Economics Grade 10 Paper 1 Gauteng June 2018 Memo (English)

Downloaded from hlayiso.com GAUTENG DEPARTMENT OF EDUCATION PROVINCIAL EXAMINATION JUNE 2018 GRADE 10 ECONOMICS PAPER 1 MARKING GUIDELINE 15 pages

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 GAUTENG DEPARTMENT OF EDUCATION PROVINCIAL EXAMINATION ECONOMICS GRADE 10 (Paper 1) SECTION A: COMPULSORY QUESTION 1: 1.1 MULTIPLE-CHOICE QUESTIONS 1.1.1 B Limited means 1.1.2 C Macroeconomics 1.1.3 A Gross Domestic Product 1.1.4 C Leakages 1.1.5 D Recession (5x2) (10) 1.2 MATCHING ITEMS 1.2.1 E Occurs when we make use of our resources to optimally produce goods and services 1.2.2 D Brings buyers and sellers together for exchange 1.2.3 B The difference between income and spending 1.2.4 C The upper turning point of a business cycle 1.2.5 F All people have a basic human right to be free from poverty, ignorance and ownership by other people 1.2.6 A Businesses supply goods and services on the goods market to households, the government and foreign sector in the form of exports (6x1) (6) 1.3 GIVE ONE TERM 1.3.1 Microeconomics 1.3.2 Capital goods 1.3.3 Income tax. 1.3.4 Leading indicators (4x1) (4) TOTAL SECTION A: 20 2

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 SECTION B Answer ONE of the two questions QUESTION 2 MACROECONOMICS 2.1 Answer the following questions. 2.1.1 Name any TWO fields of study that that are related to Economics.  Accounting  Business studies  Commercial law  Mathematics of finance (Any 2x1) (2) 2.1.2 What is the relationship between scarcity and opportunity costs?  When resources are scarce, consumers must choose to satisfy certain needs over others, in the process giving up their satisfaction of other needs. (Any 1x2) (2) 2.2 Data Response 2.2.1 What is the name of the graph above?  Business cycles (1) 2.2.2 Which point on the graph may be associated with lowest GDP?  D (1) 2.2.3 Briefly describe the term economic growth.  It is the increase in the value of goods and services produced over a period of time, measured in terms of real gross domestic product. (2) 2.2.4 Briefly explain the effect of business cycles on economic growth.  During periods of downswings the economy has a negative growth, while during periods of upswings the economy has a positive growth.  (2) 2.2.5 How can government reduce unemployment in an economy?  The government can invest in job creation initiatives like the Expanded Public Works Programme  The government can invest in education and training to address skills shortages in the country (Accept any other correct relevant answer) (2x2) (4) 3

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 2.3 Data Response 2.3.1 How much is the net profit after tax of the business above?  R500 000 (1) 2.3.2 Identify a statement from the passage above that shows that the business is efficient in its operations.  ‘During the past year their business has performed well’ (1) 2.3.3 What does it mean to “diversify their business operations” in this extract?  To expand on the line of products from those already supplied  (2) 2.3.4 Demonstrate how this extract illustrates the problem of scarcity of resources.  They cannot decide whether they should use the profits to purchase another tour bus or buy a guesthouseThis means that their resources cannot allow them to have both a guest house and a bus (2) 2.3.5 Briefly discuss the relationship between production, consumption and exchange.  Production is the process of converting raw materials into finished products  Consumption is when households use products that have been produced by businesses  For goods and services to be consumed, there must be an exchange of these goods and services between the producer and the consumer (4) 2.4 Distinguish between free goods and economic goods. Free goods Economic goods  They are freely available to  They have a price  consumers / no price involved   They are scarce  They are available in unlimited quantities (Accept any other correct relevant answer) (2x4) (8) 4

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 2.5 Demonstrate how the South African government is addressing the delivery of basic services to economically disadvantaged people to improve their standard of living.  All people should have food as a basic need, hence there is a school feeding scheme in public schools  All people must have shelter, hence the housing subsidies and RDP houses for low-income earners  All people must have access to health services. Free medical facilities are provided for those who cannot afford it  All children have a right to education-‘no fee’ education system has been introduced in the country for public schools  All people have a right to running water and sanitation, hence on affordable supply of running water is offered  All people have a right to dignity and better future  All people have a basic human right to be free from poverty, ignorance and slavery, hence the constitution with human rights laws (Accept any other correct relevant answer) Any (4x2) (8) [40] 5

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 QUESTION 3 40 MARKS – 30 MINUTES MACROECONOMICS 3.1 Answer the following questions. 3.1.1 Name TWO types of markets in the circular flow.  Factor / Resource / Input market   Product / Goods / Output market  Money market  Capital market  Financial market  Foreign market (Any 2x1) (2) 3.1.2 How is the trend line used in business cycles?  The trend line is a line that indicates the general direction of the country’s economic growth over a long period  (Accept any other correct relevant answer) (1x2) (2) 3.2 Data Response 3.2.1 Which factor of production is depicted by the cartoon above?  Natural resources / land (1) 3.2.2 Which economic industry would be affected by the above scenario?  Fishing Industry / Primary Sector  (1) 3.2.3 Briefly describe the term relative scarcity.  When a good or service is available, but one does not have the resources to acquire it / Relative scarcity exists where the demand for a good is greater than the supply of a good  (2) 3.2.4 What can the government do to solve the water crisis?  Build more dams to trap more water  Drill boreholes to utilise underground water  Encourage South Africans to conserve water (Accept any other correct relevant answer) (Any 1x2) (2) 3.2.5 What effect does the above situation have on the economy?  There will be a shortage of fish   Increase unemployment rates in the country  Poverty rates may increase (Accept any correct relevant answer) (2 x 2) (4) 6

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 3.3 Data Response 3.3.1 Which method was used to calculate the GDP in the above table?  Expenditure method (1) 3.3.2 Identify the institution responsible for publishing the data above.  South African Reserve Bank (SARB) (1) 3.3.3 Briefly describe the term factor income.  This is the total income earned from the sale of factors of production, e.g. salaries and wages earned on labour (2) 3.3.4 Name the other TWO methods used to calculate the GDP.  Production method  Income method (2) 3.3.5 Use figures in the table above to calculate the value of A. Show all calculations. GDP at market prices R2425 billion Plus factor income earned abroad by South Africans R34 billion Minus factor income earned in South Africa by R87 billion foreigners Gross National Income R2372 billion (4) 7

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 3.4 Differentiate between leakages and injections in an economy. Leakages Injections When there are leakages of When there is an injection of money into money from circular flow it means the circular flow, more money is that the money is not available to available to be spent on buying the be spent on buying the output output produced by the businesses produced by the businesses Leakages are amount of money Injections is the amount of money that that leave the circular flow enter the circular flow from outside Leakages (L)=S+T+M Injection (J)=I+G+X (Accept any other correct relevant answer) (2x4) (8) 3.5 How do households contribute towards the growth of the economy? Households…  are the owners of the factors of production. They provide these factors to producers so that they can produce goods and services   pay income tax to the government, who in turn use the tax revenue to provide public goods  buy goods and services from business, thereby providing an income to the businesses  save some of their income in financial institutions like banks and these invest this money back into the economy  receive public goods from the state (Accept any correct relevant answer) (8) [40] TOTAL SECTION B: 40 8

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 SECTION C Answer any ONE of the two questions. Your answer will be assessed as follows: STRUCTURE OF THE ESSAY MARK ALLOCATION Introduction Max. 2 The introduction is a lower-order response.  A good starting point would be to determine the main concept related to the question topic.  Do not include any part of the question in your introduction.  Do not repeat any part of the introduction in the body.  Avoid saying in the introduction what 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 / Explain / Differentiate Max. 10 Additional part: Give own opinion / Critically discuss / Evaluate / Critically evaluate / Draw a graph and explain / Use the graph given and explain / Complete the given graph / Calculate / Deduce / Compare / Explain / Distinguish / Interpret / Briefly debate / How / Suggest Conclusion Max. 2 Any higher-order conclusion should include:  A brief summary of what has been discussed without repeating facts already mentioned.  Any opinion or value judgement on the facts discussed.  Additional support information to strengthen the discussion analysis.  A contradictory viewpoint with motivation, if required.  Recommendations TOTAL 40 9

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 QUESTION 4 MACROECONOMICS  Discuss in detail the four main economic participants in the Circular Flow Model of an open economy. (26)  Describe the relationship between Savings and Investment. (10) [40] INTRODUCTION  The four main participants in the circular flow are households, businesses, the government and the foreign sector. These participants combine to form a model of how the economy works  The decisions that they make and the way in which they interact with one another  The impact they have on the individuals in our society and on the level of economic activity (Accept any other correct relevant answer) (Max 2) Body MAIN PART Households   All the people who live together and make joint economic decisions  A family is a household sharing income  They own factors of production, which are labour, entrepreneurship, land and capital  They own businesses through the shares they have in businesses.  They also earn an income from factors of production, e.g. labour earns salaries and wages, interest is paid on capital, rent is paid for land, and profit is the reward for entrepreneurial activities  They use their income to buy goods and services from producers  The main aim for consumers is to maximize their satisfaction.  Through their income and spending they determine what must be produced, for whom goods and services must be produced, and how it must be produced  What households want and can afford (their demand) determines what business will produce  Households also save a portion of their income for various reasons for their future 10

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 Business Enterprises  They produce goods and services using factors of production  Production in SA is mostly done by the privately owned business  Business / Firms are important decision-makers in our economy, they also produce capital goods  Capital goods are used in the production of consumer goods  Creation of capital goods is called Investment (I)  Businesses are responsible for efficient production  Businesses pay households wages / salaries for labour, interest for capital, rent for land, profits for entrepreneur as income for their factors of production.  They bear the production costs Public Sector  They comprise of local, provincial and national government  Government purchases factors of production from households in the factor market  The state also purchases goods and services from firms in the good markets  They also provide households and business enterprises with goods and services, which are not produced by businesses   These public goods include safety, defence, law, roads and other infrastructure  Receive tax from households and businesses, and also receive revenue from state owned enterprises  The state spends tax revenue on social services  Examples of tax on goods and services paid by consumers include Value Added Tax (VAT), sin tax and fuel levies Foreign Sector  Represents trading with the rest of the world, export / import trade – international trade  The world has become a global village  Changes in one part the village affects many other parts of the village  Changes in real flows and financial flows, technology and information occur between countries  Globalization means there is higher integration between countries  Export earnings are injections, as money is received from other countries  Import payments, are leakages since money leaves the country  (Accept any other correct relevant answer) (Max 26) 11

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 ADDITIONAL PART  Savings is the income that participants choose not to spend, and is deposited into financial institutions  It is a leakage of money from the circular flow to the financial institutions as it decreases the spending flow  Savings reduces the amount of money that people have to spend  Savings are the building blocks for investment  Investment is the creation of capital goods  Business borrows money from the financial institutions, this money comes from savings  Business uses this money to buy capital goods e.g. machinery  Without savings there can be no investments, meaning less production of goods and services  Investment balances out the leakage caused by savings  Investment has a major impact on economy (Accept any other correct relevant answer) (Max 10) CONCLUSION  The economic participants are dependent on each other. An economy cannot be functional if one of the participants does not play their role. (Accept any other correct relevant answer) (Max 2) [40] 12

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 QUESTION 5 40 MARKS – 40 MINUTES MACROECONOMICS  Discuss in detail the features of a business cycle. (26)  Critically evaluate the effects of the business cycle. (10) [40] INTRODUCTION  Business cycles are consecutive periods of increasing and decreasing economic activities (Accept any other correct relevant answer) (Max 2) Body MAIN PART Prosperity phase  Optimism encourages entrepreneurs to borrow money and to buy new machinery and equipment  More people are employed and production increases  Prices, wages, interest rates and profits increase  Factories work over-time and skilled labour becomes extremely scarce  When the boom starts everything seems to go to the extreme  Interest rates, salaries and wages increase to even higher levels and there is a much greater demand for raw materials, cost of businesses increases almost beyond control  Inflation accelerates beyond previous higher levels  Some businesses start to realize that the prosperity phase cannot last forever, but there are no clear disturbances yet The recession phase  Businesses start to provide for bad times by producing less and trying to repay the larger part of their loans  They selectively lay off workers  Spending by households and profits of businesses start to decrease  Inflation is high and the central bank reduces the quantity of money and credit in the economy, and increases interest rates  In other words, the central bank applies a stricter monetary policy  Households find it difficult to afford to buy goods on credit and to pay bonds, and banks insist that business enterprises repay the loans that were granted during the boom  Spending on durable consumer goods and capital equipment is greatly reduced and unemployment increases  Some businesses start to show losses 13

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 The depression phase  This phase is characterized by general pessimism (expecting the worse) by households and businesses  The spending of all sectors in the economy decreases drastically and consists mainly of expenditure on consumer goods  Businesses show poor profits, many make losses, and some go bankrupt  Households that cannot pay their debts have their furniture, motorcars, and even their houses repossessed  Many people find work in the informal sectors  The aim of many households is to provide for their basic needs ( food, shelter and clothing)  Because of reduction in demand, inflation also decreases and interest rates fall  At a certain stage businesses start to realize that conditions are going to improve at some time, and they take the first actions that will eventually lead to the recovery The recovery phase  Businesses realise that conditions are going to improve and start to service their machinery and improve their equipment  They increase their production slightly to provide stock for a possible increase in demand  They make better use of their labour and even employ new workers  Because businesses purchase more goods and services and employ a greater number of people, there is an increase in income and spending in the economy  Because interest rates are low, household bond repayments and other instalments are low, and so households have more money to spend  Loans are available but households and business enterprises are still not keen to borrow  As soon as sales improve, business profits increase  Entrepreneurs become more optimistic (Accept any other correct relevant answer) (Max 26) 14

Downloaded from hlayiso.com ECONOMICS MEMORANDUM (Paper 1) GRADE 10 ADDITIONAL PART Changes in aggregate supply and aggregate demand  During an upswing, domestic firms respond by increasing their production of output (aggregate supply)  In a downswing, there is a decrease in total spending (aggregate demand) Changes in economic growth  During an upswing an economy will grow positively while during a downswing the economy has a negative growth Changes in employment  During an upswing many workers are employed, while during a downswing many workers lose jobs Changes in price levels  Inflation normally occurs during the late stages of an upswing as many businesses increase their prices since there is near full employment of workers, while during a recovery prices are usually low (Accept any other correct relevant answer) (Max 10) Change in exchange rates  During an upswing there is an increase in imports and a decrease in exports because local goods are more expensive than imported goods.  Influence on the economically vulnerable  During the upswing prices are usually high and it is difficult for these people to provide for their basic needs such as food, clothing and housing  CONCLUSION  Authorities must always monitor the economic growth patterns, so that upswings may be prolonged and downswings shortened, if not avoided. (Accept any other correct relevant answer) (Max 2) [40] TOTAL SECTION C: 40 TOTAL: 100 15