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Economics P1 Nov 2015 Memo Eng

The document is a memorandum for the Grade 12 Economics Paper 1 from November 2015, consisting of various sections including multiple-choice questions, matching items, and data response questions. It covers topics such as macroeconomics, economic pursuits, trade relations, and fiscal policy, providing answers and explanations for each question. The total marks for the exam are 150, and the memorandum spans 20 pages.

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0% found this document useful (0 votes)
25 views20 pages

Economics P1 Nov 2015 Memo Eng

The document is a memorandum for the Grade 12 Economics Paper 1 from November 2015, consisting of various sections including multiple-choice questions, matching items, and data response questions. It covers topics such as macroeconomics, economic pursuits, trade relations, and fiscal policy, providing answers and explanations for each question. The total marks for the exam are 150, and the memorandum spans 20 pages.

Uploaded by

samkemasindi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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NATIONAL

SENIOR CERTIFICATE

GRADE 12

ECONOMICS P1

NOVEMBER 2015

MEMORANDUM

MARKS: 150

This memorandum consists of 20 pages.

Copyright reserved Please turn over


Economics/P1 2 DBE/November 2015
NSC – Memorandum

SECTION A (COMPULSORY)

QUESTION 1

1.1 MULTIPLE-CHOICE QUESTIONS

1.1.1 B (investment) 
1.1.2 A (amplitudes) 
1.1.3 C (collective) 
1.1.4 B (assets and liabilities) 
1.1.5 C (dumping) 
1.1.6 B (medium) 
1.1.7 A (subsidies) 
1.1.8 A (mortality rate)  (8 x 2) (16)

1.2 MATCHING ITEMS

1.2.1 I – Buying and selling equities 

1.2.2 F – Give advance warning of change in economic activity 

1.2.3 H – Shows income and expenditure estimates for three years 

1.2.4 A – Price of one country’s currency in terms of another country’s


currency 

1.2.5 C – A trade policy that leads to an increase in local production 

1.2.6 B – Rich industrial countries of the world 

1.2.7 E – Education and health 

1.2.8 D – Aims to reduce the centralisation of industries  (8 x 1) (8)

1.3 GIVE ONE TERM

1.3.1 Multiplier 
1.3.2 Money / financial 
1.3.3 Merit / public 
1.3.4 Foreign / international 
1.3.5 Gini 
1.3.6 Life expectancy  (6 x 1) (6)

TOTAL SECTION A: 30

Copyright reserved Please turn over


Economics/P1 3 DBE/November 2015
NSC – Memorandum

SECTION B

Answer any TWO of the three questions.

QUESTION 2: MACROECONOMICS

2.1 2.1.1 Give TWO examples of injections in the circular flow.

• Export income / X 
• Investments / I 
• Government expenditure/spending / G  Any (2 x 1) (2)

2.1.2 What effect will quotas have on imports?

• It will restrict imports (decline) 


• Imports become more expensive  (1 x 2) (2)

2.2 Data Response

2.2.1 What method of calculation was used in the table above to


determine the gross domestic product?

Income method / GDP (I)  (1)

2.2.2 Give ONE example of taxes on products.

• VAT 
• Sins tax / excise duty 
• Fuel levy  (1)

2.2.3 Name the missing item labelled (A).

GVA (GDP) at basic prices  (2)

2.2.4 How would you convert GDP to GNP?

GDP plus primary income from the rest of the world  minus
primary income to the rest of the world  / GDP plus/minus  net
primary income  (2)

2.2.5 Calculate the compensation of employees as a percentage of


GDP at market prices in 2013. Show ALL calculations.

1 576/3 385  x 100  = 46,55% or 47%  (4)

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Economics/P1 4 DBE/November 2015
NSC – Memorandum

2.3 Data Response


2.3.1 What message is conveyed in the cartoon above?

Free trade is benefitting the developed countries / less developed


countries are disadvantaged 
(Accept any other relevant answer) (2)

2.3.2 Which international organisation promotes free trade?

World Trade Organisation (WTO)  (2)

2.3.3 Suggest ONE way in which a country can be disadvantaged by


free trade.

• Dumping can take place 


• It can lead to economic instability 
• Exploitation of natural resources 
• It can compromise a country's economic independence 
• Infant industries may not grow (mature) 
• Lead to increased unemployment 
• The environment, safety and labour regulations are undermined

• Foreign companies can sue governments for losses 
(Accept any other relevant answer) (2)

2.3.4 How does South Africa benefit from trade relations with
China?

• Greater variety of products on South African markets 


• Many products are cheaper 
• Chinese investment greater in South Africa: boost the
economy 
• Both countries form part of BRICS - it will benefit them even
more 
(Accept any other relevant answer) Any (2 x 2) (4)

2.4 Briefly explain the different kinds of tariffs as a method of import


substitution.

• Ad valorem  a percentage of the value on luxury goods  such as


motorcars, jewellery and perfumes 
• Specific  an amount per unit, mass or size  e.g. food, animals and
plants 
• Composite / multiple  when a specific tariff and an ad valorem tariff are
levied on imported products  e.g. R10 is levied on a product plus a
percentage of 20% of the value of the product 
(Accept any other relevant answer) (4 x 2) (8)

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Economics/P1 5 DBE/November 2015
NSC – Memorandum

2.5 How can the household as an important participant in the circular flow
model contribute to building the economy?

• The owners of the four factors of production can try to increase the quality
thereof to make a better contribution to the economy 
• Households can sell their factors of production at lower rates to help to
lower the inflation rate and build the economy 
• Households (labourers) can limit labour unrest and strikes where they
usually claim unreal increases in payment (much more than the current
inflation rate) 
• Households can increase their savings and contribute indirectly to
increased production in the manufacturing sector 
• Households can limit their spending on luxury goods that will limit the
aggregate demand and stabilise prices 
• Households can concentrate on buying South African goods to stimulate
local production, future exports and increased penetration of markets
internationally 
• Households can pay their relevant taxes and claim better service delivery
and infrastructure development 
(Accept any other relevant answer) Any (4 x 2) (8)
[40]

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Economics/P1 6 DBE/November 2015
NSC – Memorandum

QUESTION 3: ECONOMIC PURSUITS

3.1 3.1.1 Name any TWO redress measures currently used in South
Africa.

• BBBEE Act 
• Employment Equity Act 
• Land Restitution Act 
• Land Redistribution Act 
• Policy Promoting Equality 
• Poverty reduction policy 
• Affirmative Action 
(Accept any relevant answer) Any (2 x 1) (2)

3.1.2 How does economic growth relate to economic development?

When an economy is growing the following may result:


• More jobs will be created 
• More people will receive income 
• The standard of living will improve 
• You need economic growth for economic development to take
place. Economic growth does not guarantee economic
development 
(Accept any other relevant answer) Any (1 x 2) (2)

3.2 Data Response

3.2.1 What is the difference in the per capita income between


countries in the North and countries in the South?

• South has low per capita income / which constitute 15% of the
world’s income 
• North has high per capita income / which constitutes 85% of the
world’s income 
(Accept any other relevant answer) (2 x 1) (2)

3.2.2 What message is conveyed in the cartoon above?

North/South divide / North is controlling the South / The North


benefits more than the South / The North has all the wealth
compared to the South / The South are marginalised 
(Accept any other relevant answer) (2)

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Economics/P1 7 DBE/November 2015
NSC – Memorandum

3.2.3 Why will the subsidising of agricultural produce by wealthy


countries make it difficult for developing countries to
participate?

• Subsidies lead to lower market prices for wealthy countries and


developing countries experience unfair competition
internationally 
• Most African countries are dependent on agricultural produce
that determine their national income in a large way. Most
people are influenced negatively by the hothouse effect –
produce decreases 
(Accept any other relevant response) (2)

3.2.4 How do countries in the North contribute to the destruction of


the environment?

• Mass production of goods and services causing pollution 


• High levels in industrial activities cause climate change 
• Over industrialisation lead into the exhaustion of natural
resources 
• Deforestation due to over industrialisation  (2 x 2) (4)
(Accept any other relevant response)

3.3 Data Response


3.3.1 What does the abbreviation SDI stand for?

Spatial Development Initiative  (2)

3.3.2 Give ONE example of an SDI in South Africa.

• Maputo Development Corridor 


• Richards Bay SDI 
• Wild Coast SDI 
• Lubombo SDI 
• Fish River SDI 
• West Coast Investment Initiative 
• Platinum SDI (Coast to coast) 
• Phalaborwa SDI  (2)

3.3.3 Explain the term corridors.

A corridor is a spatial area that forms a passage way allowing


access from one area to another and offering advantages to
mining, manufacturing and other businesses 
(Accept any other relevant answer) (2)

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Economics/P1 8 DBE/November 2015
NSC – Memorandum

3.3.4 How will South Africa benefit from SDIs?

• Improving logistics and policy environment 


• New investments 
• Job opportunities 
• New business opportunities 
• New export opportunities 
(Accept any other relevant answer) Any (2 x 2) (4)

3.4 Briefly discuss special economic zones (SEZs) in South Africa.

• It is a geographical demarcated area where specific economic activities


have been identified to develop 
• Main aim is to expand the manufacturing sector 
• Produce for the export market 
• Create additional industrial hubs so that the national industry base will be
diversified 
• These areas may enjoy incentives such as tax relief and support systems
to promote industrial development 
• There are plans to reduce tax to 15% as an incentive to attract new
industries 
• The aim of creating SEZ is to attract:
- only new businesses 
- business which are developing a new product line 
- business which are expanding their volume 
• The DTI has indicated that the existing IDZs where special tax incentives
do not apply, would be graduated into SEZs 
• It creates a basis for a broader range of industrial parks and provide
economic infrastructure to promote employment 
(Accept any other relevant fact) Any (4 x 2) (8)

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Economics/P1 9 DBE/November 2015
NSC – Memorandum

3.5 To what extent has the government's fiscal policy succeeded in


ensuring a desirable redistribution of income?

• Progressive personal income tax implicates higher tax rates levied on high
income earners and lower rates of taxes applying to lower income earners
- it leads to a desirable redistribution of income 
• A too progressive personal income tax system has led to tax evasion and
avoidance – this might cripple the system. The number of people
responsible for most of the income of the state is decreasing 
• Taxes on assets owned as well as wealth taxes (CGT) are both categories
where those who can afford it; must pay the taxes concerned 
• Cash benefits include grants to the poor – old age pensions; disability
grant; UIF are amounts paid to those who form part of the lower income
groups of people without any income 
• Benefits in kind comprises lower fees or no fee for certain income
categories, e.g. health care, education, protection, municipal services tries
to redistribute income successfully although major problems of nepotism,
apathy, lack of motivation and inefficiency occurs in these sectors where
money allocated for these groups are not spent accordingly 
• Land reform programme involves returning of land to people that were
previously dis-owned without compensation as well as people excluded
from owning land in the past. Implementation of this policy remains
problematic due to certain decisions being taken that might reduce mass
production dramatically and we might not be able to feed the nation –
disadvantaging the poor even more 
• Cash and financial benefits to SMMEs where Government provides
training, employment subsidies and financing of SMMEs - previously
disadvantaged groups will enjoy preference and income would be
successfully redistributed 
• Public works programmes provide employment but usually on a
temporarily basis e.g. where unemployed are appointed to build stadiums
for a World Cup 
• Property subsidies are paid to persons earning less than R3 500 per month

(Accept any other relevant facts) Any (4 x 2) (8)
(40)

Copyright reserved Please turn over


Economics/P1 10 DBE/November 2015
NSC – Memorandum

QUESTION 4: MACROECONOMICS AND ECONOMIC PURSUITS


4.1 4.1.1 Name any TWO phases of a business cycle.

• Recession 
• Depression 
• Prosperity 
• Recovery 
(Accept any other relevant fact) Any (2 x 1) (2)
4.1.2 How does a high level of education influence the ability of an
individual to get employed?
• It provides skills to do a specific job 
• It provides knowledge to do a specific job 
(Accept any other relevant answer) Any (1 x 2) (2)
4.2 Data Response
4.2.1 Identify the institution responsible for publishing the data
above.
South African Reserve Bank / SARB  (1)

4.2.2 What is the trend in the index of import prices?


The index of import prices is increasing  (1)
4.2.3 Explain the term terms of trade.
The ratio of the index of export prices to the index import prices /
The relationship between export price and import prices / It
expresses a country’s export prices in terms of its import prices 
(Accept any other relevant fact) (2)
4.2.4 Briefly explain why an increase in the terms of trade will have
a positive effect on the welfare of the country.
There will be increasing economic welfare because more revenue
is earned with the same expenditure 
(Accept any other relevant fact) (2)
4.2.5 Calculate the terms of trade for 2011 (A). Show ALL
calculations. Round off your answer to ONE decimal place.
191  x 100  = 124,8 
153  (Max 4) (4)

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Economics/P1 11 DBE/November 2015
NSC – Memorandum

4.3 Data Response


4.3.1 Which curve is depicted in the graph above?
Laffer curve  (2)
4.3.2 What tax rate will generate maximum revenue for the
government?
40%  (2)

4.3.3 What is the correlation between a tax rate of zero and a tax
rate of 100 % for the government?
In both scenarios government will receive no income  (2)
4.3.4 Explain the implication of a tax rate of 60% on the taxpayer.
• Tax evasion or tax avoidance will occur because too much tax
is levied on the taxpayer 
• Taxpayer's burden will increase (by 20%) 
• Some of the tax payers will stop working due to the increased
tax load  (2 x 2) (4)

4.4 Differentiate between devaluation and appreciation of a currency.


Devaluation:
• A decrease in the value of a currency  by authorities (government) 
• Refers to a fixed exchange rate system 
• The government might devalue a currency to improve exports 
• The government can change the rate from $1 = R10 changes to $1 = 12
 (Max 4)
Appreciation:
• An increase in the value of a currency  due to market forces 
• Typical of a floating exchange rate system 
• $1 = R10 changes to $1 = 8  (Max 4) (8)
4.5 How can the South African government improve efficiency in service
delivery?

• Goods and services should be provided in the desired quantity and quality

• Public goods can be efficiently provided if pareto efficiency is achieved

• Minimising red tape / avoid bureaucracy  rules and procedures should
be streamlined to minimize the negative impact on the delivery of services

• Increase training  effective training must be provided for government
officials e.g. in-service training, reskilling 
• Improve motivation  by providing awards to productive workers,
financially or payment in kind 
• Eliminate corruption  put effective monitoring measures in place  (8)
(Accept any other relevant answer) Any (4 x 2) [40]
TOTAL SECTION B: 80
Copyright reserved Please turn over
Economics/P1 12 DBE/November 2015
NSC – Memorandum

SECTION C

Answer ONE of the two questions in this section in the ANSWER BOOK.

STRUCTURE OF ESSAY MARK ALLOCATION


Introduction Max. 2
Body:
Main part: Discuss in detail/In-depth discussion/Examine/Critically Max. 26
discuss/Analyse/Compare/Evaluate/Distinguish/Differentiate/Explain
/Assess/Debate

Additional part: Give own opinion/Critically Max. 10


discuss/Evaluate/Critically evaluate/Draw a graph and explain/Use
the graph given and explain/Complete the given graph/Calculate/
Deduce/Compare/Explain/Distinguish/Interpret/Briefly debate/How/
Suggest
Conclusion
Any higher order conclusion should include: Max. 2
• A brief summary of what has been discussed without repeating
facts already mentioned in the body
• Any opinion or valued judgement on the facts discussed
• Additional support information to strengthen the
discussion/analysis
• A contradictory viewpoint with motivation, if so required
• Recommendations
TOTAL 40

QUESTION 5 MACROECONOMICS

The new economic paradigm is embedded (rooted) in demand-and-supply-side


policies to influence the economy.
• Discuss the use of monetary and fiscal policies to influence demand-and-
supply in the smoothing of business cycles. (26 marks)
• How has the Keynesian (endogenous) school of thought influenced business
cycles? (10 marks)

INTRODUCTION
• Theories by the Monetarists (Friedman) and Keynesians (Keynes) are extreme
and only true under specific circumstances /
• Under real circumstances, government pursues economic growth irrespective of
being inherently stable or unstable market conditions prevalent /
• According to the New Economic paradigm, it is possible for output rise over
extended periods of time without being hampered by supply constraints and
inflationary pressures/-does not render ideal policies /
• Smoothing of the business cycle is when policy is used to prevent dramatic peaks
and troughs /
• Consecutive periods of increasing and decreasing economic activities 
(Accept any other relevant introduction) (Max 2)

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Economics/P1 13 DBE/November 2015
NSC – Memorandum

BODY
MAIN PART
• Governments’ aim with business cycle policies is to achieve the best possible
growth rates 
• They need to apply policies to smooth out cyclical movements, so that peaks do not
end up in high inflation and troughs do not result in high unemployment 
• Governments use monetary and fiscal policies to do this 
• Fiscal policy - more successful in stimulating a depressed economy 
• Monetary policy is more effective when ‘dampening’ an overheated economy that
has inflation rising 
Monetary policies
When the level of economic activity changes the SARB can use expansionary
and contractionary measures reduce fluctuation of such economic activities.

• An expansionary monetary policy is implemented when the economy is in recession


in order to stimulate economic activities 
• Interest rates can be reduced to encourage spending 
• Household and firms can therefore borrow more and spend more 
• The increased spending increases the level of economic activity. Investment will
increase and more factors of production will be employed 
• Higher levels of production and income and expenditure will be achieved 
• If the supply of goods and services does not increase in line with increase in
demand inflation will increase. This means that demand will be greater than supply

• Inflation can be curbed by reducing money supply and availability of credit 
• To dampen the demand at the peak the government will be able to reduce money
supply by increasing interest rates  selling government bonds and securities
(open market transactions) and reduce the supply of money in circulation 
increase the cash reserve requirements to manipulate money creation activities of
banks  persuade banks to decrease lending (moral suasion)  and to
devaluate the exchange rate (exchange rate policy) 
Fiscal policy
When the level of economic activity changes the Minister of Finance can use
expansionary and contractionary measures reduce fluctuation of such economic
activities 
• An expansionary fiscal policy can be implemented when the economy is in
recession in order to stimulate economic activities 
• An increase in government expenditure will increase aggregate demand 
• This serves as an injection into the economy as production will increases, more
factors of production will be employed 
• This will lead to higher income and higher expenditure 
• Taxes can be reduced, which will lead to an increase in disposable income 
• This serves as an injection into the economy and eventually aggregate demand will
increase 
• When the economy grows too fast government can reduce its spending and
increase taxes 
• This will lead to a decrease in aggregate demand which will reduce production as
fewer goods and services will be needed 
Copyright reserved Please turn over
Economics/P1 14 DBE/November 2015
NSC – Memorandum

Demand-side policies:
Traditional monetary and fiscal policies focus on aggregate demand 
A demand-side approach only – does not render ideal results, often growth has to be
cut due to problems in inflation, balance of payments and shortages of skilled labour

• Aggregate supply needs to be managed as well - focus on increased flexibility of
supply components 
• If the costs of increasing production is completely flexible, a greater output can be
supplied at any given price level 

Supply-side policies governments can arrange things in the economy in a way that is
cooperative to changes in demand.

• Reduction of costs  Greater output supplied at any given price level. AS shifts
to AS 1 and AD to AD 1  output expands from Q to Q 1 with prices stable 

• Government measures that can reduce costs 


- Infrastructural services like communication, transport and energy costs 
- Administrative costs like inspections and regulations - add to overall costs 
- Cash incentives like subsidies  and compensation to exporters 

• Measures to improve efficiency of inputs 


- Tax rates - high rates of personal income tax are disincentives  and shifts
AS to the right - usually achieved with incentive schemes and measures such
as tax rates 
- Capital consumption by replacing capital goods on a regular basis that will
create opportunities for businesses to keep up with technological development

- Human resources development where the quality of labour can be improved by
improving health care, education and training which will increase the efficiency
of businesses 
- Free advisory services to promote opportunities to export and establish
business activities in foreign countries which includes weather forecasts,
veterinary services and research 

• Improving efficiency of markets 


Measures to improve efficiency include
- Deregulation where laws and regulations are removed to make markets free 
- Competition are encouraged to establish new businesses, invite foreign direct
investment and remove power imbalances 
- Levelling the economic playing fields because private businesses cannot
compete with public enterprises due to legislative protection 

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Economics/P1 15 DBE/November 2015
NSC – Memorandum

AGGREGATE DEMAND AND SUPPLY 

Price level %
AD AS
AD1 AS1

 

F
C
P E
AS
AD1

AS1 AD

0 Q Q1
Output level 

MARK ALLOCATION FOR GRAPH

Correct heading = 1 mark


Correct position of curves = 2 marks
Labelling of axis = 1 mark
Labelling of curves = 1 mark
TOTAL = 5 MARKS

The effects of demand-side and supply-side policies:


• Inflation  Aggregate demand and supply are in equilibrium at point C 
Aggregate demand is stimulated and moves to AD 1 , supply responds and
relocates at AS 1  larger real output without price increases 

• Supply often sticky and fixed in short term  with increase in demand to AD 1 ,
supply stays constant - intersects at point F - real production and prices increase
(inflation) - creates conditions where supply is more flexible - through the use
of supply-side measures 

• Unemployment  Demand-side policies effective in stimulating economic growth


 increases demand for labour  reduces unemployment  then inflation
rises  (Max 26)

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Economics/P1 16 DBE/November 2015
NSC – Memorandum

ADDITIONAL PART
How has the Keynesian (endogenous) school of thought influenced business
cycles?

• The Keynesian (endogenous) view is that markets are inherently unstable,


therefore government intervention is necessary to stabilise the economy 
• They argue that changes in value of total expenditure bring about changes in
demand 
• Government can intervene through fiscal policy which includes taxes and
government spending 
• During a recession, government can increase its spending and reduce taxes.
(stimulate) 
• This will increase the level of economic activity e.g. production, employment,
income and demand 
• During a peak the government can increase taxes and reduce government
spending 
• This will result in reduced income, reduced demand for factors of production, and
expenditure  (Max. 10)
(Accept any other relevant response)

CONCLUSION

It remains critical that business cycles must be clearly monitored through the indicators
available, policy makers must act quickly by using monetary and fiscal instruments in
order to prevent instability in the economy 
(Accept any other relevant conclusion) (Max. 2) (40)

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Economics/P1 17 DBE/November 2015
NSC – Memorandum

QUESTION 6: ECONOMIC PURSUITS

Economists use different indicators that help in decision-making.


• Discuss, in detail, the following economic indicators that are used to assess
the performance of the economy:
- Inflation rate
- Employment (26 marks)
• How successful is the South African Reserve Bank in stabilising prices on the
different markets as its main objective? (10 marks)

INTRODUCTION

Governments use different statistical data to predict economic trends and formulate
suitable developmental strategies toward influencing the direction that the economy
should take 
(Accept any other suitable introduction) (Max. 2)

BODY

MAIN PART

THE INFLATION RATE

Inflation can be described as an increase in the general level of prices in an economy


that is sustained over a period of time 
SARB aims to keep the inflation rate stable between 3 and 6% 

The following instruments are used to measure inflation:

• Consumer Price Index (CPI) / Headline inflation 

- This is the weighted average of the prices of a general basket of goods and
services likely to be bought by consumers 
- The weights are obtained from expenditure of different income categories of
households 
- Decides on a base year for calculating the CPI which is similar for all SNA items

- Decides on a formula for calculating the CPI 
- Decides on the collection of prices – in SA it is obtained by means of surveys

- It shows changes in the general purchases of a currency (e.g. rand) 
- It is also used for inflation targeting 
- Pertains to cost of living 
- Capital and intermediate goods are excluded 
- Prices include VAT 
- Interest rates are taken into account 
- Prices of imported goods are not shown explicitly 

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Economics/P1 18 DBE/November 2015
NSC – Memorandum

• Producer Price Index (PPI) 

- PPI measured prices of locally produced goods when they leave the factory
gate and imported goods when they enter the country 
- It consist of a basket of local, exported and imported goods 
- It includes capital and intermediate goods, but not services 
- Prices exclude VAT 
- Interest rates are excluded 
- It measures the cost of production and not the cost of living 
- It also serves as an indicator to predict consumer inflation (CPI) 

• GDP deflator 

- The GDP deflator is ratio that indicates the relationship of the GDP at nominal
prices to the GDP at real prices (formula) 
- The GDP deflator is calculated for all goods produced in a country for a certain
year and is not based on a certain basket of goods 
- GDP at constant prices is used to measure economic growth and inflation 

EMPLOYMENT

• Employment

- The number of employed persons expressed as percentage of the EAP gives the
employment rate 
- The South African employment rate was 75% during 2014 and is not
accompanied by a similar growth in employment numbers 
- Employment indicators are important and used to calculate trends in employment
in different sectors or industries  that indicates structural changes in the
economy  to calculate productivity  or to show the success of the
economy in utilising its full potential 
- Full employment or high levels of employment is an indicator of a strong
economy with high levels of growth and development 
- High levels of unemployment are normally a sign of deep-seated problems in an
economy  lack of domestic and foreign direct investment, low levels of labour
productivity and rigid labour laws or high levels of poverty 
- Employment indicators are used to calculate: (1) trends in different sectors or
industries  (2) productivity  and (3) successes of the economy in utilising
its full potential 

There are various employment indicators that are used to monitor employment
progress:

• The economically active population (EAP / labour force) 


- The official employment ages in South Africa are between (15 - 65) who are
willing to work 
- It includes workers in the formal sector, informal sector, employers, self-
employed persons and unemployed persons 

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Economics/P1 19 DBE/November 2015
NSC – Memorandum

• Unemployment 
- Strict definition - the unemployed are those people within the economically
active population who; did not work during the seven days prior to the interview,
want to work are available to start work within two weeks of the interview and
have taken active steps to look for work or start some form of self-employment
in the four weeks prior to the interview 
- Expanded definition includes everyone who desires employment, irrespective of
whether or not they actively tried to obtain one 
- The unemployment rate is expressed as the percentage of unemployed persons
out of the total number of people willing and able to work, in other words the
labour force 
- StatsSA obtains labour data from the Quarterly Labour Force Surveys to
calculate unemployment 
- In South Africa the official unemployment rate was 25% in 2014 and is the most
important cause of poverty 

There are various methods of calculating the number of unemployed:

• Census  questionnaires are distributed to respondents and included in the


questionnaires are questions relating to the work status of people 
• Surveys  Every year Statistics South Africa undertakes a workforce survey to
calculate the unemployment rate 
• Registration  The unemployed can register with the Department of Labour -
registered unemployed persons may receive payments from the unemployment
insurance fund and registration is the most accurate method of calculating the
unemployment rate because not all unemployed persons are registered 
• Employment 
- The employed are those who performed work for pay, profit or family gain in the
seven days prior to the survey interview for at least one hour, or who were
absent from work during these seven days but did not have some form of work
to return to 
- Data linked to employment is an important indicator used to determine labour
productivity, the rate of employment in different economic sectors, the income
per worker and the success of a country’s economy 
- If employment is compared with the EAP the unemployment rate can be
calculated 
- StatsSA publishes the Labour Force Survey in March and September every
year and contains information such as the employment rate, the unemployment
rate and the levels of employment in the formal and informal sectors 
(Max 26)

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Economics/P1 20 DBE/November 2015
NSC – Memorandum

ADDITIONAL PART

- The CPI breached the upper range of the inflation target during 2014. SARB has
increased interest rates to bring the inflation rate back into lower ranges, thus
stabilising prices. 
- Setting the inflation target of 3 – 6% was a major initiative by the state that helped
SARB to stabilize prices 
- A decline in international crude oil prices in recent months suppressed global
inflationary pressures. This contributed largely to lower domestic inflation  -
favourably affecting Producer price inflation. Due to this the Reserve Bank were
able to keep the repo rate unchanged  PPI for intermediate manufactured goods
has a positive impact on the stabilising of prices 
- Although the Reserve Bank has been very successful in stabilizing prices, certain
external factors which influenced the global economy like the World recession has
impacted negatively on the SARB efforts in stabilizing prices 
- Other factors like disinvestment due to poor governance led to a sharp decline in
stability which hampered the stabilizing effects of SARB 
- The poor value of the Rand on international markets is a major negative contributing
factor on the inflation rate due to a major dependency on imports 
(Accept any other relevant fact) (Max. 10)

CONCLUSION

Economic indicators are some of the most important and powerful tools that the
government can use to influence the direction that the economy should take as
against other countries  (Max. 2) [40]

TOTAL SECTION C: 40

GRAND TOTAL 150

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