Economics Grade 10 Paper 1 North West June 2017 Memo

PROVINCIAL ASSESSMENT GRADE 10 ECONOMICS P1 MACRO-ECONOMICS: MEMORANDUM JUNE 2017 MARKS: 100 These marking guidelines consist of 13 pages including this cover

Economics/P1 2 NW/JUNE 2017 NSC- GRADE 10 MEMORANDUM SECTION A [COMPULSORY] QUESTION 1 1.1 Multiple Choice: 1.1.1 C (Unlimited wants and limited resources )  1.1.2 C (Scarcity ) 1.1.3 B (export and import market )  1.1.4 B (The expenditure on exports)  1.1.5 A (Negative economic growth)  (5X2) (10) 1.2 Match column A with column B: 1.2.1 C (Includes the process of formulating hypothesis)  1.2.2 E (The value of the next best alternative that has been given up.)  1.2.3 A (They are economically and socially disadvantaged.)  1.2.3 B (Tertiary education should be cheaper so that more people will be able to afford it.)  1.2.4 D (The lowest point of the economic activity before an upswing 1.2.6 G (The question of what to produce in a free-market economy is decided by ...)  (6x1) (6) 1.3 Give ONE term for each of the following descriptions .Write only the term next to the question number (1.3.1 – 1.3.6) in the ANSWER BOOK. 1.3.1 Empirical approach  1.3.2 Lagging indicator  1.3.3 GNI  1.3.4 Human Rights  (4x1) (4)

Economics/P1 3 NW/JUNE 2017 NSC- GRADE 10 MEMORANDUM TOTAL SECTION A: 20 SECTION B Answer only ONE of the TWO questions in the ANSWER BOOK. QUESTION 2: MACROECONOMICS 40 MARKS – 30MINUTES 2.1 Answer the following questions. 2.1.1 List any TWO factors of production.  Capital   Natural resources  Entrepreneurship   Labour  (Any 2 x1) (2) 2.1.2 How is business cycles measured?  A single cycle is measured from trough to trough or peak to peak.  ( 1 x 2) (2) 2.2 Data Response 2.2.1 Identify the elements of economics in the extract?  Equity   Efficiency  (Any 1 x2) (2) 2.2.2 Quote a statement that shows the importance of economics?  In order to solve the problems of equity, sustainable development and human security.  (2) 2.2.3 Why do economists use theories and models?  To provide constraints and limitations and is usually a replica of a real situation and allows assumptions to be made and different scenarios to be acted out.   To understand how the economy works and to make forecasts.  (Any 1 x2) (2) 2.2.4 Explain the difficulties faced by the social sciences.  Social sciences are difficult to study as they involve human behaviour, which is affected by many external factors.   The environment and society are constantly changing and this influences human behaviour and decisions.  (2 x 2 ) (4)

Economics/P1 4 NW/JUNE 2017 NSC- GRADE 10 MEMORANDUM 2.3Study the cartoon below and answer the questions that follow: 2.3.1 What is depicted in the cartoon?  Expansion stage.  (Any 2 x 1) (2) 2.3.2 Name one positive effect mentioned above?  Economic growth   Low unemployment   Prices rise   Investent increased (Any 2 x 1) (2) 2.3.3 What does the highest turning point of the business cycle called?  Peak  (2) 2.3.2 Why business cycle indicators are important?  They identify business cycle that have past.   They identify current business cycles  They predict future business cycles (3x2)(6) 2.4 Differentiate between normative and positive statements, give an example for each. Positive statement Normative statement Factal statements which focus on Statements which focus on what what is? ought to be. It is an objective statement about It is a subjective statement that what exists. describes how something should be . E.g A cut in personal income tax E.g People who earns high incomes will increase consumption ought to pay more income tax than spending. people who earn low incmes. (2 x4) (8) 2.5 What will be the impact of changes in the price levels and the changes in employment as the effects of business cycles. Changes in price levels  The level of prices change as the demand for and supply of goods and services increase and decrease. 

Economics/P1 5 NW/JUNE 2017 NSC- GRADE 10 MEMORANDUM  When the price of goods and services increase the value of money decreases.   When the value of money decreases, people can buy less with the money they earn.  Changes in employment  During a downswing, there is less production and less need for labour.   An upswing leads to the hiring of more workers because of the increased productivity.   E.g more wage workers in the car –production industry will be hiredwhen production increases.  (2x4)(8) [40] Question 3 3.1 3.1.1 Name any TWO flows in the economic circular flow.  Real flow   Money flows (2x1) (2) 3.1.2 How to solve an economic problem?  What to produce  How to produce   For whom to produce. (Any 1 x 2) (2) 3.2 3.2.1 List TWO examples of leakages from the information provided in the table.  Savings  Tax revenue   Total imports  (Any 2x1)(2) 3.2.2 Determine the total amount of injections for 2015. Injections = investments + Government Expenditure + Total Export  = 310 +310 + 210 = 830 (4) 3.2.3 Explain the difference between GDP and GNI

Economics/P1 6 NW/JUNE 2017 NSC- GRADE 10 MEMORANDUM GDP is the value of all final goods and services produced within the boundaries of the country within a given period,  while GNI is the total annual income from interest ,profit and salaries and wages.  (4) 3.3 Data response 3.3.1 Identify the type of consumer goods that are imported?  Non- durable consumer goods.  (1) 3.3.2 In which month was consumption spending on durable goods the lowest?  June 2016 (2) 3.3.2 Give TWO reasons for decline mentioned in 3.3.1  Variety of goods produced in the country.   Import restrictions  Consumer’s purchasing power declined.   Job losses   Depreciation of rand against major currencies.  (Any relevant answer 2x2)(4) 3.3.3 Which month shows higher imports of non-durable consumer goods and how does it affect the economy of the country?  September 2016 and it will affect the economy of the country negatively because there will be more outflow of money.  3.4 Explain leakages and injection in the circular flow model.  Leakages are money that flows out of the circular flow.   Consumers spend only part of their income; the rest is withdrawn from the circular flow in the form of leakages.   Examples are savings, taxes and payments for imports.   Injections are money from outside entering the circular flow.  Examples are investment, government expenditure and export expenditure.  (Any 2x4)(8) 3.5 Critically discuss the possible solutions to reduce enviromental problems.  Government could impose tax on production of goods and on how they

Economics/P1 7 NW/JUNE 2017 NSC- GRADE 10 MEMORANDUM affect the environment.   Producers will have to decrease their pollution to make sure that they keep the cost of their product down.   Governments are starting to put measures in place to stop or reduce the amount of pollution within their countries.   As more people become aware of the damage to the enviroment they are taking action and taking part in programmes to help restore the damage done and to improve the enviroment around them.   Cleaner and safer technology is being developed with the environment in mind.   Less waste products, decreased reliance on fossil fuels and a demand by producers for efficient and environmentally safe technology are giving rise to new products and environmentally safe machines.  (Any 4 x 2) (8) TOTAL SECTION B: 40

Economics/P1 8 NW/JUNE 2017 NSC- GRADE 10 MEMORANDUM SECTION C Answer only ONE question from this section. STRUCTURE OF THE ESSAY MARK ALLOCATION Introduction Max .2 Body : Max.26 Main part: Discuss in detail / In –depth discussion /Examine /Critically discuss/Analyse/Compare/Evaluate /Distinguish/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 Conclusion Max.2 TOTAL 40 QUESTION 4 When you are shopping for groceries you become part of the circular flow of the economy.  Discuss the economic participants in a closed economy. (26)  Explain the importance of factor market and goods market (10) INTRODUCTION A closed economy shows how households, businesses and the public sector interact in the absence of a foreign sector. The circular flow diagram is a way of showing the flows that occur between these participants. (Max. 2) BODY: MAIN PART The participants: Households   Households directly and indirectly own the factors of production.   They sell these factors of production to firms in rerurn for remuneration.   They earn a money income in exchange for their services. 

Economics/P1 9 NW/JUNE 2017 NSC- GRADE 10 MEMORANDUM  They satisfy their needs and wants through consumption of goods and services which they purchase from the business.  (Max. 9) Firms / Businesses   Firms are the basic productive unit in the economy.   Businesses purchase the factors of production from households in the factor market.   They use the factors of production to produce goods and services.   They then sell these in the product market to households.  (Max. 9) Government /Public sector   The public sector is the part of the government that owns, produces, allocates and supplies certain goods and services to its citizens.   It receives revenue from the taxes that households and businesses pay the government.   It spends this providing merit goods and services that are not provided by businesses.   They are the buyers in the factor market and they are sellers in the product market.  (Max. 9) ADDITIONAL PART Factor Market  Factor market is the market in which the main four factors of production are sold /traded.   Labour is hired   Capital is borowed  Property is rented   Entrepreneurs offer services.   These factors of productionearn wages, interest ,rent ,and profits.  (Max 5) Product market  Product market refers to the market where busines enterprises sell goods and services.   Businesses sell goods and services to households, firms and public enterprises.   Product market can be divided into the folowing sectors, i.e primary sector, secondary and tertiary sector.  (Max 5) Conclusion

Economics/P1 10 NW/JUNE 2017 NSC- GRADE 10 MEMORANDUM While the circular flow diagram is a simplification of reality, and a closed economy is unlikely to exist in our era of gloablisation, understanding the real flows and money flows that occur in such a situation is an important foundation for understanding more complex economies.  (Max .2) [40] QUESTION 6 Every country experiences cyclical patterns in its economy.  Discuss in detail the stages of a business cycle with the aid of a diagram. (26)  Evaluate the endogenous reasons for changes in the business cycle. (10) Introduction Business cycle is consecutive periods of increasing and decreasing economic activity.  (Max. 2) Main Part An ordinary phase has four stages they are analysed in –order they appear in the diagram. 1. Recession stage  This is the phase following the boom.   Businesses start to realise they have to provide for bad times.   They start to reduce inventories. 

Economics/P1 11 NW/JUNE 2017 NSC- GRADE 10 MEMORANDUM  They repay loans and reduce their workforce.   Eventually profits come under pressure.   High accelerating inflation force interest rates upwards.   Consumer budgets become under pressure.   They reduce expenditureand void taking up credit.  Max 7marks 2. Depression stage   Business and households become pessimstic.   Banks call up credits.   Bankruptcies increase; houses, furnitures and cars are reposessed.   Unemploymet increases.  Max 7 marks 3. The recovery stage   Tight monetary conditions eventually become successful in reducing inflation.  Business realise that conditions are going to improve and they take stepsthat raise productivity.   Production and inventories increases.   Economic activities revive and more workers are employed.   Households’ incomes increases and so does consumption expenditure.  Max 7 marks 4. The prosperity /boom stage   Entrepreneurs borrow money and buy new machinery and equipment.   More people are employed.   Factories work overtime and skilled labour become extremely scarce.   Skewed businesses realise that this phase cannot last forever.   Inflation increases continously.  Max 5marks Max 26 marks Additional part Endogenous reasons are internal reasons over which the country has greater control. Actual reasons for changes in business cycle are those mainly caused by changes in micro and macro enviroments,  such as changes in demand and supply /quality of factors of production/political changes that have a direct impact on business opportunities/ changes in climate that may impact on natural resources /changes in time taken between the production and consumption of a good /technological developments.  (Max 3)

Economics/P1 12 NW/JUNE 2017 NSC- GRADE 10 MEMORANDUM Monetary reasons for the changes in business cycle are those caused by money supply and interest rates  such as changes in interest rates /changes in deman for credit /changes in the value of money /inflation. (Max 3) Psychological reasons for changes in business cycle are those caused by perceptions, personality and confidence such as business expectations /investor confidence /consumer confidence. (Max 3) Conclusion The analysis above shows a cycle under “normal” conditions, however modern economic policies succeed in preventing deep depression and boom that end in extreme conditions. (Max. 2) TOTAL SECTION C: 40 GRAND TOTAL: 100