Download section a (compulsory)

MPUMALANGA DEPARTMENT OF EDUCATION
JUNE EXAMINATION
2008
GRADE 12
ECONOMICS
TOTAL MARKS: 300
TIME: 3 HOURS
This question paper consists of 17 pages.
INSTRUCTIONS AND INFORMATION
1.
Answer SIX questions as follows:



SECTION A: COMPULSORY
SECTION B: Answer any THREE questions in the ANSWER BOOK.
SECTION C: Answer any TWO questions in the ANSWER BOOK.
2.
Write the question number above each answer.
3.
Number the answers correctly according to the numbering system used in this
question paper.
4.
Read the questions carefully and start each question on a NEW page.
5.
Leave 2 – 3 lines between subsections of questions.
6.
Answer questions in full sentences and ensure that the format and content of
your responses comply with the cognitive levels of the questions.
7.
Write neatly and legibly.
8.
Only the required number of questions will be marked in the order in which
they appear in the ANSWER BOOK.
9.
Use only black or blue ink. Lead pencil answers will NOT be marked.
10.
Non-programmable pocket calculators may be used.
2
SECTION A (COMPULSORY)
QUESTION 1: LO1 – LO3
1.1
Various possible options are provided as answers to the following questions.
Choose the answer and write only the letter (A – D) next to the question number
(1.1.1 – 1.1.9 in the ANSWER BOOK.
1.1.1
A leakage in the circular flow reduces the amount of money spent on goods
and services. Which of the following combination is an example of leakages?
A.
B.
C.
D.
Taxation, savings and imports.
Taxation, consumption and savings.
Taxation, investment and imports.
Taxation, exports and investments.
The statement “there is an increase in the productivity of labour in
manufacturing “ is a ____________ indicator.
1.1.2
A.
B.
C.
D.
1.1.3
Coincidental
Leading
Logging
None of the above.
The public sector provides goods and services where there is a market failure.
Some of them are called merit goods/services e.g.
A.
B.
C.
D.
Cigarettes and gambling.
Education and health.
Streetlights and the SANDF.
Toll roads and SAA.
3
1.1.4
Study the graph below and answer the following question:
Which form of market structure is represented by the graph where P =
MR = AR
A.
B.
C.
D.
1.1.5
Monopoly
Perfect competition
Oligopoly
Monopolistic competition
A public investment project e.g. a new railway line can be undertaken
where ____________________________
A.
B.
C.
D.
1.1.6
Social benefits exceed social costs.
Private benefits exceed private costs.
Social costs exceed social benefits.
Benefits are equal to costs.
A monopoly maximises profits where
A.
B.
C.
D.
1.1.7
MC = AR.
MC = MR.
MC = The price.
MC = AC.
South African approach to economic growth and development involves
changes in monetary and fiscal policies. The RSA’s fiscal policy aims to
stimulate economic growth and employment by
A.
B.
C.
D.
Interest rate changes
Open market transactions
Reducing corporate tax.
Increasing personal tax.
4
The aim of South Africa’s SDIs is
1.1.8
A.
B.
C.
D.
1.1.9
Attract infrastructure and business investment to under-developed areas.
Attract infrastructure and business to developed areas.
Attract infrastructure and business to developed areas to increase
investment in African countries.
To promote partnerships between government and the private sector.
Per capita GDP is an indicator related to production and it is used to
____________
A.
B.
C.
D.
Indicate economic development and to compare living standards.
Compare economic development and lifestyles.
Indicate the stock of money in the economy.
Indicate the level of social and human development.
(18)
5
1.2
State whether the following statements are TRUE or FALSE
1.2.1 National income will increase when I + G + X > S + T + M.
1.2.2 Factors that influence the economy from outside the market economy are
EXOGENOUS.
1.2.3 Public failure is when the ruling party fails to deliver on its promises.
1.2.4 A competitive firm makes normal profit when its AR = AC.
1.2.5 Pollution is an example of a positive externality.
5 X 2 = 10
1.3
Choose the correct alternative from the brackets.
1.3.1 A monopoly differs from a competitive firm in that a monopoly is a (price
taker/price maker).
1.3.2 Low levels of education are found in the (Northern/Southern) countries
of the world.
1.3.3 South Africa’s economic policy that aims to halve unemployment and
poverty by 2014 is called (GEAR/ASGISA).
1.3.4 An example of a social indicator is (education/interest rates).
4X2=8
6
1.4
Choose an item from COLUMN B that matches a description in COLUMN A.
Write only the letter (A – L) next to the question number (1.4.1 – 1.4.7) in the
ANSWER BOOK.
COLUMN A
COLUMN B
1.4.1
A few sellers dominate the market.
A
A. Extrapolation.
1.4.2
The proportion of an increase in income that is spent.
B. Amptitude.
B
1.4.3
The distance of the peaks and troughs
From the trend line.
C. MPC.
1.4.4
A curve that shows the relationship between tax rates
and tax revenue.
C
D. Supply side-approach.
1.4.5
The type of profit earned by a competitive firm in the
short run is determined by its _____________.
E. Oligopoly.
D
1.4.6
A tool used by economists to determine if the use of
resources in an economy is economical.
F. MPM.
1.4.7
An approach to economic growth and development that E
G. Laffer curve.
concentrates on the expansion in the production capacity
of the economy.
H. Demand curve.
I. Demand side-approach.
F
J. Average costs.
K. Marginal costs.
L. CBA.
G
H
I
7
Answer any THREE questions from this section in the ANSWER BOOK.
QUESTION 2: LO1 MACRO-ECONOMICS, AS1
2.1
Fill in the missing words.
2.1.1 The markets for short-term savings and loans is known as a ___________
Market.
2.1.2 Consumption on fixed capital is known as _________________.
2.1.3 The equation for total expenditure in an open economy is ____________.
2.1.4 A decrease in MPC will lead to a ________________ in the size of the
Multiplier.
4X2=8
2.1.5 Name three (3) items that are taken into account when calculating GDP at
Factor cost using the income method.
3X2=6
2.2
Study the graph below and answer the questions that follow:
2.2.1 If investment increased by 200, write the new expenditure function when
the MPC has not changed.
(4)
8
2.2.2 Use the formula ά = ____1____ to derive the value of the multiplier (ά)
1 - MPC
From the above graph show calculations.
(6)
2.2.3 If the value of the multiplier is 5, calculate the new level of national
income. Use the formula Y = ά Y.
2.2.4 Given
(4)
_____1_____
MPS + MRT
2.2.4.1
Name the sector represented by MRT.
(2)
2.2.4.2
What is the effect on the value of the multiplier?
(2)
2.2.5
2.3
Explain the relationship between expenditure and income at point A
(2)
Explain the flows of production, spending and income through the
Different markets in a closed economy.
(16)
(50)
9
QUESTION 3: LO1 MACRO-ECONOMICS, AS
3.1
Choose ONE (1) word from the brackets.
3.1.1 The government uses taxation and government spending to achieve the
economic objectives. (Monetary policy/Fiscal policy)
3.1.2 To smooth out a business cycle where there is a recession, the
government should (increase/reduce) its expenditure.
3.1.3 A business cycle that lasts between three and five years is called the
(Kitchin/Kuznets) cycle.
3.1.4 A (leading/lagging) indicator changes after the economy has changed.
4X2=8
3.1.5 List any THREE (3) monetary policy instruments.
3.2
(6)
Study the extract below and answer the questions that follow.
CHALLENGE OF UNLOCKING SA’s POTENTIAL
“We have been very fortunate to grow at 5% for a number of years
now. Within that 5% you will find part of that growth is driven by
commodity prices and improved trade terms. There is a part that is a
consequence of a structural change in the economy. We need to lift
growth to a trend-line of 6%”.
[Adapted from: City Press (Business Times), 24 February 2008] –
Interview of Finance Minister Trevor Manuel with City Press.
3.2.1 At what rate has South Africa been growing in the last two (2) years? (3)
3.2.2 Identify an example of a leading indicator from the extract.
(3)
3.2.3 Mr Manuel refers to structural changes which led to economic growth.
Was this an (Endogeneous/Exogeneous) reason?
(3)
3.2.4 Explain what a trend line is in a business cycle.
(3)
3.2.5 In the 2008 budget, there is a reduction in corporate/company tax rate
from 29% to 28%. How will this decrease lead to an increase in economic
growth?
(8)
3.3
Economists have different views on what factors give rise to Troughs and
Booms which characterise the business cycle. Explain the Exogenous
factors/reasons that cause the level of economic activity to either increase
or decrease.
(16)
10
(50)
QUESTION 4: LO2 MICRO-ECONOMICS, AS1
4.1
State whether the following statements are TRUE or FALSE.
4.1.1 The demand curve for an individual business under perfect competition is
a horizontal line.
4.1.2 When the AC curve lies above the price line, a competitive firm will incur a
loss.
4.1.3 A supply curve in a perfect market is derived by a horizontal addition of
the supply of all firms in the market.
4.1.4 In Economics, the costs of production are made up of only explicit costs.
4X2=8
4.1.5 List any THREE (3) conditions for the existence of perfect competition.
(6)
4.2
Study the graph and answer the questions that follow:
11
4.2.1 The graph above represents the costs and revenue for a firm in
(perfect/imperfect) competition).
(3)
4.2.2 The shaded area represents a (loss/profit) incurred by the firm. Motivate
your answer.
(4)
4.2.3 What determines the equilibrium point for this firm?
(3)
4.2.4 Explain why the price for the product of a firm in perfect competition is a
horizontal curve and is equal to MR and AR.
(6)
4.2.5 Name TWO (2) aims of competition policies.
4.3
(4)
Use cost and revenue curves to explain why a firm in perfect competition
does not make economic profit in the long term.
(16)
[50]
12
QUESTION 5: LO2 MICRO-ECONOMICS, AS3
5.1
Fill in the missing words.
5.1.1 A ____________ exists when there is only one seller of a good or service
for which there is no close substitute.
5.1.2 A monopoly has a downward sloping ______________ curve.
5.1.3 The profit maximisation of a monopoly is where marginal revenue is equal
to ______________.
5.1.4 _________________ takes place when firms formally agree to keep
prices high by restricting production.
(8)
5.1.5 Tabulate the differences between a monopoly and a perfectly competitive
firm in terms of price, profit and quantity produced.
(6)
PERFECT COMPETITION
MONOPOLY
PRICE
PROFIT
QUANTITY
5.2
QUANTITY
Units
P = AR
(Rands)
TR (Q x AR)
(Rands)
MR
(Rands)
1
2
3
4
5
6
5
4
3
2
6
10
12
12
10
5
4
2
0
-2
5.2.1 Use the information in the above table to plot the MR and AR curves. (10)
5.2.2 The monopolist decides on the quantity to be produced. He uses
___________.
(2)
5.2.3 What happens to the Price or AR when the quantity produced increases?
(2)
13
5.2.4 Does a monopolist face the same cost curves as a perfectly competitive
firm?
(2)
5.2.5 Explain why a monopolist makes economic or excess profits.
5.3
Explain the characteristics of an oligopoly.
(4)
(16)
[50]
14
QUESTION 6: LO3, AS 4 ECONOMIC PURSUITS
6.1
Choose the correct word from the brackets.
6.1.1 Indicators that are concerned with people. (Social/Economic)
6.1.2 This index is inflation rate that excludes the effect of mortgage bond.
(CPI/CPIX)
6.1.3 To compare living standards of different countries the (GDP/GDP per
capita) is used.
6.1.4 (Interest rate/exchange rate) is the rate at which the price of the currency
of a country is expressed in terms of the currency of another country.
(8)
6.1.5 List any THREE (3) groups in which indicators can be divided.
6.2
(6)
Study the extract below and answer the questions that follow.
STATE OF THE PROVINCE ADDRESS
“We have created a strong platform upon which to progressively
increase the provincial economic growth rate to 6% by 2014 despite
challenges. Between 2004 and 2006 economic growth has been
robust, exceeding 4% each year. However, in 2006, the provincial
growth rate of 4.4% was below the national growth rate of 5.4%.
Statistics South Africa says in 2007 in Mpumalanga 82% of households
have access to electricity for lighting, 77% of households live in formal
dwellings, 41% of households have access to a flush toilet …………..”.
[Adapted from: State of The Province Address Of The Premier Of Mpumalanga,
Thabang Makwetla - Nelspruit 22 February 2008]
6.2.1
6.2.2
Name the indicator used to explain economic growth.
(2)
What was the difference between the provincial growth rate below
the national growth rate in 2006?
(3)
6.2.3 Name the social indicator given by the example in the second
paragraph of the extract.
(3)
6.2.4 Economic and social indicators are used to measure the performance of a
country. Give two reasons why they are used for International
comparisons.
(4)
6.2.5 Give two (2) indicators relating to employment.
(4)
15
6.2.6 Choose the correct word from the brackets.
6.2.6.1
6.2.6.2
6.3
Domestic income, production and expenditure are examples of
indicators / exchange rates.
(2)
An example of an international organisation requiring
Standardisation of indicators from its members is the
FMI / IMF
(2)
Discuss the key indicators relating to price changes.
(16)
[50]
TOTAL SECTION B = [ 150 ]
16
SECTION C
Answer any TWO (2) questions from this section in the ANSWER BOOK.
INTRUCTIONS
1.
Essay responses should include an introduction, body and conclusion.
Five marks will be awarded for the introduction and conclusion. In
addition, 5 marks will be allocated for the interpretation of the topic and
language usage. A maximum of 40marks will be awarded for the body.
2.
Other questions with long answers: Five marks will be awarded for the
structure. In addition, 5 marks will be awarded for the interpretation of the
topic and language usage. A maximum of 40 marks will be awarded for
the body.
QUESTION 7: LO1 MACRO-ECONOMICS, AS3
Discuss the problems of public sector provisioning with special reference to
South Africa.
[50]
QUESTION 8: LO3 ECONOMIC PURSUITS, AS1
RDP, GEAR and Asgi SA are policies that contain South Africa's approach to
economic growth and economic development. Discuss the supply factors that
influence growth and development.
[50]
QUESTION 9: LO3 ECONOMIC PURSUITS , AS2
SA's Regional industrial development policies aim to stimulate economic activity
and to sustain industrial development in specific areas and in regions. Discuss
SDI’s and IDZ's and evaluate their suitability in South African context.
[50]
QUESTION 10: LO2 MICRO ECONOMICS , AS2
Mean real per capita income increased in all income deciles between 2000 and
2005/2006. But the increases were uneven. While 10% of the population continues to
earn more than 50% of household income in the country, and the poorest 20%
accounting for less than 1,5% of income.
Inequality continues to remain high between population groups and within individual
population groups. The importance of grants as a source of income among the lowerincome households is increasingly significant.
Source: Statistics South Africa (adapted). March 08
This is an example of the effects of market failure. Explain how the government
deals with market failure.
[50]
17