Economics Grade 12 LP SE March Test 2026 Paper & Memo

Downloaded from Stanmorephysics.com Bice LIMPOP©® PROVINCIAL GOVERNMENT IC OF SOUTH APRICA, DEPARIMENT OF EDUCATION SEKHUKHUNE EAST EDUCTION DISTRICT NATIONAL SENIOR CERTI GRADE ieee TS = ECONOMICS CONTROLLED TEST " F 19 MARCH 2026 ‘ : QUESTION PAPER ‘ ! " eee Ssennorephysics.com Tne MARKS: 100 DURATION: 1.5HRS Copyright reserved

Feomawneaded Tesiom Stanmorephyesiagu6ortist/19 March 2026 INSTRUCTIONS AND INFORMATION 1. Answer THREE questions as follows in the ANSWER BOOK: SECTION A: COMPULSORY SECTION B: Answer ONE of the TWO questions. SECTION C: Answer ONE of the two questions. 2. Answer only the required number of questions. Answers in excess of the required number will NOT be marked. 3: Number the answers correctly according to | question paper. — bering system used in this \ 4. Write the question number above eat 5. Read the questions carefully. Hy 6. Start EACH question on a NEW page. 7. Leave 2-3 lines between subsections of questions. 8. Answer the questions in full sentences and ensure that the format, content and context of your responses comply with the cognitive requirements of the questions. 9. Use only black or blue ink. 10. You may use a non-programmable pocket calculator. 11. Write neatly and legibly.

Feomawneaded Tesiom Stanmorephyesiagu6ortist/19 March 2026 SECTION A (COMPULSORY) QUESTION 1 20 MARKS 4A Various options are provided as possible answers to the following questions. Choose the answer and write only the letter (A-C) next to the question number (1.1.1-1.1.5) in the ANSWER BOOK, for example 1.1.6 B. 1.1.1 Spending that is dependent on income is a (an) ----consumption. A households B induced 4 C domestic ry 4 D autonomous | Sail 4 A business cycle that rem¢ e effect of irregular events A _ kitchen cycle B juggler cycle C real business cycle D__ kuznets cycle Government policy through taxation and government spending in order to regulate the economy is called...policy A fiscal B- monetary C protection D foreign exchange The ratio of export prices compared to import prices is known as the A Exchange B Terms of trade C Balance of payment D appreciation Withdrawal of capital investment from a company or a country is called---- A embargo B — sanction C__ investment D_— disinvestment (5x2) 10

Fooawndended Tksom Stanmorephysiagucortst/19 March 2026 1.2 Choose a description from COLUMN B that matches an item in COLUMN A. Write only the letter (A-G) next to the question number (1.2.1-1.2.5) in the ANSWER BOOK. COLUMN A COLUMN B 1.2.1 Expenditure on A Increase of the price of a currency GDP 1.2.2 Extrapolation B_ When government fails to manage its people 1.2.3 Public sector failure | C State-owned enterprises that provide public goods and service on behalf of government 1.2.4 Appreciation D When government fails to manage an economy and the resources under its contro! optimally 1.2.5 Open market E Total expenditure on final goods and transaction services produced within the borders of the country F_ Itinvolves SARB actions to control money supply G_ to estimate something unknown from fact that are known (6x1) (5)

Ecoomawideaded tesom Stanmorephyaiasusorist 19 March 2026 1.3 Give ONE term for each of the following descriptions. Write only the term next to the question number (1.3.1—1.3.5) in the ANSWER BOOK. Abbreviations, acronyms and examples will NOT be accepted. 3/1 Small initial change in spending produces a proportionately larger increase in national income 1.3.2 The distance from the trend line to the peak and trough 43.3 Goods such as cigarettes which are deemed to socially harmful 1.3.4 International organisation, that sien _money to countries with ongoing balance of 1.3.5 The item that is used accounts. and omissions on national (5x1) 5 TOTAL SECTION A: 20

Ecoomawideaded tesom Stanmorephyaiasusorist 19 March 2026 SECTION B Answer ONE of the TWO questions in this section in the ANSWER BOOK. QUESTION 2: MACROECONOMICS 40 MARKS 2:1 Answer the following questions. 2.1.1 Give any TWO examples of injections. (2x1) (2) 2.1.2 Why government expenditure is regarded an injection in the economy? 5 (1x2) (2) 2.2 2.2 Study the table below and al ™ ‘tl ue ions that follow. GOVERNMENT HOUSEHOLDS SOURCE; GOOGLE 2.2.1 Identify the primary participant from the diagram above. (1) 2.2.2 Name the main source of government revenue. (1) 2.2.3 Briefly describe the term circular flow. (2) 2.2.4 Explain the effect of an increase in savings on aggregate demand (2) 2.2.5 How can interest rates be used to smooth business cycles? (2x2) (4)

Ecoomawideaded tesom Stanmorephyaiasusorist 19 March 2026 2.3 Study the diagram below and answer the questions that follow. Business cycles Business Cycle eee ty Recession Depression 2341 Identify the period in which the level of economic activities start to decrease 2:3:2 How the length of business cycles is measured? 2.3.3 Briefly describe the term business cycle 2.3.4 What happens to prices when the economy is in a trough? 2.3.5 How can the government through fiscal policy stabilise the economy in a boom period 2.4 How can the reserve bank use open market transaction to curb inflation ? 2:5 How can households, as important participant in the circular flow model, contribute in building the economy? (4 x 2) QUESTIION 3 3.1 Answer the following questions. 3.1.1 Name TWO methods of calculating Gross Domestic Product (2x1) (2) 3.1.2 How will a decrease in VAT affect poor people in South Africa? (1x2) (2) (1) (1) (2) (2) (4) (8) (8) [40]

Feohawneaded Tesom Stanmorephyesiagu6ortist/19 March 2026 3.2 Study the extract below and answer the questions that follow. SA CURRENT-ACCOUNT GAP BEATS FORECASTS ON DIVIDEND PAYOUT South Africa’s current-account deficit widened more than expected in the fourth quarter of 2023 due to dividend and interest payments. The overall balance on the current account, the broadest measure of trade in goods and services, expanded to an annualised deficit of 2.3% of gross domestic product, or R166 billion ($8.8 billion), from a revised 0.5% of GDP in the prior quarter, the South African Reserve Bank said in a statement on Thursday. The deficit meant the full-year shortfall was 1.6% of GDP, the deepest in four years. Source: MoneyWeb 3.2.1 Identify the budget deficit for the year 2023 in the extract above. (1) unique to the South African. (1) 3.2.3 Briefly describe the term Balance of Payment. (2) 3.2.2 Name the item in the current account that is 3.2.4 What is the impact of increased imports on economic growth? (2) 3.2.5 How does the value of minerals such as gold influence the value of the current account? (4) 3.3 Study the diagram below and answer the questions that follows FOREIGN EXCHANGE MARKETS } D1 x D = g § R190 ono ee -—5 . g H 2 \ OQ R1B.70 0 Preset enn ====5 1 H H s ' H Di H 1 D i | . 0 on an Quantity of Dollars (Millions) 3.3.1 Identify the original equilibrium point in the graph above. (1) 3.3.2 Which type of exchange rate system uses demand and supply to determine the exchange rate? (1) 3.3.3 Briefly describe the term devaluation. (2)

Ecosanrdeadad tksiom StanmorephymiaguGorist/19 March 2026 (2) 3.3.4 Explain the effect of a depreciation of the rand on exports. 3.3.5 Why is necessary for government to improve efficiency in state -owned enterprise? 3.4 Briefly explain how balance of payment disequilibria can be corrected. (4x2) (8) 3.5 How does the free exchange rate policy promote international trade? (4x2) (8)

Fooawndended Tksom Stanmorephysiagucortst/19 March 2026 QUESTION 3: SECTION C 40 MARKS Answer only ONE of the two questions in this section in the ANSWER BOOK. STRUCTURE OF THE ESSAY: MARK ALLOCATION: Introduction Max. 2 Body: Main part: Discuss in detail/In-depth discussion/Examine/ Max. 26 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/Déduce/ Compare/Explain/Distinguish/Interpret/Briefly debate Conclusion Max. 2 TOTAL 40 QUESTION 4: MACROECONOMICS 40 MARKS e Discuss in details the features underpinning forecasting of business cycle e What impact will South Africa's policy on land expropriation without compensation have on the agricultural sector? QUESTION 5: 40 MARKS - 35 MINUTES e Discuss in detail the objectives of the public sector. e How can the government reduce public sector failure more efficiently? TOTAL SECTION C: GRAND TOTAL: (26) (10) [40] (26) (10) [40] [40] 100

Downloaded from Stanmorephysics.com PROVINCIAL GOVERNMENT REPUBLIC OF SOUTH AFRICA DEPARTMENT OF EDUCATION SEKHUKHUNE EAST EDUCTION DISTRICT i ECONOMICS CONTROLLED TEST " 19 MARCH 2026 D MARKING GUIDELINE Seem e meee eee eee MARKS: 100 DURATION: 1.5HRS

Ecohtomeslasteudafexm Stanmorephysics.com sekhukhune East /19 March 2026 SECTION A (COMPULSORY) QUESTION 1 1.1. MULTIPLE-CHOICE QUESTIONS 1.1.1 B-induced vv 1.1.2 C-—real business cycle vv 1.1.3 A-—fiscal Policy vv 1.1.4 B- terms of tradevv 1.1.5 D- disinvestment vv ) | (5x2) (10) 1.2 MATCHING ITEMS 1.2.1 E-total expenditure on final goods and services produced within the borders of the countryY¥ 1.2.2 G-— to estimate something unknown from the facts that are known ¥ 1.2.3 D- when government fails to manage an economy and the resources under its Control optimally~ 1.2.4 A-— anincrease in the price of a currencyY 1.2.5. F- itinvolves SARB action to control money supply.” (5x1) (5) 1.3. GIVE THE CONCEPT 1.3.1. Multiplier effect “ 1.3.2 Amplitude v 1.3.3 Demerit goods Vv 1.3.4 International monetary fundY 1.3.5 residual valuev (5x 1) (5) TOTAL SECTION A: 20 SECTION B Copyright reserved

Downloaded from Stanmorephysics.com NSC — Marking guidelines Answer any ONE of the TWO questions in this section in the ANSWER BOOK. QUESTION 2: MACROECONOMICS 2.1. Answer the following questions. 2.1.1 Name TWO examples of injections. ¢ Government spendingY — e InvestmentsY (2x1) (2) 2.1.2 Why government expenditure is regarded as an injection in the economy? e Government spends money on public goods and services which are additional to the circular flowy ¥ (Accept any other correct relevant response (1x2 (2) 2.2. DATA RESPONSE 2.2.1. Identify the primary participants from the diagram? Household ~ (1) 2.2.2 Name the main source of government revenue Taxes /taxationY (1) 2.2.3 Briefly describe the concept circular flow. Circular flow is the continuous flow of spending, production and income between different sectorsv ¥ (Accept any other correct relevant response) (2) 2.2.4 Explain the effect of an increase in savings on aggregate demand? An increase in savings result in decrease in disposable income therefore decreasing aggregate demand in the circular flowy ¥ (Accept any other correct relevant response) (2) Copyright reserved Please turn over

ERRORAISEACE" FP Stanmorephysics.com Sekhukhune East /19 March 2026 2.2.5 How can interest rates be used to smooth business cycles? (4) e The central bank must increase interest rates in order to discourage credit creation. Cost of credit becomes too expensive, reducing money supply and aggregate supply. v or e~ The central bank must decrease interest rates in order to encourage credit creation. Cost of credit becomes too cheap, increasing money sUpply and aggregate supply. v ¥ 2.3 DATA RESPONSE 2.3.1 Identify the period in which the level of economic activities start to decrease. onht RecessionY (1) 2.3.2 How is the length of business cycles measured? Trough to troughY or peak to peak¥ any 1x1 (1) 2.3.3 Briefly describe the term business cycle A time series showing repeated increasing and decreasing economic activityY V (2) (Accept any other correct relevant response) 2.3.4 What happens to inflation during a trough? Inflation is low Vv (Accept any other correct relevant response) (2) 2.3.5 How can the government through fiscal policy stabilise the economy ina boom phase? e Government can increase direct taxes thereby affecting a decrease In income and consumptiony v e Government can increase indirect taxes thereby affecting a decrease in price and consumption” ¥ - or government can use contractionary and restrictive measuresv ¥ (Accept any other correct relevant response) any 2x2 (4) 2.4 How can reserve bank use open market transaction to curb inflation e The reserve bank must apply contractionary monetary policy by selling government bonds and securities on the open market. vv Copyright reserved

Dowyleaded from Stanmorephysics.com ¢ — Selling government bonds will be a leakage of money from commercial banks to the reserve bank leaving commercial banks with less money to use for credit creation. vv e Aggregate demand and spending will both decrease leading to decrease in inflation. vv (Accept any other correct relevant responses) (8) 2.5How can households, as important participant in the circular flow model, contribute in building the economy? | e Households can sell their factors of | auction at lower rates to help lower inflation rate and build the economyY¥ e Households can limit labour unrest and strike where they usually claim unrealistic wage /salary increasesv ¥ e They can increase their savings and contributed indirectly to increased production in the manufacturing sectorY Vv e They can limit their spending on luxury goods that will limit the aggregate demand and stabilise pricesY ¥ (Accept any other correct relevant response) (8) [4 QUESTION 3: 3.1. Answer the following questions. 3.1.1 Name two methods of calculating Gross Domestic Product e income method v e expenditure method v e production method Any (2x 1) (2) 3.1.2 How will a decrease in VAT affect poor people in South Africa? e Poor people will be able to buy more goods and services as they will be affordablev ¥ (Accept any other relevant response) 1x2 (2) 3.2 DATA RESPONSE 5|Page

ERRORAISEACE" FP Stanmorephysics.com Sekhukhune East /19 March 2026 3.2.1 Identify the budget for the year 2025 in the extract above. © 16V (1) 3.2.2 Name the item in the current account that is unique to the south African economy? e Net gold export v (1) 3.2.3 Briefly describe the term Balance of Payment e BoP is the statement record of all transaction between South Africa and all other countries of the world ,over time vv (Accept any other correct relevant’ response) (2) 3.2.4 What is the impact of increase imports on economic growth? e An increase in imports may reduce economic growth since it causes a decline in local aggregate demand VY (Accept any other correct relevant response) (1x2) (2) 3.2.5 How does the value of minerals such as gold influence the value of the current account? reph e An increase in the value of gold can improve the current balance as gold share index will rise.” (Accept any other correct relevant response) 2x2 (4) 3.3. DATA RESPONSE 3.3.1 Identify the original equilibrium point in the graph above. e Ev 1x1 (1) 3.3.2 Which type of exchange rate system uses demand and supply to determine exchange rate? e Freefloatingexchangeratesystem Vv (1) (accept any other correct relevant response) 3.3.3 Briefly describe the term devaluation e Devaluation refers to the deliberate decrease in the currency in terms of another currency as a result of intervention by central bank¥ ¥ (Accept any other correct relevant response) (2) 3.3.4 Explain the effect of a depreciation of rand on exports? e When the rand depreciates exports become cheap in forign countries and that may cause an — inthe number of exports Vv (Accept any other correct relevant response) Any1x2 (2) 3.3.5 Why is necessary for government to improve efficiency in state -owned enterprises? Copyright reserved

Dowyleaded from Stanmorephysics.com ¢ There will be improvement in standard of living of people as they will offer service to the people Vv e Government will not spend lot of money on bailing them outY ¥ - Job creation’ ¥ - Economy will growy ¥ (Accept any other correct relevant answers) (2x2) (4 3.4 Briefly explain how balance of payment gisgullibria can be corrected. o Lending and borrowing¥ o Countries with surpluses often lend money to countries with deficitv Vv o Countries with deficits borrow and make them to have much foreign debtv v o Countries may borrow money from international monetary fundv ¥ Change in exchange rateY srephf o Currency depreciation or devaluation makes imports more expensive for domestic consumers 3.5How does the free exchange rate policy promote international trade ? e The free exchange rate policy makes it possible for consumers and businesses to import and export goods from other countries through the availability of foreign currencies in the foreign exchange markets. vv e This policy makes foreign currencies freely available to private individuals and companies who want to invest in foreign countries. v v (Accept any other correct relevant responses) (2x4) (8) QUESTION 4: MACROECONOMICS 40 MARKS e Discuss in details the features underpinning forecasting of business cycle (26) e What impact will South Africa's policy on land expropriation without (10) compensation have on the agricultural sector? [40] INTRODUCTION e Business cycle refers to the increase and decrease (fluctuations) in economic activities vv BODY FEATURES UNDERPINNING BUSINESS CYCLE FORECASTING 7|Page

ERO MASCACE FP 6H Stanmorephysics.com Sekhukhune East /19 March 2026 Leading indicators v e They are indicators that change before the economy gets changed. vv e They tell of how the economy will be in the coming months. v ¥ e When they rise, it means the economic activity will rise in the next few months. Vv e When they decline it also means the level of economic activity will decline in the coming months. Vv e Examples include number of residential plans passed, Number of job advertisements, number of new companies registered v Coincident indicators v e They are indicators that change at the same time as the economy changes. v Vv e A downturn is shown by a decrease in these indicators while an upswing is shown an increase in these indicators. vv e Examples of coincident indicators are: usage of capacity in manufacturing, registered unemployment, Retail sales, real merchandise imports. v Lagging indicators v e They are indicators that change after the economy has already changed. vv e They reach the turning point after the business cycle has already turned. v ¥ e They are used to confirm the changes predicted by the leading indicators. vv e Examples of lagging indicators are: number of commercial vehicle sold, real investment in machinery, unit labour cost in manufacturing v Composite indicatoryY e tis the summary of group of indicators of the same type into a single value. vv e This means all the values of the leading indicators are summarised, the same is done with coincident and lagging indicators. vv Extrapolation v e Means to estimate something unknown from facts or information that is known. vv e For example, if it becomes clear that the business cycle has passed through a trough and has entered a boom phase, forecasters might predict that the economy will grow in the few months” Length of the cycle v e tis the time that the economy takes to move from one peak to another peak or one trough to another trough. vv e Some business cycles last for a brief time while other can take up to 50 years. Vv Copyright reserved

Dowyleaded from Stanmorephysics.com e Shorter cycles represent a weaker cycle and longer lengths represent a stronger cycle. vv Amplitudev e Measures the distance from trend line to the next turning point such as from trend line to peak or trough. vv « —Large amplitude represents strong underlying forces of the economy at large. v Vv Trend line v e It shows the general direction in which the economy is moving v Vv ADDITIONAL PART e Many South African farmers will be negatively atected by land expropriation without compensation. vv ae e Some farmers are still owing banks money they borrowed when they buy land for agricultural purposes. VV e As aresult, they will still be expected to do monthly repayments of loans. VW e These can lead to some farmers being bankrupt and leave the agricultural sector. vv e The total production in the agricultural sector will decrease. Vv e Prices of agricultural products will increase and consumers will be forced to pay high prices. vv (Accept any other correct and relevant response) MAX. (10) CONCLUSION e Understanding of business cycle will help policy makers to apply correct polices that will help boost the development of the economy while reducing inflation rate and unemployment and this will allow participants in the economy to specialise in economic activities of their choicev Vv (Accept any other correct and relevant response) QUESTION 5 Discuss in detail the main objectives of the public sector in the economy. How can the government reduce public sector failure more efficiently? INTRODUCTION The state is a body that governs and regulates the functioning of its economy and also plays a paternal role in providing its economy with its basic and important needs. vv (Max. 2) 9|Page

ERO MASCACE FP 6H Stanmorephysics.com Sekhukhune East /19 March 2026 BODY: MAIN PART uf Full employment ” Full employment is a condition where all 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 27.6%.v v Employment increases due to the contribution of the informal sector. Vv ¥ The rate of unemployment has ull, increased in South Africa over the years. vv The GEAR strategy was implemen ine government with the purpose to create a climate conducive to employment creation mainly by the private sector, VV . Economic growthy Economic growth is referred to as an increase in the production of goods and services produced by the country in a specified period. vv Economic growth is measured in real GDP. v ¥ For economic growth to occur, economic growth rate must be higher than population growth rate. vv Economic growth if used for the purposes of development, improves the economic welfare of the country's inhabitants. vv . Price stability v The SARB has implemented a policy of keeping inflation within the targeting rate of 3-6%. vv Market economies produce better results in terms of growth and development if the inflation rate is stable. vv Interest rates are the main instrument used to stabilise prices. vv The stable budget deficit also has a stabilising effect on the rate of inflation. Vv Economic equity Vv Redistribution of income and wealth is essential in the market economies. 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 stabilityy” 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. Copyright reserved

Dowpilea ded from Sta nmorephysics.com (Max. 26) ADDITIONAL PART How can the government reduce public sector failure more efficiently? The government could reduce public sector failure by: Providing leadership and training to management and employees. vv Recognising employee worker performance through incentives, vv e.g. reward on excellent service. ¥ Eliminating corruption through regular monitoring, v Administering flexible business proce ) ace differences. vv * Employing different strategies to ensure Sé turn-around time. Vv , (Accept any relevant and correct answer e.g. auditing. ¥ modate individual fice delivery, v V e.g. set targets, (Max. 10) CONCLUSION It is very important that the state improves its functioning from time to time to avoid the economy's instability so as to bring about desired development. vv (Accept any other relevant conclusion) (Max. 2) W|Pag