Grade 12 Economics Exam
June 2013.
Time: 180 Minutes
Marks: 300
INSTRUCTIONS
1
Answer SIX questions as follows:
SECTION A: COMPULSORY QUESTION
SECTION B: THREE COMPULSORY QUESTIONS
Question 2 – LO1 (Macroeconomics)
Question 3 – LO2 (Microeconomics)
Question 4 – LO4 (Contemporary Issues)
SECTION C: TWO QUESTIONS OUT OF THREE OPTIONS.
(+/- 20 minutes)
(+/- 90 minutes)
(+/- 70 minutes)
2
Write the number of the question next to each answer.
3
Number the answers according to the system used in this question paper.
4
Start each question on a NEW SHEET OF PAPER. Leave one to two lines open
between sub-sections of each question.
5
Read each question carefully.
6
A neat and systematic presentation of facts is required.
7
Answer in full sentences.
8
Do not answer more than the required number of questions. Only the required
number of questions, in the order in which they have been handed in, will be
marked.
9
Use only a black or blue pen (graphs / diagrams may be done in pencil).
10
Non – programmable pocket calculators may be used.
THIS QUESTION PAPER CONSISTS OF 13 PAGES AND ONE ANSWER SHEET
SECTION A (COMPULSORY)
For this section, use the ANSWER SHEET attached to the question paper.
QUESTION 1
1.1
Three options are provided as possible answers to the following questions. Indicate
with an X the correct answer (A – C) next to the question number (1.1.1 – 1.1.12).
1.1.1 Deregulation means that the state
A. adopts certain acts, measures and regulations to ensure the smooth running of
production
B. adopts certain acts, measures or regulations to prevent monopolistic power
forming
C. removes certain acts, measures or regulation to promote informal economic
activities without unnecessary regulations
1.1.2 The volume of ... is an example of a leading indicator.
A. goods imported
B. mining production
C. manufacturing production
1.1.3 Money spent by a South African tourist staying in a London hotel is part of ...
A. invisible imports
B. invisible exports
C. trade balance
1.1.4 Lowering the interest rate can be classified as a … approach to economic growth.
A. supply-side
B. fiscal
C. demand-side
1.1.5 The diagram shows the cost and revenue curves of a monopolistically competitive
firm in long-run equilibrium.
Grade 12 Economics: June 2013
2
Which statements correctly describe the performance of this firm?
The firm is making a
normal profit
The firm is fully exploiting
all economies of scale
A
no
no
B
no
yes
C
yes
no
1.1.6 A government gives its approval for the building of a private airport because the
airport would be socially beneficial.
In making its decision it calculates private costs at $700 m, private benefits at
$800m and external costs at $200m.
What does this suggest must be true about the external benefits of the scheme?
A. External benefits equal private benefits
B. External benefits exceed $100m
C. External benefits exceed external costs
1.1.7
An advertising agency estimates than an advertising campaign would shift the
demand curve for a profit maximising firm’s product from D1 to D2 in the diagram.
What does the shaded area measure?
A. The additional sales revenue the campaign would be expected to generate
B. The maximum sum it would be worth the firm spending on the campaign
C. The opportunity cost to the agency of undertaking the campaign
Grade 12 Economics: June 2013
3
1.1.8 The diagram shows a firm’s short-run marginal cost curve (SRMC).
What explains why the curve is upward sloping at output levels above OQ?
A. Barriers to entry
B. Diseconomies of scale
C. The law of diminishing returns
1.1.9 The graph shows a country’s average annual inflation rate over a five year period.
What can be concluded about the general price level during the five years?
A. It fell in only one year
B. It fell in only two years
C. It rose in only two years
1.1.10 Over a period of a year, the annual rate of inflation falls from 10% to 6%.
Which statement is correct?
A. The cost of living has increased
B. There has been a reduction in the Consumer Price Index
C. The standard of living has increased
Grade 12 Economics: June 2013
4
1.1.11 Tourism could lead to socio-economic problems such as …
A. pollution.
B. unemployment.
C. poverty
1.1.12 One of the main reasons for the recent increase in international tourism to South
Africa is …
A. the appreciation of the rand.
B. low tax rates.
C. peaceful political transformation.
(12 x 2 = 24)
1.2
Complete the following sentences by using the words provided in the list below.
Write only the word(s) next to the question number (1.2.1 – 1.2.5).
cost-push; demand-pull; homogeneous; heterogeneous; AR curve; MR curve; merit
goods; public goods; social security grants; taxes.
1.2.1 Goods that are essential for the general welfare of a country’s residents, but are not
provided by the market.
1.2.2 The most important source of income for the poor.
1.2.3 The demand curve for a monopolist is also its ...
1.2.4 All products sold in perfectly competitive markets are ...
1.2.5 This type of inflation is also known as “stagflation”.
(5 x 2 = 10)
PTO...
Grade 12 Economics: June 2013
5
1.3
Choose a description from COLUMN B that matches an item in COLUMN A. Write
only the letter (A – M) next to the question number (1.3.1 – 1.3.8).
COLUMN A
COLUMN B
the distance of the peaks and troughs from
the trend line in a business cycle
1.3.1
Endogenous explanation
A
1.3.2
Implicit GDP deflator
B
also known as spill-over effects
1.3.3
Externalities
C
the government increases government
expenditure and reduces taxation
1.3.4
CBA
D
business cycles are inherently stable
1.3.5
Amplitude
E
price index of all goods and services
1.3.6
Contractionary fiscal policy
F
measures the cost of production
1.3.7
Explicit cost
G
comparison made between the expected
social costs and benefits
1.3.8
Moving average
H
the rent an entrepreneur pays
J
K
L
comparison made between the expected
private costs and benefits
the government reduces government
expenditure and increases taxes
reduces the impact of random events to
highlight long-term trends
M the profit earned by an entrepreneur
N
business cycles are inherently unstable
(8 x 2 = 16)
TOTAL SECTION A: [50]
PTO...
Grade 12 Economics: June 2013
6
SECTION B: Answer ALLTHREE questions from this section.
START EACH QUESTION ON A NEW PAGE.
QUESTION 2: (LO1 Macroeconomics)
2.1
Choose the correct word(s) from those given in brackets. Write only the word(s)
next to the question number (2.1.1 – 2.1.4)
2.1.1 Real flows and money flows move in the (same / opposite) direction.
2.1.2 Economic equity is ensured by (proportionate / progressive) tax rates.
2.1.3 Excessive demand for credit is linked to the (recovery / prosperity) phase of the
business cycle.
2.1.4 Devaluation and revaluation occur with (floating / fixed) exchange rates.
(4 x 2 = 8)
2.2
GDP at factor cost, GDP at basic prices and GDP at market prices are associated
with which methods of National Income accounting respectively?
(3 x 2 = (6)
2.3
Study the graph below that depicts a simplified 2-sector economy (where E = C + I)
and answer the questions that follow:
2.3.1 Name the two sectors involved in deriving the multiplier.
(2)
2.3.2 What is represented by the line E=Y?
(2)
2.3.3 Use the formula, k=Y/J, to calculate the value of the multiplier. Show your
calculations.
(4)
2.3.4 Explain the relationship between the mpc and the multiplier.
(2)
PTO...
Grade 12 Economics: June 2013
7
2.4
Study the extract below and answer the questions that follow.
UNEMPLOYMENT RATE RISES TO 25.2%
Johannesburg – The number of unemployed increased by 100 000 people to 4.6 million
between the 4th of 2012 and the 1st quarter of 2013, Statistics SA (StatsSA) said on
Monday. This took the country’s official unemployment to 25.2% from 24.9% in the 4 th
quarter of 2012, StatsSA said in its Quarterly Labour Force Survey.
StatsSA ‘s official definition of unemployment is someone aged between 15 and 64 who is
without work in the week preceding the interview, but who looks for work and is available to
take up employment or open a business.
In the expanded definition of unemployment, which includes people who have stopped
looking for work, the rate was 36,7% in the 1st quarter of 2013, the highest since 2008.
The South African economy lost approximately one million jobs during the recession. It had
gained 646 000 jobs since the lowest level of employment in the 3rd quarter of 2010 (12.9
million). However, at 13.6 million, employment in the 1st quarter of 2013 was still lower than
the 14 million before the recession.
Source: fin24 (2013/05/24)
2.4.1 Differentiate between “official definition of unemployment” and the “expanded
definition of unemployment”.
(2)
2.4.2 In terms of the business cycle. At what stage of the cycle would one experience
“the lowest level of employment in the 3rd quarter of 2010”?
(2)
2.4.3 Calculate the Economic Active Population (EAP) by making use of the following
formula: [EAP = # of unemployed / unemployment rate (%)]
(2)
2.4.4 Briefly explain the relationship between unemployment and the inflation by making
use of a graph.
(4)
2.5
Discuss how the Balance on the Current Account is calculated.
(8)
2.6
Discuss the Monetarist approach as a cause of Business cycles.
(8)
[50]
PTO...
Grade 12 Economics: June 2013
8
QUESTION 3 (LO2: Microeconomics)
Start this question on a NEW and SEPARATE SHEET OF PAPER.
3.1.
Determine which of the following statements are true or false. Write only True or
False next to the number (3.1.1 – 3.1.4).
3.1.1.
3.1.2
3.1.3
3.1.4
Allocative inefficiency means that a business does not produce goods at the
lowest possible cost.
A monopolistically competitive firm will make an economic profit in the long run.
If a producer has a patent right, it is an example of an artificial monopoly.
An ideal price is an imputed price or value of a good or service.
(4 x 2 = 8)
3.2
Identify THREE forms of non-price competition.
3.3
Study the graph below and answer the questions that follow.
3.3.1
3.3.2
3.3.3
What type of market structure is illustrated above?
Is the firm making a profit or loss? Calculate it and show your working.
Will this firm continue to produce in the SHORT RUN? Explain your answer.
(3 x 2 = 6)
(2)
(4)
(4)
PTO...
Grade 12 Economics: June 2013
9
3.4
Study the following diagram of a market failure and answer the questions that
follow:
3.4.1 What market failure is represented by the diagram above?
(2)
3.4.2 What is the equilibrium level of output and prices in this market (without government
intervention)?
(2)
3.4.3 What is the socially optimum level of output and price?
(2)
3.4.4 Explain how government could correct the market failure shown.
(4)
3.5
Explain why a firm’s short-run average cost curve is usually drawn as a U shape
and explain the link between the short-run average cost curve and the long-run
average cost curve of a firm.
(8)
3.6
Discuss whether an economy would benefit from its government intervening to
regulate an industry.
(8)
[50]
PTO...
Grade 12 Economics: June 2013
10
QUESTION 4 (LO4: Contemporary Issues)
Start this question on a NEW and SEPARATE SHEET OF PAPER.
4.1
Choose the correct word from those given in brackets. Write only the word next to
the question number (4.1.1 – 4.1.4).
4.1.1
4.1.2
4.1.3
4.1.4
Tax payers (nominal / real) income usually rises in an inflationary environment.
The SARB has (limited / complete) control over the money supply.
Most employment in the tourism industry is in the (transport / hospitality) sectors.
Spending by international tourists can be regarded as (income / service) receipts.
(4 x 2 = 8)
4.2
List THREE monetary policy tools used to control inflation.
4.3
Study the graph below and answer the questions that follow:
(3 x 2 = 6)
4.3.1 What macroeconomic model is represented in the diagram above?
(2)
4.3.2 What might cause the AD curve to shift from AD1 – AD2?
(2)
4.3.3 Explain why the AS curve is vertical at Yf.
(4)
4.3.4 What type of inflation is illustrated in the diagram?
(2)
PTO...
Grade 12 Economics: June 2013
11
4.4
Study the extract below and answer the questions that follow.
Tourist arrivals showed exceptional growth in the first quarter of 2012, with overall arrivals
growing by 10.5%. A total of 2 267 807 tourists arrived in South Africa in January. February
and March. Overseas tourist arrivals grew by 17.8% but growth in tourist arrivals had come
from all regions. Emerging markets had continued their robust growth while traditional markets
had bounced back.
Arrivals from Europe grew by 11.9% (394 716 tourists). Robust sales, marketing partnerships,
South Africa's accessibility, and its value for money for European travellers contributed to the
growth from Europe. Tourist arrivals from regional African tourist markets achieved positive
growth rates of 7.9%.
This overall growth in tourism could be ascribed to significant investments in the local tourism
industry, in time, energy and resources.
Source: Fin24.com, June 2012
4.4.1
4.4.2
4.4.3
4.4.4
Define the concept “tourism”.
(2)
Which region is the source of most tourists to South Africa?
(2)
Which region is the source of most tourist spending in South Africa?
(2)
Identify TWO reasons highlighted in the article that explain why tourism has recently
grown in South Africa
(4)
4.5
Briefly discuss the monetarist explanation of inflation (MV = PQ)
(8)
4.6
Briefly discuss FOUR reasons/purposes why tourists visit South Africa.
(8)
TOTAL SECTION B: [150]
PTO...
Grade 12 Economics: June 2013
12
SECTION C
Answer TWO questions from this section.
INSTRUCTIONS
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 40 marks will be awarded
for the body.
QUESTION 5 (LO1: Macroeconomics)
Start this question on a NEW and SEPARATE SHEET OF PAPER.
Failure by the public sector to produce public goods and services causes higher prices in
the market.
Discuss the characteristics, reasons and effects of the public sector failures when
providing goods and services.
[50]
QUESTION 6: (LO2: Microeconomics)
Start this question on a NEW and SEPARATE SHEET OF PAPER.
Explain, with the aid of graphs, how short and long-term equilibrium for the individual
producer is achieved under conditions of perfect competition. In your explanation, ensure
that you make reference to: market supply and demand; normal profit; economic profit and
economic loss.
[50]
QUESTION 7: (LO3: Contemporary Issues)
Start this question on a NEW and SEPARATE SHEET OF PAPER.
Tourism can be an engine of growth, capable of dynamiting and rejuvenating other sectors
of the economy. We must see tourism as a means for a better life for all. Tourism is the
world's largest industry and every year it pumps millions of dollars into some of the poorest
countries.
Discuss the effects of tourism on the South African economy, highlighting its impact on
GDP, employment, poverty, externalities, the environment and infrastructure.
[50]
TOTAL SECTION C: [100]
GRAND TOTAL: [300]
Grade 12 Economics: June 2013
13
BLANK PAGE
Grade 12 Economics: June 2013
14
Grade 12 Economics Exam
June 2013
ANSWER SHEET.
Name: ______________________________
A
B
C
Teacher: OFH / SH / WHS
1.3.1
1.1.1
1.3.2
1.1.2
1.3.3
1.1.3
1.3.4
1.1.4
1.3.5
1.1.5
1.3.6
1.1.6
1.3.7
1.1.7
1.3.8
1.1.8
1.1.9
1.1.10
1.1.11
1.1.12
1.2.1
1.2.2
1.2.3
1.2.4
1.2.5
Grade 12 Economics: June 2013
15