Economics Grade 11 Paper 1 Gauteng November 2015 Memo

Downloaded from hlayiso.com GAUTENG DEPARTMENT OF EDUCATION PROVINCIAL EXAMINATION 2015 GRADE 11 ECONOMICS PAPER 1 MEMORANDUM 19 pages

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 GAUTENG DEPARTMENT OF EDUCATION PROVINCIAL EXAMINATION ECONOMICS Paper 1 MEMORANDUM QUESTION 1 1.1 MULTIPLE-CHOICE QUESTIONS 1.1.1 B (goods that command a price) √√ 1.1.2 C (declining in importance as part of GDP) √√ 1.1.3 C (lack of free education) √√ 1.1.4 C (rent) √√ 1.1.5 A (development) √√ 1.1.6 A (coin deposits) √√ 1.1.7 B (the monetary policy of the SARB) √√ 1.1.8 B (M3) √√ (8x2) (16) 1.2 Choose a description from COLUMN B that matches an item in COLUMN A 1.2.1 E √ (The movement of factors of production from one location to another) 1.2.2 A √ (Machines and equipment replace people in the production process) 1.2.3 F √ (How quickly money can be converted into cash) 1.2.4 B √ (Budgetary spending exceeds income) 1.2.5 D √ (A group of two or more countries that use the same currency) 1.2.6 G √ (Part of ownership in a company that entitles the owner to a proportional division of profits when dividends are declared) 1.2.7 I √ (Unique practices of locals in a given culture or society) 1.2.8 H √ (The change in the number of people in a country over time) (8x1) (8) 2

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 1.3 IDENTIFY THE CONCEPT 1.3.1 Microeconomics √ 1.3.2 Wealth √ 1.3.3 Prime √ 1.3.4 Gross value added √ 1.3.5 Scarcity √ 1.3.6 Land restitution √ (6x1) (6) TOTAL SECTION A: 30 3

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 SECTION B QUESTION 2 MACROECONOMICS 2.1 2.1.1 Name TWO categories of natural resources.  renewable resources √  non-renewable resources √ (2x1) (2) 2.1.2 Why do people with scarce skills receive higher wages?  People with scarce skills are more valuable to a firm and they, therefore receive a higher wage √√ (1x2) (2) 2.2 2.2.1 During which years were inflation levels higher than salary levels?  2002√ and 2008√ (1x2) (2) 2.2.2 What is labour-productivity gap?  This refers to salary increases and the level of inflation. √√  Workers demand higher salaries, but productivity decreases. √√ (Accept any other relevant answer) (2) 2.2.3 State a reason why salary increases were higher than inflation between 2009 and 2011.  Cost of living increase. √√  Increase in electricity/fuel, etc. √√ (Accept any other relevant answer) (2) 4

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 2.2.4 In your opinion, what are the consequences when salary levels increase faster than inflation levels?  Increase in demand for goods and services. √√  Inflation increase √√  Unemployment increase. √√ (Accept any other relevant answer) (2x2) (4) 2.3 2.3.1 Which economic system is illustrated in the extract?  Market economy/Free economy √ (1) 2.3.2 List any other economic system  Centrally planned economy / communist economy √  mixed economy √ (1) 2.3.3 What is meant by centralised direction?  Government makes all decisions in a central place. √√  Government controls all factors of production √√  Government decides on how, what and where to produce. √√ (Accept any other relevant answer) (2x2) (4) 2.3.4 Why does Adam Smith describe the economic process as an “invisible hand”?  Production takes place without a master plan. √√  The “What” “For Whom” and “Why” are solved by an invisible force. √√  Market forces automatically adjust √√ (Accept any other relevant answer) (2x2) (4) 2.4 Distinguish between real investment and financial investment.  Real investment or gross fixed capital formation is spending on additions to the capital stock √√  e.g. machinery, structures and inventories √√  it is undertaken with the aim of making profits in the future√√  Financial investment is investment in shares and other financial instruments√√  it is an asset that you put money into with the hope that it will grow or appreciate into a larger sum of money.√√ (2x4) (8) 5

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 2.5 Discuss the main reasons for privatization.  Increased competition √√  Greater efficiency in the use of scarce resources and lower costs in production √√  Competition gives consumers a greater choice of goods √√  No political intervention in the running of the company√√  Private companies are accountable to shareholders and are therefore motivated to make profits√√  Profits from private companies can be taxed, which increases state revenue√√ (Accept any other relevant answer) (Any 4x2) (8) [40] 6

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 QUESTION 3 3.1 3.1.1 Name TWO sources of wealth. – Savings √ – Inheritances √ – Gifts √ – Appreciation of assets √ Any (2x1) (2) 3.1.2 How will the money supply be affected if the SARB buys government bonds in the open market? Money supply will decrease/reduce √√ (Accept any other relevant answer) (1x2) (2) 3.2 3.2.1 Define the concept Lorenz curve.  It is a graphic representation of the cumulative distribution of a country’s wealth. √√  The Lorenz curve is a curve which shows how unequal the distribution of income between households can be. √√ (1x2) (2) 3.2.2 What are the ranges of the Gini coefficient? (0√ – 1√) (2) 7

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 3.2.3 Use the information from the table to plot the Lorenz curve 100 80 % of income 60 40 Lorenze Curve A 20 20 40 60 80 100 %% ofof househld ehold household Mark allocation 1 mark for labelling on the axis 1 mark for labelling of the axis 2 marks for line of equality 2 marks for the Lorenz curve (6) 8

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 3.3 3.3.1 What does the abbreviation SADC stand for? Southern African Development Community. √√ (2) 3.3.2 List any TWO member countries of SADC. Mauritius √ Seychelles √ Lesotho √ Swaziland √ Botswana √ Namibia √ Zimbabwe √ Mozambique √ Zambia √ Malawi √ Angola √ Tanzania √ Democratic Republic of Congo √ South Africa √ (2x1) (2) 3.3.3 According to the extract, how can a country under SADC improve its industrial base?  The production of value-added goods. √√  More exports of quality goods. √√ (Accept any other relevant answer) (2x2) (4) 3.3.4 Why can industrial development be seen as the main driver of regional development?  Industrial development creates work in regions. √√  Industrial development can lead to economic growth and development √√  Industrial development can lead to increased exports / foreign exchange can be earned. √√ (2x2) (4) 9

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 3.4 Differentiate between a developing economy and a developed economy  A developing economy would be an economy where all citizens do not yet have the resources available to live free, healthy and safe lives  The gap between the rich and the poor is very large in the developing countries  These countries are in the southern hemisphere  A developed economy would be an economy where all citizens enjoy a standard of living that enables them to live free, healthy and safe lives  These countries are in the northern hemisphere (Accept any other relevant answer) (2x4) (8) 3.5 Evaluate free subsidised basic household services provided by the local government. – Water supply: a public standpipe supply or point source supply is provided free of charge √√ – Sanitation: basic sanitation services provided free of charge with additional payment for properties of higher value √√ – Electricity: consumption-based tariff, with the first 50 kwh per month provided free of charge √√ – Refuse removal: targeting based on property value, with additional service- level payments is provided for those requiring more than the basic service. √√ – However, not all communities receive these free services.√√ – Communities are constantly demonstrating their dissatisfaction by marches, pickets, etc. √√ – They are not always satisfied with these services.√√ – It seems that there is a lack of services in many communities. √√ (Accept any other relevant answer) (4x2) (8) [40] 10

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 QUESTION 4 4.1 4.1.1 List TWO groups of people that are marginalised in South Africa  Non-whites √  Women √  Immigrants/Refugees √  Disabled people √ (2x1) (2) 4.1.2 How will the price of a product impact on the profits of the entrepreneur?  The higher the price of the product, the higher the profits. √√  Cost increases can negatively influence the profit margin √√ (Accept any other relevant answer) (1x2) (2) 4.2 4.2.1 Define durable goods.  Involves those goods that lasts for more than one year/ Goods that lasts for a long period of time. √√ (2) 4.2.2 On which category of durable goods do households spend most of their income in 2014?  Personal transport equipment√√ (2) 4.2.3 Explain what “at constant prices” mean.  The value of household expenditure before inflation/ The unadjusted value of household consumption expenditure. √√ (2x1) (2) 4.2.4 What is the tendency in the clothing and footwear category since 2012? Motivate your answer.  The expenditure in this category increased over the years. √√ Reasons:  The population has increased over the years. √√  The prices of goods for these categories has increased. √√  The inflation levels have increased. √√ (2x2) (4) 11

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 4.3 4.3.1 List TWO reasons, according to the cartoon, why Africa is raved by poverty.  HIV/AIDS √  Hunger √  Corruption √  High debt levels √ (1x2) (2) 4.3.2 Define the concept poverty.  It is the inability of people to attain a minimum standard of living. √√ (2) 4.3.3 What is a poverty gap?  The difference between the income of the poor and the poverty limit.√√ (2) 4.3.4 Explain how social grants are used to alleviate poverty in South Africa. - Old age pensions are paid to satisfy people’s basic needs. √√ - Child grants provide in the underpriviledged children’s needs.√√ - Foster care grants provide for the needs of the homeless. √√ (Accept any other relevant answer) (2x2) (4) 4.4 Distinguish between banks and micro-lenders. Banks:  Provide small and large amounts of credit to individuals, small and medium businesses and large corporations√ √  Provide loans to less risky customers √ √  Provide a wide array of financial services √ √  Regulated by the banks act√ √ Micro-lenders  Provide small amounts of credit to individuals for different purposes√ √  Provide loans to more risky customers√ √  Provide a limited range of financial services, mostly loans and insurance √ √  Regulated by the national credit act√ √  (Accept any other relevant answer) Any (2x4) (8) 12

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 4.5 Discuss the objectives of GEAR.  To increase exports drastically for economic growth √√  To reduce the fiscal deficit to 3% of the GDP√√  Budget reforms, aimed at strengthening the distribution effect.√√  Tax reforms and other incentives to promote job creation. √√  Expanding on infrastructure and increased government expenditure√√  To control inflation between the target area.√√  Expansion of infrastructure and increase in government investments. √√ (Accept any other relevant answer) Any (4x2) (8) [40] TOTAL SECTION B: 80 13

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 SECTION C Answer ONE question from this section in the ANSWER BOOK. STRUCTURE OF ESSAY: MARK ALLOCATION: Introduction Max. 2 Body: Main part: Discuss in detail/In-depth discussion/Examine/ Max. 26 Critically discuss/Analyse/Compare/Evaluate/Distinguish/ Differentiate/Explain/Assess/Debate Addition part: Give own opinion/Critically discuss/ Max. 10 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 Conclusion Max. 2 Any higher-order conclusion should include:  A brief summary of what has been discussed without repeating facts already mentioned in the body  Any opinion or valued judgment on the facts discussed  Additional support information to strengthen the discussion/analysis  A contradictory viewpoint with motivation, if required Recommendations TOTAL 40 14

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 QUESTION 5 MACRO ECONOMICS 40 MARKS – 40 MINUTES Infrastructure plays an important role in the development of the economy.  Discuss the following aspects of South Africa’s infrastructure:  Communications  Transport (26 marks)  Briefly explain how the cellphone industry assists in reducing the exclusion of the poor from telecommunications. (10 marks) [40] Introduction: The economic infrastructure of a country are the internal facilities that make business activity possible such as communication, transportation and distribution networks, financial institutions and energy supply systems.√√ (Accept any other relevant answer) (2) Body: Main Part 1. COMMUNICATIONS It is the movement of information throughout the world. √√ These include the following:  Postal services √ This is controlled by the SA Post Office, a state-owned agency. √√ Many courier companies provide the only competition for the post office in the fast delivery of goods. √√ 1  Telecommunications √ Telkom is the primary landline service provider. √√ Communications by means of cellular phone networks has grown more rapidly than landlines. √√ Messages and images can be sent via the telephone, cellphone and computers. √√  Internet and e-mail√ There are two national hubs that connect internet service providers to a single network, the Johannesburg and Cape Town internet exchange √√ Wider access to broadband, ADSL and 3G has boosted internet connectivity. √√ 15

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1  Radio √ The South African Broadcasting Corporation (SABC) is the state-funded public broadcaster. √√  Television √ The SABC operates the national television network with three full-spectrum free-to-air Channels and on a satellite pay-tv channel beamed mainly to audiences in Africa. √√  Print media √ South Africa is served by eight national, several regional and mainly local community newspapers. √√ 2 TRANSPORT √  A well-developed and reliable transport network is essential for an efficient economy. √√  It has three subsidiary companies: Spoornet; Metrorail and Transport; National Ports Authority (ports) √√  Road network √ The transport of goods by road has greatly increased in recent years and the SA National Roads Limited (SANRAL) is responsible for improving and maintaining the national roads. √√  Rail network √ Controlled by Spoornet and is mainly concerned with the transportation of goods but there are also long distance passenger services and Metrorail transports commuters in the cities. √√  Airways √ State-owned SA Airways and its subsidiaries SA Express, SA Airlink and Mango provide services internally and internationally. √√  Ports: √ Ports are divided into fishing and commercial ports √√ The Transnet-National Ports authority controls the commercial ports √√ 16

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1  Pipelines: √ Transnet provides a pipelines between Durban and Gauteng to transport liquid gas. √√  Gas is transported from Secunda in Mpumalanga to Durban and from Mozambique to Sasolburg. √√ (Accept any other relevant answer) Max. (26) Additional Part: Briefly explain how the cellphone industry assists in reducing the exclusion of the poor from telecommunications:  Cellphones are readily available √√  Cheap to run √√  Cellphones can be used even if you don’t have a fixed residential address √√  No waiting for landline connections. √√  No expensive monthly charges. √√ (Accept any other relevant answer) MAX. (10) Conclusion: Communication and transport has to be fast and efficient so that business can compete internationally and also includes information, services and people. √√ (Accept any other relevant answer) MAX. (2) [40] 17

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 QUESTION 6 ECONOMIC PURSUITS 40 MARKS – 40 MINUTES Money has evolved or developed substantially over time. It is hardly recognized in its traditional form.  Discuss all the money-associated instruments. (26 marks)  How effective is the SARB control over the activities of commercial banks in South Africa? (10 marks) Introduction: Money associated instruments are means by which payments can be made or money can be transferred other than as notes and coins. √√ (Accept any other relevant answer) Max. (2) Body: Main part Cheques √  A completed cheque is an instruction to a bank to pay a sum of money out in cash or to an individual.√√ Bank transaction cards √  Used at ATMs which replace human bank tellers in performing basic banking functions such as deposits, withdrawals and account enquiries. √√  The advantage of transactional cards include 24-hour availability, no labour costs and convenience of location. √√ Debit cards √  Used to withdraw funds electronically directly from the card holder’s account or to pay for goods or service at businesses. √√  Most debit cards require a PIN (personal Identification number) to be used to verify the transaction. √√ Credit cards √  Used to borrow money to pay for goods and services on credit. √√  Card holders normally must pay for these credit card purchases within 30 days of purchase to avoid paying interest. √√  They usually have a credit limit. √√ 18

Downloaded from hlayiso.com ECONOMICS MEMORANDUM Paper 1 Internet banking √  The process of completing financial transactions from home as opposed to having to go into the bank. √√  It can include making account enquiries √√, transferring money√√, paying accounts√√ and applying for loans. √√ Mobile banking services√  A mobile device such as a cell phone or a PDA (personal digital assistant) is used to perform balance checks, √√account transactions, √√payments, √√ credit applications, √√ and other transcations. √√ Max. (26) Additional Part: How effective is the SARB control over the activities of commercial banks in South Africa?  The SARB determines the interest rate of the commercial banks in South Africa. √√  Money supply is controlled through the occurence of open-market transactions √√  The required cash reserves are maintained by the banks. √√  The SARB determines the credit limits of commercial banks. √√  The SARB determines loan amounts through a system of credit ratings√√  Disciplinary measures such as the denial of further loans are implemented. √√  The SARB implements moral persuasion on commercial banks√√ Max (10) Conclusion The Bank Act is responsible for the regulation of the banking sector in South Africa. √√ (Accept any other relevant answer) Max (2) (40) TOTAL SECTION C: 40 GRAND TOTAL: 150 19