               Control bodies such as regulatory authorities can be used 
               Statutory requirements can also be used to control excessive
               prices.                                                      (Max.)    (6)

 B.       Improving income distribution                                               (2)

               Free market economy does not improve income and wealth
               distribution. 
               Governments use a combination of taxes and subsidies to effect
               redistribution. 
               Traditional methods () refer to the levying of taxes to provide free
               services to the poor. 
               Redress methods () relate to the use of laws to enforce
               redistribution. 

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14                            ECONOMICS                                (SEPTEMBER 2012)

         E.g. BEE, affirmative action, empowerment, land restitution and
         redistribution, property subsidies, RDP houses etc. 
         Minimum Wages () are also used to enforce redistribution of
         income. 
         Unskilled workers are at a disadvantage when negotiating with their
         employers. 
         Maximum prices/Price ceiling () are set by the government to
         benefit the poor. 
         Minimum prices () are set for basic food stuffs to ensure that
         sufficient quantities are produced. 
         Subsidies on goods () have the effect of lowering the prices of such
         goods.                                                         (Max.)     (10)

C.   Enhancing macroeconomic stability                                             (2)

         If macroeconomic objectives are not achieved it is considered as
         market failure. 
         Government intervention focuses on demand side or supply side of the
         economy. 
         Most important demand-side policies are monetary and fiscal
         policies. 
         Supply side problems such as lack of information and immobility of
         factors of production must be removed. 
                                                                    (Max. 3 x 2)     (6)

     Yours faithfully 

     S. Tshabalala                                                                  (2)

     Use the following assessment grid together with the above to assess the
     discussion.

      MARKS                        INTERPRETATION OF TOPIC
        0          Candidate has shown no understanding of the topic.
        1          Candidate has shown some understanding of topic but
                   missed important aspects of topic.             (1 – 15 marks)
          3        Candidate has interpreted topic correctly buy has not linked
                   facts to topic.                              (16 – 30 marks)
          5        Candidate has interpreted topic correctly and has linked facts
                   to topic.                                    (31– 45 marks)       (5)
                                                                                    [50]

### Page 15

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(SEPTEMBER 2012)                        ECONOMICS                                       15

 QUESTION 9            (LO3 AS4)

 Write a detailed essay on the economic indicators under the headings Production,
 Employment and Price changes.

 INTRODUCTION

 Economic indicators are used to measure the performance of the
 economy.  (accept any appropriate introduction )                                     (3)

 BODY

 A.       Production

             Production of an economy is measured in terms of GDP. 
             GDP can be calculated by production, income and expenditure
             method. 
             GDP is the value of final goods produced within the boundaries of a
             country over given period. 

          1. GDP at current prices 
             GDP calculated at market or current prices is called nominal GDP. 
             Nominal GDP shows the monetary value of goods and services. 

          2. Real GDP 
             Growth performance of the economy is measured in terms of real
             GDP. 
             Real GDP is obtained when the effects of inflation is removed from
             nominal GDP. 
             Real GDP is used to show real aggregate economic activity and
             movement of business cycles. 
             It is also used for forecasting. 

          3. Per capita real GDP
             Economic growth allows people to consume more goods and
             services. 
             But if population grows faster than economic growth people will be
             worse off. 
             For this reason Per capita real GDP is calculated. 
             Per capita real GDP is real GDP divided by the number of
             population. 
             An increase in per capita real GDP shows an improvement in the
             standard of living. 
             Per capita figures indicate economic development, living standards and
             also compare living standards.                             (Any 7 x 2)   (14)

### Page 16

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16                             ECONOMICS                                (SEPTEMBER 2012)

B.   Employment

     1. Economically Active Population 
        People between ages 15 and 65 years who are willing to work, are
        known as economically active population (labour force). 
        People in this group are workers in the formal and informal sector,
        employers and self-employed persons and unemployed people. 

     2. Employment rate
        Number of employed persons expressed as a percentage of the
        EAP. 
        Employment rate in RSA is low compared to developed countries 
        Employment indicators are used for calculating trends and structural
        changes in the economy. 
        Also used to calculate productivity 
        It also shows the success of the economy in utilising its full
        potential. 

     3. Unemployment
     These are people in the EAP who:
        Did not work for seven days before the interview 
        Want to work and are available to work within a week 
        Have taken steps to look for work 
        Unemployment is the most important cause of poverty 
                                                                      (Any 7 x 2)    (14)
C.   Price changes

        Price changes are part of market economy. 
        When abnormal changes in prices occur for longer periods, it is called
        inflation or deflation. 
        Inflation is an indicator of the health of the economy 
        Inflation is monitored by PPI and CPI 
     Production prices 
        It is used to measure prices when goods leave the factory or when
         imported goods enter the country 
        PPI serves as an indicator to predict Consumer goods inflation 
     Consumer prices 
        CPI shows price changes of a shopping basket of goods of an
         average household 
        CPI is the most comprehensive indicator of consumer price inflation 
        CPIX shows the inflation rate excluding the effect of mortgage bond
         interest rates. 
        Interest rates are used by SARB to control inflation.      (Any 6 x 2)     (12)

     CONCLUSION

     Pro-cyclical indicators move in the direction whereas counter-cyclical
     indicators move in the opposite direction.                                     (2)

### Page 17

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(SEPTEMBER 2012)                         ECONOMICS                                        17

          Use the following assessment grid together with the above to assess the
          discussion.

           MARKS                      INTERPRETATION OF TOPIC
             0        Candidate has shown no understanding of the topic.
             1        Candidate has shown some understanding of topic but missed
                      important aspects of topic.                     (1 – 15 marks)
               3      Candidate has interpreted topic correctly buy has not linked
                      facts to topic.                                (16 – 30 marks)
               5      Candidate has interpreted topic correctly and has linked facts
                      to topic.                                      (31– 45 marks)        (5)
                                                                                          [50]

 QUESTION 10          (LO4 AS2)

 Policies to promote tourism

 INTRODUCTION

 The policy suggestions aim to ensure and accelerate the delivery of tourism
 benefits to all South Africans.  It aims to maintain the sustainability of the
 tourism industry to enhance the quality of life of South Africans.           (Max.)    (3)

 BODY

 A.     Marketing 
           The marketing and promotion of South Africa’s tourism is most
            important. 
           South African tourist attractions must be promoted as tourist
           destinations. 
           Generic promotions (South Africa as a whole) must be made. 
           SA tourism was created for this. 
           Generic marketing programmes must be included by travel agents 
           Factors such as value for money, the political miracle, climate,
           friendliness etc. must be emphasised. 
           Domestic marketing must encourage citizens to consider a wide variety
           of destinations and group tours. 
           Purposes such as biodiversity, cultural, sport, recreation etc. must be
           Promoted. 
           Destinations such as World Heritage sites, Kruger National Park etc.
           must be given importance.                                     (Any 6 x 2)    (12)

 B.     Spatial Distribution / Directing 

             Most tourists go to the same familiar destinations that are well
             known. 

### Page 18

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18                              ECONOMICS                                (SEPTEMBER 2012)

     1. Create representative bodies 
        Industries linked to an attraction can form representative bodies to
        market effectively. 
        Describe the product more attractively. 
        Competitive prices must be charged 
        Products must be promoted considering focus, wording, timing and
        medium. 
        Location and accessibility of the attraction are also important. 

     2. Improve and extend supporting services
        The cause of uneven distribution of tourists is the lack of supporting
        services. 
        Accommodation() – adequate facilities must be provided 
        Services () – An increasing range of facilities and services should be
        provided. 
        Access() – The development and maintenance of transport facilities
        are essential 
        Ancillary (support) services () – to both the consumer and the
        industry through networking and information. 

     3. Improve marketing 
        4 x P’s:
            Product () – were product described in best way?
            Price () – must be competitive. 
            Promotion () – reconsider all aspects of advertising. 
            Place () – location and accessibility are important.         (Max.)     (14)

     A.    Taxing 
        Growth of tourism leads to an increase in tourist taxes. 
        Most countries are using it as a source of state revenue. 
        Taxes should be raised in according to guidelines 
        Equity () – Taxes should be fair compared to other sectors. 
        Efficiency() – Taxes should have minimal effect on the demand for
        travel and tourism 
        Taxes must be used to regulate the flow of tourists to specific areas. 
        Simplicity () – Taxes should be simple to pay and administer. 
                                                                            (Max.)     (8)
     B.    Infrastructure
        Requires economic and social infrastructure and basic services 
        More infrastructure () – Physical infrastructure should increase as
        tourism increases. 
        Lack of quality infrastructure reduces tourist flow. 
        Upgrading() – if expansion is not possible, upgrading should be
        done. 
        New technology () – should be implemented in all areas to market
        tourism products domestically and internationally. 
                                                                            (Max.)     (6)

### Page 19

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(SEPTEMBER 2012)                        ECONOMICS                                       19

        CONCLUSION

        The policy suggestions aim to ensure and accelerate the practical delivery of
        tourism benefits to all South Africans.                                        (2)

        Use the following assessment grid together with the above to assess the
        discussion.

          MARKS                      INTERPRETATION OF TOPIC
            0        Candidate has shown no understanding of the topic.
            1        Candidate has shown some understanding of topic but missed
                     important aspects of topic.                     (1 – 15 marks)
              3      Candidate has interpreted topic correctly buy has not linked
                     facts to topic.                                (16 – 30 marks)
              5      Candidate has interpreted topic correctly and has linked facts
                     to topic.                                      (31– 45 marks)       (5)
                                                                                        [50]

                                                               TOTAL SECTION C:         100

                                                                   GRAND TOTAL:         300

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