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EXAMINATIONS COUNCIL OF SWAZILAND Swaziland General Certificate of Secondary Education 6899/02 ECONOMICS Paper 2 Structured Questions October/November 2013 2 hours Additional Materials: Answer Booklet/Paper READ THESE INSTRUCTIONS FIRST If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet. Write your Centre number, candidate number and name on all the work you hand in. Write in dark blue or black pen. You may use a soft pencil for any diagrams, graphs or rough working. Do not use staples, paper clips, highlighters, glue or correction fluid. Answer any four questions. You may use a calculator. At the end of the examination, fasten all your work securely together. The number of marks is given in brackets [ ] at the end of each question or part question. This document consists of 3 printed pages and 1 blank page. © ECOS 2013 [Turn over 2 Answer any four questions. 1 Xavi, who was Spain’s best player, led the Spanish soccer team to be the first team from Europe to win the World Cup competition in a foreign continent. This competition was hosted by the Republic of South Africa in 2010. (a) In which stage of production is soccer? Explain your answer. [2] (b) Analyse, using a demand and supply diagram, what is likely to happen in the market for Spain’s Xavi as a result of winning the World Cup soccer competition. [6] (c) Explain the meaning of complements and substitute goods or services, giving an example of each in relation to the soccer industry. [4] (d) Discuss how hosting the World Cup tournament in South Africa might have helped its economy. [8] 2 In 2010 the Central Bank of Swaziland announced that interest rates will remain unchanged at 6.5 percent. (a) Explain the following terms: (i) interest rate [2] (ii) money [2] (iii) commercial bank [2] (b) What methods does the Central Bank use to control the money supply? [3] (c) Explain the factors that determine the rate of interest charged on a loan. [4] (d) Advise the Government of Swaziland about the consequences of reducing interest rates. [7] 3 (a) Define the following terms: (i) Perfect competition [2] (ii) Fixed cost [2] (b) Explain the principle of profit maximisation for a private firm. [2] (c) Discuss three possible factors affecting the size of a firm in any one industry. [7] (d) Swaziland Electricity Company (SEC) has increased prices for electricity because it is a monopoly. Do you think it is beneficial for society for a company to be a monopoly? [7] © ECOS 2013 6899/02/O/N/13 3 4 In Swaziland the Company Act of 2009 is in harmony with regional developments such as the Southern Community (SADC) and the Southern African Customs Union (SACU). (a) Name the two types of business organisations that are guided by the Swaziland Company Act of 2009. [2] (b) Explain the importance of SACU to the Swaziland economy. [4] (c) Evaluate the effects of changing from a partnership to a private limited company. [7] (d) Swaziland and South Africa are member countries of SADC with a fixed exchange rate. Do you think it is advisable for countries to have a fixed rather than a floating exchange rate? [7] 5 6 In 2009 about 24 000 mining jobs in South Africa were at risk which could expose many families to poverty. However the government hopes to reduce poverty by 50 percent in 2014. (a) State the basic necessities that the millions of South Africans might be lacking. [3] (b) Name three influences that affect population growth. [3] (c) Discuss the effects of an increase in the population of an economy. [7] (d) Do you think that HIV/AIDS is one of the factors that increase poverty in a country? [7] In 2010, Swaziland’s inflationary pressures were expected to continue on transport, housing, and utilities, due to the increase in fuel prices. (a) Identify any two economic indicators other than inflation. [2] (b) Explain two possible causes of inflation. [4] (c) Explain how a retail price index is calculated. [7] (d) Discuss whether a government should be concerned when its economy has a high inflation rate. [7] © ECOS 2013 6899/02/O/N/13 4 BLANK PAGE Permission to reproduce items where third-party owned material protected by copyright is included has been sought and cleared where possible. Every reasonable effort has been made by the publisher (UCLES) to trace copyright holders, but if any items requiring clearance have unwittingly been included, the publisher will be pleased to make amends at the earliest possible opportunity. University of Cambridge International Examinations is part of the Cambridge Assessment Group. Cambridge Assessment is the brand name of University of Cambridge Local Examinations Syndicate (UCLES), which is itself a department of the University of Cambridge. © ECOS 2013 6899/02/O/N/13