# Economics Grade 12 P1 Eastern Cape Mock 2017 Memo (English)

> Grade 12 Economics Paper 1 memorandum from the Eastern Cape Mock Exam 2017 (English), 19 pages. Read online or download the free PDF.

- Page: https://www.hlayiso.com/library/economics-p1-gr12-memo-sept2017-english/3bc2ac92-e0de-4198-91d6-d15849198b39
- Updated: 2026-09-27
- Subject: Economics
- Grade: Grade 12
- Language: English
- Document type: Memorandum
- Year: 2017
- Exam period: Eastern Cape Mock Exam
- Paper: 1
- Curriculum: CAPS
- Pages: 19

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Economics · Grade 12 · Eastern Cape Mock Exam · 2017 · English. Memorandum, 19 pages. Read online or download the PDF.

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                            NATIONAL
                       SENIOR CERTIFICATE

                              GRADE 12

                        SEPTEMBER 2017

                       ECONOMICS P1
                     MARKING GUIDELINE

MARKS:   150

                This marking guideline consists of 19 pages.

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   2                            ECONOMICS P1                           (EC/SEPTEMBER 2017)

   SECTION A (COMPULSORY)

   QUESTION 1

   1.1     MULTIPLE-CHOICE QUESTIONS

           1.1.1     C   leakages 

           1.1.2     B   reducing production costs 

           1.1.3     A   provide merit goods 

           1.1.4     D   an embargo 

           1.1.5     A   the prevention of dumping 

           1.1.6     D   wealth 

           1.1.7     C   repo rate 

           1.1.8     B   interdependent                                    (8 x 2)     (16)

   1.2     MATCHING ITEMS

           1.2.1     G   Value of all final goods and services produced by the
                         permanent residents of the country for a specific year 

           1.2.2     A   Financial grants to support the production of exports
                         goods 

           1.2.3     D   Money received without any productive service
                         rendered 

           1.2.4     F   Business owned by the state and run by public
                         authorities 

           1.2.5     H   An inter-government organisation that aim to promote
                         socio-economic cooperation and integration 

           1.2.6     I   The total amount of money in circulation in the
                         economy 

           1.2.7     B   Focuses on improving the competitiveness of the
                         manufacturing industries 

           1.2.8     E   Are used to analyse the changes in a series of data over
                         a period of time 
                                                                            (8 x 1)          (8)

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    (EC/SEPTEMBER 2017)           ECONOMICS P1                          3

   1.3     IDENTIFY THE CONCEPT

           1.3.1     Consumption spending 

           1.3.2     Exogenous / Monetarist 

           1.3.3     Exchange rate 

           1.3.4     Corridor 

           1.3.5     Devaluation 

           1.3.6     RDP                                   (6 x 1)      (6)

                                                 TOTAL SECTION A:        30

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   4                                ECONOMICS P1                          (EC/SEPTEMBER 2017)

 SECTION B

 Answer TWO of the three questions from this section in the ANSWER BOOK.

 QUESTION 2: MACROECONOMICS

 2.1      2.1.1      Name the TWO periods in a business cycle.

                        Contraction/downswing 
                        Expansion/upswing                             (Any 2 x 1)        (2)

          2.1.2      What is the impact of the multiplier, if the equilibrium
                     income increases by more than the increase in initial
                     expenditure?

                     The total income and expenditure increase the multiplier will
                     also increase.                                        (1 x 2)       (2)

 2.2      DATA RESPONSE

          2.2.1      Which source was used to compile the data in the above
                     table?

                     Quarterly bulletin, March 2017                                       (1)

          2.2.2      Which year is currently used as the base year by the
                     Reserve Bank?

                     2015                                                                 (1)

          2.2.3      Briefly explain the difference between nominal GDP and
                     real GDP.

                     Nominal GDP
                      Referred to as GDP at current price. 
                      Also known as market or money value. 
                      Inflation has not yet been taken into account. 
                      These prices do not reflect whether economic activity has
                        increased. 

                     Real GDP
                      Referred to GDP at constant prices. 
                      Real prices are adjusted for price changes. 
                      Real national product is the national product expressed in
                         prices which applied in a certain base year. 
                         (Accept any other correct relevant responses.) (Any 2 x 2)        (4)

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    (EC/SEPTEMBER 2017)              ECONOMICS P1                                            5

        2.2.4    Calculate the deflator for 2016. Show all your calculations.

                 Deflator: Nominal GDP ÷ Real GDP x 100
                 Deflator for 2016 = 4 336 988  ÷ 3 009 860  x 100 
                                   = 144                                                  (4)

 2.3    DATA RESPONSE

        2.3.1        At which point will the government maximise revenue?                  (1)

                     A
                      
        2.3.2        What curve is depicted above?

                     Laffer                                                               (1)

        2.3.3        What effect will point C have on government revenue?

                     Tax revenue will increases                                          (2)

        2.3.4        What are the dangers of high personal income tax rates?

                      Tax avoidance 
                      Tax evasion 
                      People will be discouraged to work              (Any 1 x 2)       (2)

        2.3.5        How can the South African government avoid public –
                     sector failure?

                          Improving the quality of management skills in the public
                           sector 
                          Reducing corruption, including nepotism when hiring public
                           sector employees 
                          Reducing bureaucracy by investing in modern systems
                           such as a IT system 
                          Increasing accountability 
                          (Accept any other correct relevant response.) (Any 2 x 2)        (4)

 2.4    Briefly explain how a deficit on a balance of payment will
        automatically be corrected under a free floating exchange rate
        system.

            There is an excess demand for foreign currency on the foreign
             exchange market. 
            Exports will become cheaper and will increase. 
            Imports will become more expensive and decrease. 
            The deficit will decrease. 
             (Accept any other correct relevant response.)       (Any 4 x 2)               (8)

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   6                            ECONOMICS P1                          (EC/SEPTEMBER 2017)

 2.5       How does the entry of domestic businesses into foreign markets
           benefit South Africa?
           South Africa will benefit from entering foreign markets by:
            Local businesses becoming more competitive. 
            Improving quality and decreasing prices. 
            Earning foreign exchange. 
            Enabling us to import products from other countries that we are not
              able to produce for ourselves. 
               (Accept any other correct relevant response.)             Max. 8      (8)
                                                                                    [40]

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    (EC/SEPTEMBER 2017)              ECONOMICS P1                                             7

  QUESTION 3: ECONOMIC PURSUITS

  3.1     3.1.1      Name TWO instruments that the SARB can use to influence
                     the economy.

                         Interest rates 
                         Open market transactions 
                         Moral persuasion 
                         Cash reserve requirements 
                         Exchange rate policy                              (Any 2 x 1)          (2)

          3.1.2      What effects will a huge increase in electricity costs have on
                     smaller businesses in South Africa?

                     Businesses will run at a loss / closing down / more will be forced
                     into bankruptcy. 
                     (Accept any other correct relevant response.)            (Any 1 x 2)         (2)

  3.2     DATA RESPONSE

          3.2.1      What does the abbreviation IPAP stand for?

                     Industrial Policy Action Plan                                               (1)

          3.2.2      Name ONE focus area of this policy for 2017/2018.

                         Education and skills 
                         Infrastructure  and regulatory environment 
                         The labour relations environment 
                         Inclusive growth                                  (Any 1 x 1)          (1)

          3.2.3      Explain ONE reason for industrial development

                         Job creation 
                         Maintain macroeconomic stability. 
                         Develop and maintain appropriate incentives to attract
                          investors. 
                         Diversification of the economy 
                         Contribute to the industrial development of the African
                          continent. 
                          (Accept any other correct relevant response)       (Any 1 x 2)          (2)

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   8                                ECONOMICS P1                          (EC/SEPTEMBER 2017)

           3.2.4     How successful is the industrial development policies in
                     South Africa?

                          Promotes incentives for investors to establish
                           industries. 
                         Promote industrialisation by manufacturing developments
                          policies which offer incentives  such as loans, export
                          promotion, subsidies and establishment allowances.
                         Promote globalisation by having a liberal policy towards
                          foreign investment. 
                         Improve infrastructure of transport, power and modern
                          communication including access to the internet. 
                         Innovation and technology. 
                          (Accept any other correct relevant response.) (Any 1 x 2)         (2)

           3.2.5     What impact might IPAP have on industrial development
                     in the private sector of South Africa?

                      Rapid increase in the price of electricity and petrol which
                        increase business costs. 
                      Labour unrest which has led to reduced productivity 
                      Structural unemployment as new skills are needed and
                        others become outdated. 
                      The global financial crisis and the continuing instability
                        resulting in low foreign demand for South African
                        exports. 
                       (Accept any other correct relevant response) (Any 2 x 2)             (4)

 3.3       DATA RESPONSE

           3.3.1         Name the method used to measure economic
                         development of a country.

                         Human development Index (HDI)                                     (1)

           3.3.2         Which country has the highest HDI in the table above?

                         Norway  (0,955)                                                   (1)

           3.3.3         Explain the term human development.

                         Is the improvement of the opportunities facing a country’s
                         people so that they can lead long, full educated and healthy
                         lives, accessing resources and participating in their
                         communities. 
                         (Accept any other correct relevant response.)                      (2)

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    (EC/SEPTEMBER 2017)              ECONOMICS P1                                            9

           3.3.4          Why is South Africa’s economic development
                          underperforming?

                             Decline in life expectancy due to HIV and Aids
                              epidemic 
                             Underperforming education system 
                             Decline in employment rate 
                              (Accept any other correct relevant response) (Any 1 x 2)     (2)

           3.3.5          How can the South African government help to improve
                          economic development?

                          Government plan to maintain economic development include:
                           Job creation 
                           Subsidies to no-fee schools 
                           Access to basic services such as a provision of solar
                             water geysers 
                           Upgrading of informal settlements and water
                             structures 
                            Spending on health and social assistance 
                             (Accept any other correct relevant response.) (Any 2 x 2)     (4)

 3.4       Compare the standard of living between the North-South countries.

                                               North                     South
           Real GDP per capita :       Produces 78% of          Produces 22% of
                                       world income – have      world income – the per
                                       much higher per capita   capita is much
                                       income.                lower. 
           Life expectancy :           Is over 75 years and     Is about 50 years, and
                                       over 80 in some          40 years in some
                                       countries.             African countries. 
           Education:                  Literacy levels are      Literacy levels are as
                                       about 95%.             low as 50% in some
                                                                developing countries
                                                                in Africa. 
                                                      Max. 4                    Max. 4     (8)

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   10                           ECONOMICS P1                         (EC/SEPTEMBER 2017)

 3.5       How successful is Black Economic Empowerment in the South
           African economy?

               Number of black people who own, manage and control
                businesses in the country increases significantly. 
               Income and inequalities decreases substantially. 
               Businesses spend money on projects that empower workers and
                other member of disadvantaged communities. 
               It brings about transformation of the ownership, management and
                employment equity aspect of businesses in S.A. 
               Ensures employees are not placed in position within a company
                because of their race. 
               They are promoted and encouraged to move up the ranks if they
                meet the minimum criteria. 
                (Accept any other correct relevant response.)            Max. 8     (8)
                                                                                   [40]

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    (EC/SEPTEMBER 2017)             ECONOMICS P1                                          11

    QUESTION 4

    4.1    4.1.1     List TWO problems of public sector provisioning.

                         Accountability 
                         Efficiency 
                         Assessing needs 
                         Parastatals 
                         Pricing policy 
                         Privatisation/ Nationalisation                  (Any 2 x 1)      (2)

           4.1.2     How does economic growth relate to economic
                     development?

                     Economic growth is concerned with goods and services  and
                     economic development is concerned with people and human
                     development. 
                     (Accept any other correct relevant response.)         (1 x 2)          (2)

    4.2    DATA RESPONSE

           4.2.1     What international trade policy is reflected in the graph
                     above?

                     Free trade                                                            (1)

           4.2.2     What happens to the supply when the country engages in
                     free trade?

                     Increases                                                             (1)

           4.2.3     Describe the term free trade.

                     Is when producers and consumers are free to buy goods and
                     services from anywhere in the world, without the interference of
                     government. 
                     (Accept any other correct relevant response.)                          (2)

           4.2.4     Explain why trade protocols are necessary for the economy.

                         They have a combined effect of increasing the amount of
                          trade between countries. 
                         They restrict trade by laying down rules for the way in which
                          it occurs. 
                          (Accept any other correct relevant response.)     (Any 1 x 2)    (2)

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   12                              ECONOMICS P1                           (EC/SEPTEMBER 2017)

           4.2.5     How does the society experience an increase in welfare
                     through free trade?

                         Need to examine the costs of trade barriers. 
                         Tariffs and quotas reduce the quantity and variety of gods
                          available to consumers. 
                         The foreign which are imported are more expensive due the
                          excise taxes and customs duties. 
                         Free trade increases the range of choice that is available to
                          consumers and reduces the general price level. 
                                                                            (Any 2 x 2)     (4)

   4.3     DATA RESPONSE

           4.3.1     What economic problem is illustrated in the picture above?

                     Inflation                                                             (1)

           4.3.2     How might inflation affect the consumers buying power?

                     Decreasing/decline                                                    (1)

           4.3.3     Briefly describe the term inflation.

                     Inflation can be described as an increase in the general level of
                     prices in an economy, that is sustained over a period of
                     time.                                                                (2)

           4.3.4     How would an investor be influenced by inflation?

                      Profits / return on investment might decline. 
                      Assets with a fixed nominal value have a fixed return and 
                      Lower purchasing power as prices increases 
                       (Accept any other correct relevant response.)      (Any 1 x 2)       (2)

           4.3.5     Why is important for the South African government to
                     monitor the performance of the economy?

                        Is to make decisions and form policies 
                        Show whether targets have been met 
                        Compare conditions between areas and in different
                         periods. 
                         (Accept any other correct relevant response.)  (Any 2 x 2)         (4)

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    (EC/SEPTEMBER 2017)            ECONOMICS P1                                            13

    4.4    Briefly explain the critical infrastructure and skill support
           programme as the incentives used by the South African
           government to improve industrial development.

           Critical infrastructure Programme
            Is a cost-sharing grant for projects designed to improve critical
                infrastructure in South Africa.
            Covers a qualifying development cost between 10% and 30%
                towards the total development costs. 
            Becomes available on completion of the project. 
            It extends to both the public sector and private sector 
            The programme deems infrastructure to be critical if investment
                had not taken place or would not work optimally without the
                infrastructure.
            Government supplies financial incentives to large enterprises
                requiring critical infrastructure. such as roads, electricity and
                water purification.                                       (Any 2 x 2)

           Skill support programme
            Is a cash incentive scheme to encourage greater investment in
                skills training in general. 
            To introduce new, advance skills to the immediate benefit of the
                South African labour force. 
            A maximum of 50% of a company’s trading costs are covered. 
                                                                   (Any 2 x 2)             (8)

    4.5    How can climate changes influence international trade?

           A change in climatic conditions might influence international trade by:
            Leading to different products being produced and exported to other
               countries than before. 
            Leading to imports of different products produced locally and
               exported before. 
            Causing other types of industries to arise due a change in
               production pattern and types of products delivered. 
            Causing a serious need for research in unknown fields of
               production to ensure international trade. 
              (Accept any other correct relevant response.)                                (8)
                                                                                          [40]

                                                                TOTAL SECTION B:           80

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     14                         ECONOMICS P1                        (EC/SEPTEMBER 2017)

 SECTION C

 Answer ONE question from this section in the ANSWER BOOK.

STRUCTURE OF ESSAY:                                               MARK ALLOCATION:
Introduction
The introduction is a lower order response:
     A good 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.                                                   Max. 2
     Do not repeat any part of the introduction in the body.
     Avoid saying in the introduction that you are going to
        discuss in the body.
Body:
 Main part: Discuss in detail/In-depth discussion/Examine/             Max. 26
     Critically discuss/Analyse/Compare/Evaluate/Distinguish/
     Differentiate/Explain/Assess/Debate
 Additional part :Give own opinion/Critically discuss/Evaluate         Max. 10
     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
Conclusion
Any relevant higher order conclusion that should include:
 A brief summary of what has been discussed / analysed
     without repeating facts already mentioned in the body
 An opinion or valued judgment on the facts discussed                  Max. 2
 Additional support information to strengthen the discussion /
     analysis
 A contradictory viewpoint with motivation, if so required
 Recommendations
TOTAL NUMBER OF MARKS                                                     40

QUESTION 5: MACROECONOMICS                                 40 MARK − 40 MINUTES

The business cycle plays a key role in enabling economists to make educated
guesses about the future growth of the economy.

         Discuss indicators as features underpinning forecasting business cycles.
                                                                       (26 marks)
         Why is it important that the Reserve Bank maintains price stability in the
          South African economy?                                        (10 marks)

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     (EC/SEPTEMBER 2017)           ECONOMICS P1                                              15

 INTRODUCTION

 Economic indicators are statistics used to measure some aspect of the
 economy. 
 (Accept any other correct relevant introduction.)                                Max. 2

 BODY: MAIN PART

 Economic indicators:

     Leading economic indicators 
      Changes before the economy changes. 
      They peak before the peak in aggregate economic activity is reached and they
        reach a trough before aggregate economic activity reaches a trough. 
      They give advance warning of changes in aggregate economic activity. 
      They give consumers, business leaders and policy makers a glimpse into
        where the economy might be headed. 
      If leading indicators rise today, then the rest of the economy is likely to rise in
        the coming year. 
      Examples of leading economic indicators: Job advertising space, average
        manufacturing hours worked, building plans approval.                   (Max. 8)

  Lagging economic indicators 
    Do not change direction until after the business cycle has changed its
      direction. 
    They reach a peak/trough months after the business cycle has reached a
      peak/trough. 
    Follow coincident indicators after a further time elapse 
    They therefore may serve to confirm the behaviour of the coincident
      indicators. 
    If they do not confirm an upswing or a downswing, this signals that the
      upswing or downswing is weak and will mostly end at an early stage. 
    Economists use them to estimate whether individual indicators gave false
      signals. 
    Examples of lagging economic indicators: Unemployment rate, Number of
      commercial vehicles sold, Real machinery and equipment sold, Number of
      hours worked in construction.                                       (Max. 8)

  Coincident economic indicator 
    Move together with the aggregate economic activity. 
    They indicate actual state of the economy 
    Coincidence indicator change at the same time as the economy. 
    They reach a peak / trough at the same time as the business cycle. 
    Economists use them to compile the business cycle. 
    They follow leading indicator after some time has elapsed but they tend to
      confirm the turning points of the leading indicator. 
    Examples of coincident indicator: Industrial production index, Volume of
      imports, Value of wholesale, retail and new vehicle sales          (Max. 8)

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     16                             ECONOMICS P1                          (EC/SEPTEMBER 2017)

 Composite economic indicator 
   A summary of various indicators of the same type into a single value. 
   The three composite indicators are often used to calculate a single composite
    indicator,  that is single number to benchmark a country’s economic
    performance.                                                        (Max. 4)
    (Accept any other correct relevant response.)
    (A maximum of 8 marks may be allocated for mere listing of facts/examples)
                                                                         (Max. 26)

 ADDITIONAL PART

 It is important that the Reserve Bank maintains price stability in the South African
 economy by:

         Ensuring that markets can function optimally and the government can promote
          economic growth and development more effectively. 
         Avoiding frequent fluctuations in the level of consumer and producer goods 
         Making it easy for consumers and producers to plan and budget  so that
          consumers might be aware of costs of goods and services. 
         Boosting investors’ confidence and foreign investors who would be likely to
          invest in local businesses if they were sure what production costs.  /
          revenue was going to be from one month to the next. 
          (Accept any other correct relevant response.)                        (Max. 10)

 Conclusion

 It is difficult to do accurate economic forecasting because there are many factors
 that influence the dynamics of the economy. 
 (Accept any other correct relevant conclusion.)                          (Max. 2)
                                                                                            [40]

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     (EC/SEPTEMBER 2017)         ECONOMICS P1                                          17

 QUESTION 6: ECONOMIC PURSUITS

 Many people are interested in the performance of an economy, such as
 ordinary citizens, businesses, investors and the government.

     Discuss the following social indicators:
      - Nutrition and health            (16 marks)
      - Demographics                    (10 marks )        (26 marks)
     How can the economic development be improved through the use of
      these social indicators?                            (10 marks)

 INTRODUCTION

 Social indicators are statistics that show the level and progress of human
 development in a country. 
 (Accept any other correct relevant introduction.)                   Max. 2

 BODY: MAIN PART

 Nutrition and health

       The health of a population and of the labour force of a country is very
        important for the economic growth and development. 
      Healthy citizens are more productive, earn more, consume more and
        work longer. 
 Infant mortality rate. 
      It measures the number of infants who died before reaching one year of
        age per thousand live births in a given year. 
      The infant mortality rate in South Africa is still high compared to other
        countries. 
      Infant mortality is often connected to a low birth weight, which can be
        caused by pregnant mother’s malnutrition, stress or by her smoking,
        alcohol or drug abuse. 

  Under five mortality 
    Is often connected to malnutrition, diarrhoea, measles, malaria and
      respiratory infections. 
    The under-five mortality rate is normally given as the number of deaths
      per 1 000 live births. 
    The number of children that will die before the age of five years. 

  Access to health service 
    South Africa compares well in terms of indicators measuring access to
      primary health services  and
    The amount of health expenditure as a percentage of GDP. 

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   18                              ECONOMICS P1                            (EC/SEPTEMBER 2017)

  Access to clean drinking water 
    Means that people have safe drinking water out of taps in their
     houses. 
    The percentage of a population that has a reasonable access to safe
     drinking water 

           Access to sanitation facilities 
           Means that people have access to toilets or improved sanitation
            facilities that keep them away from other humans, animals and
            insects. 
           The percentage of a population with at least adequate sanitation
            facilities 

         Nutrition
         Is a process of a person‘s body getting the food necessary for health
          and growth. 

      Child malnutrition 
       Malnutrition is expressed in two ways: weight of age and height of that
        age. 
      A person’s body weight is compared to an ideal for a person of that
        age, sex and height. 
      Physical signs also need to be taken into account as people of normal
        weight, or people who are overweight, can still be suffering from
        deficiencies in particular nutrients. 

         Overweight children 
         There is an association between obesity of children and other
          diseases. 
         A person is considered obese if his / her BMI is more than 30 kg. 
                                                                       (Max. 16)

         Demographics
         Is the study of population relating to elements such as its total size,
          population changes over time, age and gender distribution and
          geographical distribution. 

        The population growth 
         South Africa has a relatively high population growth compared with
          that of developed countries.
         The population growth rate is an important indicator to the government
          in terms of the number of social services that are needed. 

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    (EC/SEPTEMBER 2017)         ECONOMICS P1                                          19

      Life expectancy 
        Expresses the number of years a newborn infant may live  if the
          prevailing patterns of mortality remained the same throughout his or
          her life. 
        Mortality rates in South African have been affected by the prevalence
          of HIV, which has been increasing significantly. 
        It is important for government to know what the average life
          expectancy is,  because working humans require a range of social
          services. 
        Assurance companies in particular are interested in life
          expectancy.                                               (Max. 10)
          (Accept any other correct relevant response)
          (A maximum of 8 marks may be allocated for mere listing of
          facts/examples)                                             (Max. 26)

 ADDITIONAL PART

 Economic development can be improved by:
  Spending more on the improvement of the quality of life of the general
    population and reduce social tension. 
  Investing more in the future quality labour force for the progression of the
    economy. 
  Improving health and educational facilities. 
  Focusing on the areas that needs development in communities and spend
    on them. 
  Improving social cohesion and interdependence. 
  Assisting the government to look into other areas of need through the
    budget. 
    (Accept any other correct relevant response.)                    (Max. 10)

 CONCLUSION

 Social indicators are directing government expenditure on issues that will
 guarantee social development and a quality lifestyle. 
 (Accept any other correct, relevant conclusion)                        (Max. 2)
                                                                                   [40]

                                                          TOTAL SECTION C:          40
                                                             GRAND TOTAL           150

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