Economics Grade 12 P1 NSC November Mock 2026 Memo (English)

hlayiso mock exams Practice Series: Grade 12 NSC Preparation WWW.HLAYISO.COM NATIONAL SENIOR CERTIFICATE GRADE 12 ECONOMICS P1 MOCK EXAMINATION 2026 MARKING GUIDELINES MARKS: 150 These marking guidelines consist of 18 pages. Copyright reserved Please turn over

Economics/P1 2 Hlayiso/Mock 2026 NSC – Marking Guidelines PRINCIPLES FOR MARKING ECONOMICS (HLAYISO MOCK 2026) • Mark ALL responses in the candidate’s script, whether correct or incorrect. • Where a candidate gives more responses than required: in Section A mark the FIRST response only; in 2.1.1, 3.1.1 and 4.1.1 mark the first TWO responses only; in Sections B and C (choice questions) mark only the required number of questions and write EXTRA on any additional question. • Use ONE tick (✓) for each mark awarded, placed at the fact being credited. Use a neat cross for incorrect responses. • One-word answers are acceptable for: list, name, state, identify. FULL sentences are required for: describe, explain, evaluate, analyse, suggest, differentiate, distinguish, define, discuss, why, how. The words provide, what, tabulate, identify and give are read in context. • Calculations: 3 marks for the method/workings and 1 mark for the correct final answer. • Graphs are marked according to the allocation of marks given in these guidelines. • Accept responses that are correct and relevant but expressed differently. Spelling errors are not penalised if the meaning is clear. • In multiple-choice questions, accept the correct answer written in words instead of the letter. • Record the sub-total of each sub-question in the right margin and transfer question totals to the cover of the answer book. Copyright reserved Please turn over

Economics/P1 3 Hlayiso/Mock 2026 NSC – Marking Guidelines SECTION A (COMPULSORY) QUESTION 1 30 MARKS – 20 MINUTES 1.1 MULTIPLE-CHOICE QUESTIONS 1.1.1 C – trough ✓✓ 1.1.2 A – gross national product ✓✓ 1.1.3 D – regressive ✓✓ 1.1.4 B – consume ✓✓ 1.1.5 C – current account ✓✓ 1.1.6 D – cheaper ✓✓ 1.1.7 A – National Development Plan ✓✓ 1.1.8 B – developed ✓✓ (8 x 2) (16) 1.2 MATCHING ITEMS 1.2.1 F – the distance between the trend line and a peak or a trough of a business cycle ✓ 1.2.2 C – spending that is added to the circular flow, such as investment and exports ✓ 1.2.3 A – a technique used to smooth out short-term fluctuations in time-series data ✓ 1.2.4 D – the ratio of the prices of exports to the prices of imports ✓ 1.2.5 B – geographically designated areas that offer incentives to attract investment in targeted industries ✓ 1.2.6 I – selling goods in a foreign market at a price below the cost of production ✓ 1.2.7 G – a composite indicator of life expectancy, education and income ✓ 1.2.8 H – the use of government spending and taxation to influence economic activity ✓ (8 x 1) (8) 1.3 GIVE THE TERM 1.3.1 Length (of the business cycle) ✓ 1.3.2 Indirect taxes ✓ 1.3.3 Budget deficit ✓ 1.3.4 Import quota ✓ 1.3.5 Free trade ✓ 1.3.6 Infant mortality rate ✓ (6 x 1) (6) [30] TOTAL SECTION A: 30 Copyright reserved Please turn over

Economics/P1 4 Hlayiso/Mock 2026 NSC – Marking Guidelines SECTION B QUESTION 2: MACROECONOMICS 40 MARKS – 30 MINUTES 2.1.1 Name any TWO components of aggregate expenditure. • Consumption expenditure by households (C) ✓ • Investment spending by businesses (I) ✓ • Government spending (G) ✓ • Net exports (X – M) ✓ (2 x 1) (2) 2.1.2 How can a decrease in interest rates affect investment spending by businesses? Lower interest rates reduce the cost of borrowing, so businesses borrow more to buy capital goods and investment spending increases ✓✓ (Accept any other correct relevant response) (1 x 2) (2) 2.2.1 Identify the turning point labelled A. Peak ✓ (1) 2.2.2 Name the measurement labelled C. Amplitude ✓ (1) 2.2.3 Briefly describe the term recession. A phase of the business cycle in which real GDP declines for at least two consecutive quarters ✓✓ (Accept any other correct relevant response) (2) 2.2.4 Explain the importance of the trend line in forecasting business cycles. The trend line shows the general direction (long-term growth path) in which the economy is moving, so it can be extended (extrapolated) to predict future economic activity ✓✓ (Accept any other correct relevant response) (2) 2.2.5 How can the government use fiscal policy to stimulate the economy during a recession? • By increasing government spending on infrastructure, which creates jobs and raises aggregate demand ✓✓ • By reducing personal income tax so that households have more disposable income to spend ✓✓ • By reducing company tax so that businesses have more funds to invest ✓✓ • By increasing transfer payments, e.g. social grants, to boost consumer spending ✓✓ • By running a budget deficit to inject spending into the economy ✓✓ (Accept any other correct relevant response) (2 x 2) (4) Copyright reserved Please turn over

Economics/P1 5 Hlayiso/Mock 2026 NSC – Marking Guidelines 2.3.1 Identify the sector that made the largest contribution. Tertiary sector ✓ (1) 2.3.2 Name ONE other method of calculating GDP. • Expenditure method ✓ • Income method ✓ (1) 2.3.3 Briefly describe the term gross value added. The value of output of a sector/business minus the value of the intermediate goods and services used in production ✓✓ (Accept any other correct relevant response) (2) 2.3.4 Explain why subsidies on products are subtracted when GDP at market prices is calculated. Subsidies lower the market prices of products below their production cost, so they must be subtracted to avoid overstating/to reflect the actual market value of output ✓✓ (Accept any other correct relevant response) (2) 2.3.5 Calculate the GDP at market prices (A). GDP at market prices = GVA at basic prices + taxes on products – subsidies on products = R6 340 bn + R790 bn – R60 bn ✓ ✓ ✓ = R7 070 billion ✓ (4) Copyright reserved Please turn over

Economics/P1 6 Hlayiso/Mock 2026 NSC – Marking Guidelines 2.4 Briefly discuss the Keynesian and the monetarist explanations of business cycles. Keynesian explanation • Keynesians believe that markets are inherently unstable and that business cycles are caused by changes in aggregate demand ✓✓ • Changes in any component of aggregate demand (C, I, G, X – M) are magnified by the multiplier, causing upswings and downswings ✓✓ • Changes in the money supply affect interest rates, which influence investment and consumption ✓✓ • Keynesians support active government intervention through fiscal and monetary policy to smooth out business cycles ✓✓ (Max. 4) Monetarist explanation • Monetarists believe that markets are inherently stable and that business cycles are mainly caused by government interference ✓✓ • Changes in the money supply by the central bank (e.g. sudden changes in interest rates) disturb the economy and cause cycles ✓✓ • An excessive increase in the money supply leads to inflation, while a decrease leads to a slowdown in economic activity ✓✓ • Monetarists prefer limited government intervention and a steady, predictable growth in the money supply ✓✓ (Max. 4) (Accept any other correct relevant response) (A maximum of 4 marks may be allocated for mere listing of facts/examples) (2 x 4) (8) Copyright reserved Please turn over

Economics/P1 7 Hlayiso/Mock 2026 NSC – Marking Guidelines 2.5 How can a depreciation of the rand impact the South African economy? • South African exports become cheaper for foreign buyers, so export earnings increase ✓✓ • Imports become more expensive, which encourages South Africans to buy locally produced goods ✓✓ • Higher exports and lower imports may improve the current account of the balance of payments ✓✓ • Increased production of exports and import substitutes may create jobs and stimulate economic growth ✓✓ • South Africa becomes a cheaper destination for foreign tourists ✓✓ • However, imported inputs such as oil become more expensive, which may lead to cost-push inflation ✓✓ • The cost of servicing foreign debt increases for the government and businesses ✓✓ (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (4 x 2) (8) [40] QUESTION 3: ECONOMIC PURSUITS 40 MARKS – 30 MINUTES 3.1.1 Name any TWO economic indicators. • Economic growth rate (real GDP) ✓ • Inflation rate ✓ • Unemployment rate ✓ • Interest rates ✓ • Exchange rate ✓ • Balance of payments/current account balance ✓ • Productivity ✓ (Accept any other correct relevant response) (2 x 1) (2) 3.1.2 How can special economic zones (SEZs) promote industrial development? SEZs offer incentives such as tax relief and ready infrastructure, which attract local and foreign investors to establish manufacturing businesses in targeted areas ✓✓ (Accept any other correct relevant response) (1 x 2) (2) 3.2.1 Identify the country with the lowest level of human development. Country P ✓ (1) 3.2.2 Name the international organisation that publishes the HDI. United Nations Development Programme (UNDP) ✓ (1) Copyright reserved Please turn over

Economics/P1 8 Hlayiso/Mock 2026 NSC – Marking Guidelines 3.2.3 Briefly describe the term Human Development Index. A composite index that measures the level of development of a country using life expectancy, education (years of schooling) and income per capita, with values between 0 and 1 ✓✓ (Accept any other correct relevant response) (2) 3.2.4 Explain why the HDI is a better measure of development than GDP per capita. GDP per capita only measures income, while the HDI also includes health (life expectancy) and education, and therefore gives a broader picture of people’s well-being ✓✓ (Accept any other correct relevant response) (2) 3.2.5 How can the government improve the HDI of a country? • By increasing spending on education, e.g. building schools and offering bursaries, which increases years of schooling ✓✓ • By improving access to health care, which increases life expectancy ✓✓ • By providing clean water and sanitation, which reduces disease and infant mortality ✓✓ • By creating jobs and promoting economic growth, which increases income per capita ✓✓ • By providing social grants to poor households ✓✓ (Accept any other correct relevant response) (2 x 2) (4) 3.3.1 Identify ONE type of infrastructure that was upgraded. • Security fencing ✓ • Lighting ✓ • Roads ✓ • Electricity infrastructure ✓ • Water infrastructure ✓ (1) 3.3.2 Name the government department responsible for industrial policy. Department of Trade, Industry and Competition (dtic) ✓ (1) 3.3.3 Briefly describe the term industrial development. The expansion of the manufacturing (secondary) sector through the establishment of new industries and the growth of existing ones ✓✓ (Accept any other correct relevant response) (2) 3.3.4 Explain how revitalising industrial parks in rural areas can slow down urbanisation. Jobs are created closer to where people live, so fewer people need to move to cities in search of employment ✓✓ (Accept any other correct relevant response) (2) Copyright reserved Please turn over

Economics/P1 9 Hlayiso/Mock 2026 NSC – Marking Guidelines 3.3.5 How can small businesses benefit from operating in industrial parks? • They can rent factory space at affordable rates instead of building their own premises ✓✓ • They have access to reliable infrastructure such as electricity, water and roads ✓✓ • Improved security reduces losses from theft and vandalism ✓✓ • They can form links (clusters) with other businesses as suppliers or customers ✓✓ • They may qualify for government support programmes and incentives ✓✓ (Accept any other correct relevant response) (2 x 2) (4) 3.4 Briefly discuss SEZs and development corridors as South African regional development initiatives. Special economic zones (SEZs) • SEZs are geographically designated areas that are set aside for specific economic activities ✓✓ • They offer incentives such as a reduced corporate tax rate, customs-controlled areas, building allowances and employment incentives ✓✓ • SEZs aim to attract foreign and domestic investment, promote exports and create jobs ✓✓ • They include industrial development zones (IDZs) located near ports and airports ✓✓ (Max. 4) Development corridors • Development corridors are routes (e.g. major roads and railway lines) along which infrastructure is developed to link economic centres ✓✓ • They aim to unlock the economic potential of areas along the route by attracting investment ✓✓ • An example is the Maputo Development Corridor, which links Gauteng with the port of Maputo ✓✓ • Corridors improve transport links, reduce transport costs and promote regional trade ✓✓ (Max. 4) (Accept any other correct relevant response) (A maximum of 4 marks may be allocated for mere listing of facts/examples) (2 x 4) (8) Copyright reserved Please turn over

Economics/P1 10 Hlayiso/Mock 2026 NSC – Marking Guidelines 3.5 Evaluate the success of South Africa’s growth and development policies in reducing unemployment. Successes: • Public employment programmes, such as the Expanded Public Works Programme (EPWP), have provided short-term work opportunities for many unemployed people ✓✓ • Skills development initiatives (SETAs, learnerships) have improved the employability of some young people ✓✓ • Incentives such as the Employment Tax Incentive encourage businesses to employ young workers ✓✓ • Investment in SEZs and industrial parks has created jobs in manufacturing ✓✓ Shortcomings: • Unemployment, especially youth unemployment, remains very high ✓✓ • Many EPWP jobs are temporary and do not lead to permanent employment ✓✓ • Low economic growth and electricity shortages have limited job creation ✓✓ • There is a mismatch between the skills of job seekers and the skills needed by employers ✓✓ • Poor implementation and corruption have reduced the effectiveness of some policies ✓✓ (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (4 x 2) (8) [40] Copyright reserved Please turn over

Economics/P1 11 Hlayiso/Mock 2026 NSC – Marking Guidelines QUESTION 4: MACROECONOMICS AND ECONOMIC PURSUITS 40 MARKS – 30 MINUTES 4.1.1 Name any TWO macroeconomic objectives of the government. • Economic growth ✓ • Full employment ✓ • Price stability ✓ • Exchange rate stability/balance of payments stability ✓ • Economic equity/redistribution of income ✓ (2 x 1) (2) 4.1.2 How can the government reduce a budget deficit? By reducing government spending and/or increasing tax revenue (e.g. by improving tax collection) ✓✓ (Accept any other correct relevant response) (1 x 2) (2) 4.2.1 Identify the inflation rate at point A. 8% ✓ (1) 4.2.2 Name the economist after whom the curve is named. (A.W.) Phillips ✓ (1) 4.2.3 Briefly describe the term stagflation. A situation in which high inflation occurs together with low (stagnant) economic growth and high unemployment ✓✓ (Accept any other correct relevant response) (2) 4.2.4 Explain the effect if the economy moves from point B to point A. Unemployment decreases from 6% to 3%, but inflation increases from 2% to 8%, which shows the trade-off between inflation and unemployment ✓✓ (Accept any other correct relevant response) (2) 4.2.5 How can supply-side policies help to reduce both inflation and unemployment? • Supply-side policies increase aggregate supply, which raises output and employment while lowering the price level ✓✓ • Improving education and skills increases labour productivity, which lowers unit costs and creates jobs ✓✓ • Investment in infrastructure (e.g. electricity, ports) lowers production costs and attracts investment ✓✓ • Reducing red tape and providing incentives to small businesses encourages production and job creation ✓✓ (Accept any other correct relevant response) (2 x 2) (4) Copyright reserved Please turn over

Economics/P1 12 Hlayiso/Mock 2026 NSC – Marking Guidelines 4.3.1 Identify ONE problem of public sector provisioning in the cartoon. • Poor service delivery/water outages ✓ • Inefficiency/bureaucracy (“a plan to draw up a plan”) ✓ • Poor accountability/budget approved but repairs not done ✓ (1) 4.3.2 Name the principle of taxation where people pay according to the benefit received. Benefit principle ✓ (1) 4.3.3 Briefly describe the term parastatal. A business enterprise that is owned and controlled by the government (state-owned enterprise), e.g. Transnet ✓✓ (Accept any other correct relevant response) (2) 4.3.4 Explain how poor service delivery by municipalities can affect economic growth. Businesses cannot produce without reliable water, electricity and roads, so output and investment decline and economic growth slows down ✓✓ (Accept any other correct relevant response) (2) 4.3.5 How can the government improve the efficiency of public service delivery? • By appointing skilled and qualified officials based on merit ✓✓ • By strengthening accountability, e.g. performance agreements and consequences for poor performance ✓✓ • By fighting corruption and ensuring transparent procurement processes ✓✓ • By maintaining infrastructure regularly instead of waiting for it to break down ✓✓ • By using public-private partnerships and technology (e-government) to improve services ✓✓ (Accept any other correct relevant response) (2 x 2) (4) Copyright reserved Please turn over

Economics/P1 13 Hlayiso/Mock 2026 NSC – Marking Guidelines 4.4 With the aid of a correctly labelled Laffer curve, explain the relationship between tax rates and tax revenue. Tax revenue e TRmax TR1 Laffer curve 0 t1 te t2 100 Tax rate (%) Allocation of marks: correct labelling of axes = 1; correct shape and labelling of the Laffer curve = 1; correct indication of the optimal tax rate (te ) and maximum revenue = 1; correct indication of two tax rates yielding the same revenue = 1 (Max. 4) Explanation: • At a tax rate of 0% the government receives no tax revenue ✓✓ • As tax rates increase from 0% towards te , tax revenue increases ✓✓ • Tax revenue reaches its maximum (TRmax ) at the optimal tax rate te ✓✓ • If tax rates increase above te , tax revenue decreases because high taxes discourage work, saving and investment, and encourage tax avoidance and evasion ✓✓ • At a tax rate of 100% no one has an incentive to earn taxable income, so revenue falls to zero ✓✓ • The same tax revenue (TR1 ) can be collected at a low rate (t1 ) or a high rate (t2 ), so lowering a high tax rate can increase revenue ✓✓ (Accept any other correct relevant response) (Max. 4) (8) Copyright reserved Please turn over

Economics/P1 14 Hlayiso/Mock 2026 NSC – Marking Guidelines 4.5 How can regional trade agreements, such as the AfCFTA, benefit South Africa? • The removal of tariffs gives South African producers access to a much larger African market ✓✓ • Higher exports increase production, which creates jobs and stimulates economic growth ✓✓ • Businesses can benefit from economies of scale as they produce for a larger market ✓✓ • Imports of raw materials and intermediate goods from other African countries become cheaper, lowering production costs ✓✓ • Consumers benefit from a wider variety of goods at lower prices ✓✓ • The agreement encourages investment in regional value chains and infrastructure ✓✓ • Closer cooperation strengthens South Africa’s bargaining power in global trade negotiations ✓✓ (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (4 x 2) (8) [40] TOTAL SECTION B: 80 Copyright reserved Please turn over

Economics/P1 15 Hlayiso/Mock 2026 NSC – Marking Guidelines SECTION C QUESTION 5: MACROECONOMICS 40 MARKS – 40 MINUTES Discuss in detail the main components of the balance of payments. (26 marks) How can South Africa reduce a deficit on the current account of the balance of payments? (10 marks) INTRODUCTION The balance of payments is a systematic record of all economic transactions between residents of a country and the rest of the world over a specific period, usually one year. ✓✓ (Accept any other correct relevant introduction) (Max. 2) BODY: MAIN PART Current account ✓ • The current account records transactions in goods, services, primary income and secondary income (current transfers) ✓✓ • Merchandise exports and imports: the value of physical goods sold to and bought from other countries ✓✓ • Net gold exports: South Africa records gold separately because it is both a commodity and a reserve asset ✓✓ • Trade balance: the difference between merchandise exports (including net gold exports) and merchandise imports ✓✓ • Services: receipts and payments for services such as transport, travel (tourism), insurance and financial services ✓✓ • Primary income: compensation of employees and investment income, e.g. dividends and interest paid to and received from non-residents ✓✓ • Secondary income (current transfers): transfers without anything in return, e.g. SACU payments, donations and grants ✓✓ • A deficit on the current account means that payments to the rest of the world exceed receipts ✓✓ Capital transfer account ✓ • Records capital transfers without a return, e.g. debt forgiveness and the transfer of ownership of fixed assets ✓✓ • It also records the acquisition and disposal of non-produced, non-financial assets such as patents and copyrights ✓✓ Financial account ✓ • Records the flow of financial capital into and out of the country ✓✓ • Direct investment: investment in which the investor gains a lasting interest/control (at least 10% ownership) in a business, e.g. building a factory ✓✓ • Portfolio investment: the purchase of shares and bonds without gaining control of the business ✓✓ • Financial derivatives: financial instruments whose value depends on other assets, e.g. options and futures ✓✓ • Other investment: loans, trade credit, currency and deposits ✓✓ • Reserve assets: gold and foreign exchange reserves held by the SARB; an increase is shown with a negative sign ✓✓ Copyright reserved Please turn over

Economics/P1 16 Hlayiso/Mock 2026 NSC – Marking Guidelines Unrecorded transactions ✓ • This balancing item is used to ensure that the balance of payments balances, because some transactions are not recorded or are recorded incorrectly ✓✓ • It is calculated as the difference between the total of the current and capital transfer accounts and the financial account ✓✓ (Accept any other correct relevant response) (A maximum of 8 marks may be allocated for headings/examples) (Max. 26) ADDITIONAL PART • Promote exports through export incentives, trade missions and export credit insurance ✓✓ • Encourage import substitution by supporting local manufacturers of goods that are currently imported ✓✓ • Impose import tariffs or quotas on non-essential imports (within WTO rules) ✓✓ • Allow the rand to depreciate, which makes exports cheaper and imports more expensive ✓✓ • Improve the productivity and competitiveness of South African producers, e.g. through skills development and reliable electricity ✓✓ • Promote tourism to increase service receipts from foreign visitors ✓✓ • Reduce excessive domestic spending (e.g. through higher interest rates) to lower the demand for imports ✓✓ • Encourage foreign-owned businesses to reinvest profits locally, which reduces dividend payments abroad ✓✓ (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (Max. 10) CONCLUSION A persistent current account deficit must be financed by capital inflows, which may be volatile; South Africa should therefore focus on increasing exports and competitiveness rather than only restricting imports. ✓✓ (Accept any other correct relevant higher-order conclusion) (Max. 2) [40] Copyright reserved Please turn over

Economics/P1 17 Hlayiso/Mock 2026 NSC – Marking Guidelines QUESTION 6: ECONOMIC PURSUITS 40 MARKS – 40 MINUTES Discuss in detail the arguments in favour of protectionism. (26 marks) How can import tariffs negatively affect South African consumers and businesses? (10 marks) INTRODUCTION Protectionism refers to the trade policy of a government to protect domestic industries against foreign competition by means of tariffs, quotas, subsidies and other trade restrictions. ✓✓ (Accept any other correct relevant introduction) (Max. 2) BODY: MAIN PART Protection of infant industries ✓ • New industries cannot compete with established foreign producers that have lower costs due to economies of scale ✓✓ • Temporary protection allows infant industries to grow until they can compete internationally ✓✓ Protection against dumping ✓ • Foreign producers may sell goods below their production cost to eliminate local competitors ✓✓ • Anti-dumping duties protect local producers against such unfair competition ✓✓ Protection of employment ✓ • Cheap imports can force local businesses to close, which leads to job losses ✓✓ • Protection keeps labour-intensive industries, e.g. clothing and textiles, in production and saves jobs ✓✓ Protection against low-wage countries ✓ • Countries with very low wages can produce goods more cheaply, so domestic producers cannot compete ✓✓ • Protection prevents domestic wages and working conditions from being undermined ✓✓ Strategic industries and self-sufficiency ✓ • Industries such as food, energy and defence are protected so that the country does not depend on other countries for essential goods ✓✓ • This reduces the risk of shortages during wars, pandemics or trade disputes ✓✓ Balance of payments stability ✓ • Restricting imports reduces payments to the rest of the world and can improve the current account ✓✓ • Fewer imports reduce the outflow of foreign exchange and support the value of the rand ✓✓ Source of government revenue ✓ • Import tariffs (customs duties) provide revenue that the government can use for public spending ✓✓ Diversification of the economy ✓ • Protection helps a country to develop a wider range of industries, reducing its dependence on a few primary exports such as minerals ✓✓ • A diversified economy is less vulnerable to changes in world commodity prices ✓✓ Protection of the environment and standards ✓ • Trade restrictions can keep out products that do not meet health, safety and environmental standards ✓✓ Copyright reserved Please turn over

Economics/P1 18 Hlayiso/Mock 2026 NSC – Marking Guidelines (Accept any other correct relevant response) (A maximum of 8 marks may be allocated for headings/examples) (Max. 26) ADDITIONAL PART Consumers • Consumers pay higher prices for imported goods and for local goods that compete with imports ✓✓ • Consumers have less choice because fewer imported products are available ✓✓ • Protected local producers may offer lower-quality products because they face less competition ✓✓ • Higher prices reduce the purchasing power of households, especially the poor ✓✓ Businesses • Businesses that import raw materials and machinery face higher production costs ✓✓ • Higher input costs make South African exports less competitive ✓✓ • Protected businesses may become inefficient because they do not need to compete ✓✓ • Trading partners may retaliate with tariffs on South African exports, reducing export earnings ✓✓ (Accept any other correct relevant response) (A maximum of 2 marks may be allocated for mere listing of facts/examples) (Max. 10) CONCLUSION Protectionism can help to develop and protect key industries in the short term, but it should be temporary and targeted, because long-term protection raises prices and reduces efficiency and competitiveness. ✓✓ (Accept any other correct relevant higher-order conclusion) (Max. 2) [40] TOTAL SECTION C: 40 GRAND TOTAL: 150 Copyright reserved