# Economics Grade 12 Paper 1 KZN Mock 2025 Memo

> Grade 12 Economics Paper 1 memorandum from the KZN Mock Exam 2025, 16 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: 2025
- Exam period: KZN Mock Exam
- Paper: 1
- Curriculum: CAPS
- Pages: 16

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## About this document

Economics · Grade 12 · KZN Mock Exam · 2025. Memorandum, 16 pages. Read online or download the PDF.

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### Page 1

KWAZULU-NATAL PROVINCE

EDUCATION
REPUBLIC OF SOUTH AFRICA

NATIONAL
SENIOR CERTIFICATE

GRADE 12
. ECONOMICS P1 ‘
: MARKINGJGUIDELINES :
: PREPARATORY EXAMINATION :
4 SEPTEMBER 2025 :

MARKS: 150

This marking guideline consists of 17pages.

### Page 2

SECTION A: (COMPULSORY) 30 MARKS — 20 MINUTES

QUESTION 1

1.1

1.2

1.3

MULTIPLE CHOICE QUESTIONS

114.1 Avy
112 Bvyv
11.3 Cvv
114 Avy
11.5 Ovv
116 Cvv
11.7 BYY
1.1.8 Dvv

market

deregulation

appreciation

foreign exchange

life expectancy

Growth Employment and Redistribution Policy
globalisation.

common market. (8 x 2) (16)

MATCH THE ITEMS

1.2.1 HY
1.22: Gi
1.2.3 EV

1.24 Av

1.2.5 Fv
1.26 Dv
1.2.7 BY

1.2.8 Cv

CONCEPTS

A withdrawal of money from the circular flow.
Persuasion of banks by the SARB to offer credit responsibly
An individual who enjoys the benefit of a good without paying for it

An organisation that provides financial assistance to countries
with ongoing balance of payments problems

A penalty applied by one or more countries on another country
Increase in the production of goods and services
An amount of money that is available for households to spend.

The established code of procedure or behavior in any
group or organization. (8 x 1) (8)

1.3.1. Gross national incomev

1.3.2 Laffer curve’

1.3.3 Economically Active Population’

1.3.4 Fixed exchange rate systemv

1.3.5 Embargov

1.3.6 Infrastructurev (6 x 1) (6)

TOTAL SECTION A: 30

### Page 3

QUESTION 2; MACROECONOMICS 40 MARKS - 30 MINUTES

24
2.1.1

2.1.2

2i2
2.2.1

2.2.2

2.2.3

2.2.4

2.2.5

Give TWO flows in a circular flow. (1 x 2)(2)

« Money flow v
« Real flow v

Why is it necessary to dampen an overheating economy? {2 x 1)(2)

Dampening an overheating economy is necessary to prevent negative
consequences of rapid economic growth such as inflation and economic
instability. vv

(Accept any other correct relevant response)

DATA RESPONSE

Identify the remuneration for the use of capital as a factor of

production. (1)
Interest v

Name any ONE type of financial market. (1)

e Money market v
e Capital market

Briefly describe the term circular flow. (2)

Circular flow is a presentation that shows the flow of goods, services and
money between different participants in an economy. vv

(Accept any other correct relevant response)
Explain the importance of the foreign market in the economy. (2)

e Foreign market brings additional money into the economy through exports. vv

e Foreign market provides an opportunity for domestic businesses to expand
their customer base beyond boarders leading to increased sales and
economic growth. vv

(Accept any other correct relevant response)
How can an increase in investments positively impact the economy? (4)

e Investments in new projects can create job opportunities which will contribute
to employment growth and poverty reduction. vv
e An increase in investments may also lead to the improvement in the
production capacity of the country leading to higher production levels
and economic growth. vv
e May lead to improved productivity as investment in new technologies
can improve productivity leading to efficiency and competitiveness? v v (2 x 2) (4)

(Accept any other correct relevant response)

### Page 4

2.3

2.3.1

2.3.2

2.3.3

2.3.4

2.3.5

DATA RESPONSE

Identify the item that records transactions related to the sale of shares
on an international stock exchange. (1)

Net Portfolio InvestmentY

Name the account in the balance of payments that records exports and
imports of goods and services. (1)

e Current account ¥

Briefly describe the term net financial derivatives. (2)
Net financial derivatives refer to the value of financial contracts whose value
is derived from value of underlying asset.v v

(Accept any other correct relevant response)

Explain the purpose of Special Drawing Right (SDR) allowances in the
balance of payments. (2)

e Special drawings rights are used by countries to manage balance of
payments difficulties. vv

e SDRs can be used as a supplementary foreign exchange reserve asset
providing an additional source of liquidity. vv

(Accept any other correct relevant response)

Use the information in the table above to calculate the balance on
financial account (A). Show ALL calculations

A= Balance on financial account — Reserve assets

A= -1660v — (-1508) v or A= (-335+1666-26-1153)

A= -1660+ 1508” Az -152
A= -152v (4)

### Page 5

2.4

2.5

Briefly discuss amplitude and length as features underpinning forecasting.
Amplitude

e tis the difference between the total output between a peak and
a trough. Vv“
e It measures the distance of the oscillation of a variable from the
trend line. It is the intensity of the upswing and downswing in
economic activity. vv
e The larger the amplitude the more extreme the changes that may
occur. vv (2 x 2)(4)

Length

e This is the time that it takes for a business cycle to move through one
complete cycle. It is measured from peak to peak/ trough to trough. vv
e  Itis useful to know the length because the length tends to remain
relatively constant over time. vv
e If business cycles have longer length, we consider the economy to
be strong, shorter cycles shows the economy is weak. vv (2 x 2) (4)

(Accept any other correct relevant response)

(A maximum of 4 marks may be allocated for mere listing of facts / examples)

Analyse the relationship between the financial sector and other participants
in the circular flow model.

e The financial sector provides households with facilities in which they
can save and invest money. vv”
« Households borrow money from the financial sector for consumption
and investments. vv
* Financial sector provides businesses with access to capital enabling
them to invest in capital goods, production and expansion. vv
e Businesses use financial services such as loans, mortgage bonds
and credit to manage their operations. vv
« The financial sector facilitates government borrowing and lending
helping to finance government expenditures. vv (4 x 2) (8)

(Accept any other correct relevant response)

(A maximum of 2 marks may be allocated for mere listing of facts/examples)

### Page 6

QUESTION 3: ECONOMIC PURSUITS 40 MARKS — 30 MINUTES

3.1

3.2

Answer the following questions.

3.1.1 Name TWO indicators used to measure inflation rate. (2 x 1)(2)

e Consumer Price Index (CPI) v
e Producer Price Index (PPI) v

3.1.2 How would reduced costs of doing business stimulate
economic growth? (1 x 2)(2)

Lowering cost of doing business can make it possible for
entrepreneurs to start new businesses, leading to increase
in production, employment and improvement of economic growth. vv

(Accept any other correct relevant response)

DATA RESPONSE

3.2.1 Identify a term in the extract that relates to the removal of import
tariffs. (1)

Duty-freev

3.2.2. Name the organization that promotes reduction of all trade
barriers (1)

World Trade Organisation (WTO) v

3.2.3 Briefly describe the term protectionism. (2)

Protectionism is the trade policy that restricts importation of goods and
services in order to protect the domestic economy. vv

(Accept any other correct relevant response)

3.2.4 Explain the negative impact of dumping on the South African
Economy. (2)

« Dumping drives out competition in the market reducing choice for
consumers. Vv ¥

e Locai businesses may struggle to compete with the low prices,
potentially leading to job losses and economic instability. v

e Dumping can harm local industries in South Africa by making it
difficult for them to compete with low prices of imported goods. v ¥

« It can weaken the country’s industrial base and the economy
more dependent on foreign products. vv
(Accept any other correct relevant response)

### Page 7

3.3

3.2.5

How can South Africa benefit from export promotion? (2 x 2)(4)

e The size of foreign market is much larger than the local market,
this enables producers to produce more and benefit from
economies of scale. vv

e Increasing domestic output creates a larger demand for labour
which will increase the employment rate in the country. “~

* Money earned from exports will improve the trade balance in
the country which result in an increase in the national income. v “

e Export promotion leads to export led economic growth which
result in economic development. v ¥

(Accept any other correct relevant response)

DATA RESPONSE

3.3.1 Identify the lowest unemployment rate on the graph above. (1)
31.9% v

3.3.2 Name any ONE example of demographic indicator. (1)
e Population growth rate v
e Dependency rate v
e Net migration v

(Accept any other correct relevant response)
3.3.3 Briefly describe the term social indicator. (2)
Social indicator is a measure that reflects the welfare of a society. vv
(Accept any other correct relevant response)
3.3.4 Explain the impact of remuneration per worker on the inflation
rate. (2)
e Anincrease in wages drives up labour costs, increase in prices which
in turn contributes to inflation. vv

e Higher wages increase disposable income of consumers leading
to higher demand for goods and service leading to higher prices. vv
(Accept any other correct relevant response)

3.3.5 How can the South African government create sustainable

employment opportunities?
e Invest in renewable energy projects to create jobs in installation
and maintenance. vv
e Promote sustainable agricultural practices and conservation
efforts, offering employment opportunities in rural areas. vv
e Provide training and capacity building programmes to enhance
local capabilities and support industrial growth. vv (2 x 2) (4)

(Accept any other correct relevant response)

### Page 8

3.4

3.5

Differentiate between economic growth and economic development. (8)
Economic growth

« Refers to an increase in the production of goods and services in any
economy over a specific period of time. vv
It is measured by real gross domestic product. vv
Focuses on quantitative changes such as increase in the level of output,
income and employment opportunities. vv

Economic development

e Economic development refers to the improvement in the quality of life,
standard of living within a country. vv

e It is measured in terms of per capita income, GDP per capita and human
development index. vv

e Itincludes qualitative changes such as advancements in education,
healthcare and infrastructure. vv (4 x 2) (8)

(Accept any other correct relevant response)
(A maximum of 4 marks may be allocated for mere listing of facts/examples)

How can South Africa discourage the import of goods from other
countries? (8)

e South Africa can apply import tariffs to increase prices of imported goods
and encouraging consumption of locally produced goods. vv

e Import quotas limit the number goods and services that can be imported
from other countries. vv

e Subsidies can be used to encourage local producers to produce previously
imported goods vv

e Exchange control limit the amount of foreign exchange made available for
imports, investment and travelling abroad. vv

e Physical control can in the form of a complete ban or embargo on the
imports of certain good can be applied vv e.g. arms and drugs. v

e Diverting trade measures make it difficult to import from abroad are
import deposits, time consuming customs procedures and high quality
standards imposed.v v (4 x 2) (8)

(Accept any other correct relevant response)

(A maximum of 2 marks may be allocated for mere listing of facts /
examples)
[40]

### Page 9

QUESTION 4: MACROECONOMICS AND ECONOMIC
PURSUITS 40 MARKS - 30 MINUTES

41

4.2

Answer the following questions.

4.1.1

4.1.2

Name any TWO industrial development policies. (2 x 1)(2)

e Industrial Policy Action Plans Vv
e The National Industrial Policy Framework ¥

How can interest rates be used to correct the balance of

payments disequilibrium? (1 x 2)(2)

The government can increase interest rates in order to decrease
the spending on imports. vv
(Accept any other correct relevant response)

DATA RESPONSE

4.2.1

4.2.2

4.2.3

4.2.4

Identify the economic concept represented by the cartoon above.

North-South divide ¥

Name the policy that was aimed at creating 5million jobs by
year 2020.

New Growth Path v

Briefly describe the term standard of living.

Standard of living is the improvement in the quality of life or welfare
of the population in the country. vv

(Accept any other correct relevant response)

Explain life expectancy as a social indicator.

e Life expectancy is a key social indicator that reflects a number of
years a person is expected to live from birth. vv

* Life expectancy is influenced by factors such as income levels,
access to healthcare systems, sanitation and education. vv
(Accept any other correct relevant response)

(1)

(1)

(2)

(2)

### Page 10

4.3

4.2.5

How can the countries in the North divide contribute to poverty
alleviation in countries in South divide?

e Provide financial assistance to support development projects,
infrastructure and social services. v

e Reduce or cancel debts owed by the Southern countries to
alleviate financial burden. vv

« Encourage foreign direct investments in Southern countries
by opening markets for exports. vv (2 x 2)(4)

(Accept any other correct relevant response)

DATA RESPONSE

4.3.1 Identify the natural rate of unemployment from the graph above. (1)
14% v

4.3.2 Name one example of leading indicators. (1)

4.3.3

4.3.4

4.3.5

e Job advertising space v
e Building plans approved v
e Equity prices v

(Accept any other correct relevant response)
Briefly describe the term Phillips curve.

Phillips curve is a curve that shows the relationship between inflation
and unemployment rate. v ¥ (2)

(Accept any other correct relevant response)
Explain the importance of curbing inflation in the economy.

e High inflation rate creates uncertainty and instability in the

economy. v ¥
e Inflation reduces the purchasing power of money and affect

ability of consumers” to afford goods and services. vv (2)
(Accept any other correct relevant response)

How can improving the efficiency of key inputs decrease
unemployment rate?

« Optimising resources efficiency can allow businesses to explore
new markets and products, which creates new job opportunities. vv
e Businesses can gain competitive edge which would lead to
increased market share, requiring more employees to meet
increasing demand. v ¥
e Efficient resource usage result in the reduction of cost which
can be reinvested to improve human resource. vv (2 x 2) (4)
(Accept any other correct relevant response)

### Page 11

44

4.5

Briefly discuss endogenous factors and exogenous factors as causes of
business cycles. (8)

Endogenous factors

These are the causes that originate within the market system. vv
They believe that markets are inherently unstable. vv

« They believe that the government should intervene by using government
policies to smooth out business cycles. vv

Exogenous factors

These are causes that originate outside the market system. vv
External factors cause expansion and contraction in the economy. v
They believe that markets are inherently stable. v~

The believe that government should not intervene in how market
operates. vv

e Examples include natural disasters, shocks, etc. v
(4 x 2)(8)

(Accept any other correct relevant response)
(A maximum of 4 marks may be allocated for mere listing of facts / examples)

Why is productivity considered a key measure of economic
performance? (8)

e Productivity is closely linked to competitiveness, economies with high
productivity are more competitive in the global market. vv

e Productivity is the key inputs of long term economic growth, as productivity
increases an economy can produce more goods and services of high quality
at a lower cost per unit. vv

e Productivity is related to the standard of living, higher wages and incomes
as businesses can afford to pay their workers. v v

e Productivity is often driven by innovation, as new technologies and
processes enable to produce more. vv

e Productivity measures how efficiently an economy uses its resources,
Higher productivity indicates that the economy is producing more
output with the same amount of input, or the same output with fewer
inputs. vv (4 x 2) (8)

(Accept any other correct relevant response)
(A maximum of 2 marks may be allocated for mere listing of facts / examples)
[40]

TOTAL SECTION B: 80

### Page 12

SECTION C
QUESTION 5: MACROECONOMICS
e Discuss in detail macroeconomic objectives of the state. (26 marks)

e Evaluate the success of government in achieving the socio-economic
rights of citizens (10 marks)

INTRODUCTION

The government provides goods and services that are under-supplied by the
market and play a major role in regulating economic activities. vv

(Max 2)
(Accept any other correct relevant introduction)

MAIN PART
Full employment ¥

e Full employment is a condition where all economically active people who are looking for a
job can find it. vv

* Government is always trying to attain high levels of
employment in the country. vv
The current rate of unemployment is estimated at 32,90%.vv
Employment increases due to the contribution of the informal sector. vv
The rate of unemployment has increased in South Africa
over the years. vv

« The GEAR strategy was implemented by the government with the purpose
to create a climate conducive to employment creation mainly by the private
sector. vv

Economic growth v

e Economic growth refers to an increase in the production of goods and
services by the country over a specific period. vv
Economic growth is measured in real GDP. vv
For economic growth to occur, economic growth rate must be higher than the
population growth rate. vv

e Economic growth leads to economic development. vv

Price stability v

e The SARB has implemented a policy of keeping inflation within the target
rate of 3-6%. vv

e Market economies produce better results in terms of growth and development
if the inflation rate is stable. vv

e Interest rates are the main instrument used to stabilise prices. vv

### Page 13

Economic equity “

Redistribution of income and wealth is essential in the economy. vv

The South African government uses the progressive tax system to redistribute
income. vv

Taxes on profits, progressive income tax and tax on wealth are taxes used

to finance free public services and social security grants. vv”

Exchange rate stability”

The government manages the economy through effective fiscal and monetary
policies to stabilise the country's exchange rate. vv

Depreciation and appreciation of the currency could create uncertainties for
the currency and should be limited. vv

The South African government uses the free-floating exchange rate system,
this allows the currency value to be determined by the market forces of

demand and supply. vv (Max. 26)
ADDITIONAL PART
Evaluate the success of government in achieving the socio-economic rights of
citizens. (10)
Success

A comprehensive plan, National Development Plan 2030 is aiming at
eliminating, poverty by providing skills development and creating jobs. vv
Social grants provide basic income to the vulnerable population, limiting the
scale of poverty and inequality. vv

Investment in infrastructural development aims to facilitate economic
growth and improve standard of living. vv

Failure

Despite poverty reduction efforts, many South Africans still struggle with limited

access to basic services. v “

South Africa remains one of the most unequal societies globally with disparities

in education, health and income. v “

Unemployment among youth hinder economic growth and perpetuate poverty. vv
5x2) (10

(Accept any other correct relevant and higher order response) ) 0)

(A maximum of 2 marks may be allocated for mere listing of facts / examples)

CONCLUSION

While the government has achieved success in certain areas, it is still a challenge to
achieve some of its objectives because of the problems that are associated with
the public sector such as corruption and lack of accountability. vv

(Accept any other correct relevant and higher order response)

### Page 14

QUESTION 6: ECONOMIC PURSUITS 40 MARKS - 40 MINUTES

e Discuss in detail South Africa’s initiatives (endeavors) in regional
development.

e Evaluate the appropriateness of South African regional development
policies in terms of international benchmark.

INTRODUCTION

Regional development is the policy aimed at increasing economic activity in
geographical areas that are less developed. v V

(Accept any other correct relevant introduction)

MAIN PART

Spatial development initiatives (SDI) ¥

e tis a policy aimed at attracting infrastructure and investments to areas
with high unemployment and poverty. vv

e The main objective is to create employment and stimulate economic
growth in specific areas with high growth potential. vv

e This initiative makes provision for private-public partnerships (PPPs) to
take advantage of the economic potential of underdeveloped areas. v ¥

e Lubombo SDI is one of the example of the 9 local SDIs we have in South
Africa. v

The incentives from the government the SDIs enjoy includes;

e Duty free incentives- The benefit of importing intermediate goods with no
charge of import tariff. vv
e Skills support programme-Tax free grants for skills development. vv

Industrial Development Zones (IDZs) “

e IDZs are purpose built industrial estates located near a point of entry or
exit into a country such as ports and airports. vv

e The benefits of IDZs is to support investing companies, especially for
greenfield development projects. vv

« Access to transport for export purposes is one of the key objective of
the IDZs. vv

« The other aim is to waiver import duties for products that are produced
for export. vv

¢ The example of the [DZ is Saldanha Bay which focuses on steel. v

(26 marks)

(10 marks)
[40]

(Max 2)

### Page 15

Special Economic Zones (SEZs) ¥

It is a geographically demarcated area where specific economic activities
have been identified to be developed.

SE2's can benefit the economy by attracting new businesses. vv

SEZ’s assist businesses that establish new product lines and expand their
operationsy Vv

creating more employment for the households in their neighborhood v ”
promoting more effective use of resources , increasing productivity and economic
growthy “

focusing on both domestic production and exports. vv

These areas may enjoy incentives such as tax relief and support systems to
promote industrial development. v “

The government provides economic infrastructure to these areas and help in
establishing industrial parks for employment-enhancing manufacturers. v ”
It creates a basis for a broader range of industrial parks. vv

It also provides economic infrastructure to enable the effective clustering of
value-adding and employment-enhancing manufacturers. Vv ¥

Corridors ¥

A corridor is a track of land that forms a passageway allowing access from

one area to another. Vv

The purpose of this can be to link two industrial areas or to link industries and

the markets. vv

Maputo corridor is a major trade corridor which connects Limpopo, Mpumalanga

and Gauteng with Maputo city in Mozambique. vv

This corridor comprises of roads, railway and border facilities at

Komatipoort. vv (Max 26)

(Accept any other correct relevant and higher order response)

### Page 16

ADDITIONAL PART

How effective is South Africa regional development policies in term of
international benchmarking? (10 marks)

Managing strategies free of corruption through good governance to improve
the country’s economic growth and development. vv

Build partnership between central government, local authorities, civil
societies and special interest groups with the private sector. vv

Provide sufficient resources in poor areas, focusing on total development
of all human life. vv

Establish competitive businesses which will operate without depending on
the government, reducing its financial burden. vv

Involving people from all regions in training, education, improving
productivity and provide essential goods and services. vv

Concentrate on issues at grass level to ensure development starts at lower
levels of the population to improve their economic welfare. vv

Integrate between different areas by means of spill over benefits to other
industries to improve the functioning of the economy. vv (5 x 2) (10)

(Accept any other correct relevant and higher order response)
(A maximum of 2 marks may be allocated for mere listing of facts / examples)

CONCLUSION

Although the government has invested in such initiatives there have been some
internal and external factors such as shortage of skills and unstable exchange
rate that have hindered the progress of these initiatives. vv

(Accept any other correct relevant and higher order response)

TOTAL SECTION C: 40

GRAND TOTAL: 150

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