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SENIOR CERTIFICATE EXAMINATIONS/

NATIONAL SENIOR CERTIFICATE EXAMINATIONS

ECONOMICS P1

2023

MARKS: 150

TIME: 2 hours

This question paper consists of 12 pages.

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INSTRUCTIONS AND INFORMATION

1. Answer FOUR questions as follows in the ANSWER BOOK:

SECTION A: COMPULSORY
SECTION B: Answer TWO of the three questions.
SECTION C: Answer ONE of the two questions.

2. Answer only the required number of questions. Answers in excess of the

required number will NOT be marked.

3. Number the answers correctly according to the numbering system used in this
question paper.

4. Write the question number above each answer.

5. Read the questions carefully.

6. Start EACH question on a NEW page.

7. Leave 2–3 lines between subsections of questions.

8. Answer the questions in full sentences and ensure that the format, content
and context of your responses comply with the cognitive requirements of the
questions.

9. Use only black or blue ink.

10. You may use a non-programmable pocket calculator.

11. Write neatly and legibly.

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SECTION A (COMPULSORY)
QUESTION 1 30 MARKS – 20 MINUTES
1.1 Various options are provided as possible answers to the following questions.
Choose the answer and write only the letter (A–D) next to the question
numbers (1.1.1 to 1.1.8) in the ANSWER BOOK, e.g. 1.1.9 D.
1.1.1 The nominal value of all final goods and services produced within
the boundaries of a country is known as GDP at …
A basic prices.
B current prices.
C constant prices.
D factor cost.
1.1.2 A grouping of various indicators of the same type into a single
value is referred to as …indicators.
A leading
B lagging
C coincident
D composite
1.1.3 State-owned enterprises that provide public goods and services
are called …
A nationalisation.
B bureaucrats.
C parastatals.
D privatisation.
1.1.4 When a country can produce a product at a lower opportunity cost
than any other country, it is known as … advantage.
A comparative
B relative
C absolute
D complete
1.1.5 The co-ordination of various social, fiscal and monetary policies
among the member countries is required in a/an ...
A free-trade area.
B economic union.
C customs union.
D common market.
1.1.6 The economic policy that aims to eliminate poverty and reduce
inequality by 2030 is called the ...
A National Development Plan.
B New Growth Path.
C Expanded Public Works Programme.
D Reconstruction and Development Programme.

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1.1.7 The use of science and technology to promote industrial

development is part of the ...

A Industrial Policy Action Plan.

B National Industrial Policy Framework.
C National Research and Development Strategy.
D Integrated Manufacturing Strategy.

1.1.8 Bank notes and coins in circulation and demand deposits in the
banking sector, is classified as … money supply.

A M4
B M3
C M2
D M1 (8 x 2) (16)

1.2 Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the letter (A–I) next to the question numbers (1.2.1 to 1.2.8) in the
ANSWER BOOK, e.g. 1.2.9 J.

COLUMN A COLUMN B
1.2.1 Marginal propensity to A the ratio between export and import
consume prices measured by means of indexes
1.2.2 Fiscal policy B the decrease in production costs due to
high levels of production
1.2.3 Economic equity
C aims to significantly increase the
1.2.4 Terms of trade number of previously disadvantaged
1.2.5 Economies of scale people to own, manage and control the
country's economy
1.2.6 Globalisation
D the redistribution of income within the
1.2.7 Broad-based Black economy
Economic
Empowerment E use of taxation and government
expenditure to achieve macroeconomic
1.2.8 United Nations objectives
F the worldwide integration of economies,
with trade as an important element
G established to promote economic
recovery and development
H the proportion of additional income that
households choose to spend on goods
and services
I committed to maintaining international
peace, security, social development and
human rights
(8 x 1) (8)

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1.3 Give ONE term for each of the following descriptions. Write only the term
next to the question numbers (1.3.1 to 1.3.6) in the ANSWER BOOK.
Abbreviations, acronyms and examples will NOT be accepted.

1.3.1 Estimating or forecasting something unknown from facts and

information that are known

1.3.2 An estimate of income and expenditure for a three-year period

during the budgeting process

1.3.3 A trade policy that promotes the production of goods domestically

rather than importing them

1.3.4 Restriction on the quantity of imports allowed into a country

1.3.5 The compensation of citizens who lost their land because of

discriminatory apartheid laws

1.3.6 Policies that are aimed at increasing the economic livelihood of

specific areas (6 x 1) (6)

TOTAL SECTION A: 30

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SECTION B

Answer any TWO of the three questions in this section in the ANSWER BOOK.

QUESTION 2: MACROECONOMICS 40 MARKS – 30 MINUTES

2.1 Answer the following questions.

2.1.1 Name the TWO turning points of a business cycle. (2 x 1) (2)

2.1.2 Why would a decrease in South African exports lead to the

depreciation of the rand? (1 x 2) (2)

2.2 Study the graph below and answer the questions that follow.

2.2.1 Identify the tax rate at which the government maximises tax
revenue. (1)

2.2.2 Name any form of indirect tax paid by households to the

government. (1)

2.2.3 Briefly describe the term progressive tax. (2)

2.2.4 Explain the effect of a regressive tax system on income distribution. (2)

2.2.5 Why will tax revenue decrease if the government imposes very
high tax rates? (2 x 2) (4)

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2.3 Study the cartoon below and answer the questions that follow.

THE IMPACT OF THE UKRAINE/RUSSIA WAR ON BUSINESS CYCLES

[Adapted from studyeye.home.blog/2022/07/02]

2.3.1 Identify a concept that relates to the changes in the consumer price
index in the cartoon above. (1)

2.3.2 Name the explanation (approach) of business cycles illustrated in

the above cartoon. (1)

2.3.3 Briefly describe the term recession. (2)

2.3.4 Explain the impact of the Ukraine/Russia war on local food prices. (2)

2.3.5 How can the government use monetary policy to stimulate

economic activity? (2 x 2) (4)

2.4 Briefly discuss the free-floating and the fixed exchange rate systems. (2 x 4) (8)

2.5 How can the South African government improve the quality of public sector
provisioning? (4 x 2) (8)
[40]

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QUESTION 3: ECONOMIC PURSUITS 40 MARKS – 30 MINUTES

3.1 Answer the following questions.

3.1.1 Give any TWO examples of wealth tax. (2 x 1) (2)

3.1.2 Why is small business development important to the South African

economy? (1 x 2) (2)

3.2 Study the extract below and answer the questions that follow.

THE AFRICAN GROWTH AND OPPORTUNITY ACT (AGOA)

AGOA is a United States Trade Act, enacted on 18 May 2000, and it has
since been renewed to 2025. It builds on existing United States trade
programmes by expanding the duty-free benefits to qualifying sub-Saharan
African (SSA) countries.

While the legislation significantly enhances market access to the US for South
Africa, it goes against the protectionism policy.

[Adapted from //agoa.info]

3.2.1 Identify a term in the extract above, which relates to the removal of
import tariffs. (1)

3.2.2 Name ONE other trade protocol of which South Africa is part. (1)

3.2.3 Briefly describe the term protectionism. (2)

3.2.4 Explain a disadvantage when applying the protectionism policy. (2)

3.2.5 How can the African Growth and Opportunity Act (AGOA)
negatively affect South Africa? (2 x 2) (4)

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3.3 Study the graph below and answer the questions that follow.

[Source: tradingeconomics.com]

3.3.1 In which year did South Africa record the highest human
development index? (1)

3.3.2 Name ONE indicator used to measure human development. (1)

3.3.3 Briefly describe the term economic development. (2)

3.3.4 Why did South Africa experience a decline in social and economic
development in 2020? (2)

3.3.5 How can the government improve the standard of living of the
people? (2 x 2) (4)

3.4 Briefly discuss partnerships and good governance as benchmark criteria for
regional development. (2 x 4) (8)

3.5 Evaluate the impact of export promotion on local industries in South Africa.
(4 x 2) (8)
[40]

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QUESTION 4: MACROECONOMICS AND ECONOMIC PURSUITS

40 MARKS – 30 MINUTES

4.1 Answer the following questions.

4.1.1 Name any TWO characteristics of public goods. (2 x 1) (2)

4.1.2 How can South African workers benefit from import substitution?
(1 x 2) (2)

4.2 Study the table below and answer the questions that follow.

BALANCE OF PAYMENTS (BOP)

THE FINANCIAL ACCOUNT
Item 2022 (R millions)
Net direct investment 32 367
Net portfolio investment -4 688
Net financial derivatives -3 465
Net other investments 9 594
Reserve assets (SDR allowances) -35 241
Balance on Financial Account -1 433
Memo item: Balance on Financial Account, A
excluding reserve assets
[Source: SARB, Quarterly Bulletin, September 2022]

4.2.1 Identify the item that records an investment made in a specific

asset with a fixed future value, such as gold. (1)

4.2.2 Name the item that caters for any omissions and errors in the
balance of payments. (1)

4.2.3 Briefly describe the term portfolio investment. (2)

4.2.4 Explain the purpose of Special Drawing Rights (SDR) allowances

in reserve assets. (2)

4.2.5 Use the information in the table above to calculate the memo item
(A). Show ALL calculations. (4)

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4.3 Study the information below and answer the questions that follow.

INDUSTRIAL DEVELOPMENT ZONES (IDZ)

Saldanha IDZ
?

[Adapted from www.google.com]

4.3.1 Identify the industrial development zone that manufactures

vehicles. (1)

4.3.2 Name the key economic activity in which the Saldanha IDZ
specialises. (1)

4.3.3 Briefly describe the term corridor. (2)

4.3.4 Why is it necessary for the government to provide incentives to

businesses? (2)

4.3.5 How can South Africa benefit from the introduction of special
economic zones (SEZ)? (2 x 2) (4)

4.4 With the aid of a well-labelled Phillips curve, explain the relationship between
inflation and unemployment. (8)

4.5 Analyse the demand-side and supply-side factors that influence economic
growth in South Africa. (4 x 2) (8)
[40]

TOTAL SECTION B: 80

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SECTION C

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

Your answer will be assessed as follows:

MARK
STRUCTURE OF ESSAY
ALLOCATION
Introduction
The introduction is a lower-order response. Max. 2
 A good starting point would be to describe the main concept related to
the question topic.
 Do NOT include any part of the question in the introduction.
 Do NOT repeat any part of the introduction in the body.
 Avoid mentioning in the introduction what you are going to discuss in
the body.
Body
Main part: Discuss in detail/In-depth discussion/Examine/Critically Max. 26
discuss/Compare/Distinguish/Differentiate/Explain/Draw a graph and
explain/Complete the given graph/Assess/Debate
A maximum of 8 marks may be allocated for headings/examples.

Additional part: Critically discuss/Evaluate/Critically evaluate/Debate/ Max. 10

Deduce/Compare/Interpret/How?/Suggest
A maximum of 2 marks may be allocated for mere listing of facts.
Conclusion
Any higher-order conclusion should include: Max. 2
 A brief summary of what has been discussed without repeating facts
already mentioned
 Any opinion or valued judgement on the facts discussed
 Additional support information to strengthen the discussion/analysis
 A contradictory viewpoint with motivation
 Recommendations
TOTAL 40

QUESTION 5: MACROECONOMICS 40 MARKS – 40 MINUTES

 Discuss in detail the markets within the four-sector circular flow model. (26 marks)
 How can the increase in injections impact on the South African economy?
(10 marks) [40]

QUESTION 6: ECONOMIC PURSUITS 40 MARKS – 40 MINUTES

 Discuss in detail the various social indicators. (26 marks)

 How can urbanisation influence the standard of living of the South African
population? (10 marks) [40]

TOTAL SECTION C: 40
GRAND TOTAL: 150

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SENIOR CERTIFICATE EXAMINATIONS/

NATIONAL SENIOR CERTIFICATE EXAMINATIONS

ECONOMICS P1

2023

MARKING GUIDELINES

MARKS: 150

These marking guidelines consist of 22 pages.

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SECTION A (COMPULSORY)

QUESTION 1

1.1 MULTIPLE-CHOICE QUESTIONS

1.1.1 B - current prices 

1.1.2 D - composite 
1.1.3 C - parastatals 
1.1.4 A - comparative 
1.1.5 B - Economic union 
1.1.6 A - National Development Plan 
1.1.7 C - National Research and Development Strategy 
1.1.8 D - M1  (8 x 2) (16)

1.2 MATCHING ITEMS

1.2.1 H- the proportion of additional income that households choose

to spend on goods and services 
1.2.2 E- use of taxation and government expenditure to achieve
macroeconomic objectives 
1.2.3 D- the redistribution of income within the economy 
1.2.4 A- the ratio between export and import prices measured by
means of indexes 
1.2.5 B- the decrease in production costs due to high levels of
production 
1.2.6 F - the worldwide integration of economies, with trade as an
important element
1.2.7 C- aims to significantly increase the number of previously
disadvantaged people who own, manage and control the
country's economy 
1.2.8 I- committed to maintaining international peace, security,
social development and human rights  (8 x 1) (8)

1.3 GIVE THE TERM

1.3.1 Extrapolation 
1.3.2 Medium Term Expenditure Framework 
1.3.3 Import substitution 
1.3.4 Import quota 
1.3.5 Land restitution 
1.3.6 Regional development  (6 x 1) (6)

TOTAL SECTION A: 30

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SECTION B

Answer any TWO of the three questions in this section.

QUESTION 2: MACROECONOMICS 40 MARKS – 30 MINUTES

2.1 Answer the following questions.

2.1.1 Name the TWO turning points of a business cycle.

 Peak 
 Trough  (2 x 1) (2)

2.1.2 Why would a decrease in South African exports lead to the

depreciation of the rand?
Supply of foreign currency will decrease which will increase the value
of foreign currency resulting in the depreciation of the rand / Demand
for local currency in export destination countries may decrease
resulting in depreciation 
(Accept any other correct relevant response) (1 x 2) (2)

2.2 DATA RESPONSE

2.2.1 Identify the tax rate at which the government maximises tax
revenue.

50%  (1)

2.2.2 Name any form of indirect tax paid by households to the

government.
 Value Added Tax / VAT 
 Excise duty (Sin tax, Fuel levy, Carbon tax, Sugar tax) 
 Import duty / Import tariff 
(Accept any other correct relevant response) (1)

2.2.3 Briefly describe the term progressive tax.

Tax system whereby people in higher-income groups pay higher tax
rates than those in lower-income groups. 
(Accept any other correct relevant response) (2)

2.2.4 Explain the effect of a regressive tax system on income

distribution.
Regressive tax system makes income to be more unequally
distributed / The income inequality amongst the population will
increase / The gap between low-income earners and high-income
earners will increase as low-income earners pay higher tax rates than
high-income earners 
(Accept any other correct relevant response) (2)

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2.2.5 Why will tax revenue decrease if the government imposes very
high tax rates?
 Some businesses and individual may be forced to evade tax
resulting in lower tax revenue for the government. 
 Some workers may be discouraged to enter the labour market
which will reduce the tax base for the government. 
 Businesses may reduce production or withdraw their investments
from the economy, which shrinks the tax base. 
(Accept any other correct relevant response) (2 x 2) (4)

2.3 DATA RESPONSE

2.3.1 Identify a concept that relates to the changes in the consumer

price index from the cartoon above.
Cost of living  (1)

2.3.2 Name the explanation (approach) of business cycles

illustrated in the above cartoon.

Exogenous / Monetarist  (1)

2.3.3 Briefly describe the term recession

Decline or negative growth in real Gross Domestic Product for at
least two consecutive quarters / The first stage of a downswing
where economic activity starts to decrease. 
(Accept any other correct relevant response) (2)

2.3.4 Explain the impact of the Ukraine/Russia war on local food

prices.
The Ukraine/Russia war resulted in a decreased supply and an
increase in prices of agricultural inputs from Russia, which led to
an increase in local food prices / Fuel prices increased resulting in
higher cost of transport which increased local food prices 
(Accept any other correct relevant response) (2)

2.3.5 How can the government use monetary policy to stimulate

economic activity?
 The government can use expansionary monetary policy to
stimulate economic activity during the recession or depression
phase. 
 Reduction in interest rates will make credit cheaper which will
increase demand for goods and services 
 Money supply can be increased by granting more credit or
decreasing cash reserve requirements or buying securities via
open market transactions which will increase consumer
spending as well as production 
(Accept any other correct relevant response) (2 x 2) (4)

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2.4 Briefly discuss the free-floating and the fixed exchange rate systems.
Free-floating
 The value of a currency is solely determined by market forces, i.e.
demand for rand and supply of rand. 
 The government does not intervene in the foreign exchange market to
influence exchange rates. 
 The exchange rate fluctuates as market conditions change
 Any differences in supply and demand are automatically corrected in
the market. 
 South Africa uses a free-floating exchange rate system that allows the
currency to adjust to global conditions  (2 x 2) (4)
Fixed
 The government determines or pegs the exchange rate based on the
value of another currency such as the US dollar. 
 The central bank buys and sells foreign exchange to maintain the
exchange rate at the set level. 
 The government can devaluate the exchange rate to a lower level in
terms of other currencies or revaluate it to a higher level.  (2 x 2) (4)
(Accept any other correct relevant response)
(Allocate a maximum of 4 marks for a mere listing of facts/
examples) (8)

2.5 How can the South African government improve the quality of public
sector provisioning?
The South African government can improve the quality of public sector
provisioning by:
 awarding government contract for service delivery to companies with a
positive track record 
 allocating adequate resources to different department to ensure
service delivery without failure 
 eliminating unnecessary rules and procedures (bureaucracy) to ensure
efficient service delivery 
 eliminating corruption among government officials by implementing
whistle blowing channels such direct telephone lines to report
corruption 
 employing government official based on qualifications, skills and
experience to ensure high competence level in the public sector 
 offering incentives such as performance bonuses to civil servants to
motivate them to perform their tasks successfully 
 improving or upgrading the aging infrastructure to ensure reliable
service delivery 
 avoiding nepotism, favouritism, bribery and cadre deployment in
recruitment procedures in the public sector 
 privatizing some government assets to improve efficiency in service
delivery,  e.g. If Eskom could be privatized electricity supply could
improve 

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 holding government officials accountable for their decisions and

actions.
 implementing strict measures to reduce mismanagement of taxpayers'
money,  e.g. Intensifying the implementation of the Public Financial
Management Act (PFMA) 
 forming Private Public Partnerships to enable a faster, more efficient
delivery of goods and services 
 encouraging a competitive work culture by hiring and retaining talented
individuals through competitive compensation packages 
 developing a framework for the appointment and payment of members
to the Board of state-owned companies 
 focusing on scarce resources for highest financial impact 
 setting clear costing and development mandates with financial
implications clearly set out 
(Accept any other correct relevant response) (4 x 2)
(Allocate a maximum of 2 marks for a mere listing of facts/
examples) (8)
[40]

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QUESTION 3: ECONOMIC PURSUITS 40 MARKS – 30 MINUTES

3.1 Answer the following questions.

3.1.1 Name any TWO examples of wealth tax.

 Capital gain tax 
 Transfer duty 
 Estate duty 
 Property tax 
 Donations tax 
 Dividend tax 
(Accept any other correct relevant response) (2 x 1) (2)

3.1.2 Why is small business development important to the South

African economy?
Small businesses can help to create employment for those who are
structurally unemployed / Small businesses may create sources of
income for the households thereby reducing poverty in the country
/ Small businesses contribute to economic growth / Small
businesses increase competition which increases economic
efficiency  (2)
(Accept any other correct relevant response) (1 x 2)

3.2 DATA RESPONSE

3.2.1 Identify a term in the extract above, which relates to the

removal of import tariffs.
Duty-free  (1)

3.2.2 Name ONE other trade protocol of which South Africa is part.
 Southern African Custom Union (SACU) 
 Multilateral Monetary Area (MMA) 
 Southern Africa Development Community (SADC) 
 African Union (AU) 
 Japan-South Africa's Partnership Forum 
 Brazil, Russia, India, China and South Africa (BRICS) 
 European Union (EU) 
 Mercusor
 African Continental Free Trade Area (ACFTA) 
(Accept any other correct relevant response) (1)

3.2.3 Briefly describe the term protectionism.

Government policy that discourages the importing of certain goods
and services so that domestic industries are not exposed to unfair
foreign competition 
(Accept any other correct relevant response) (2)

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3.2.4 Explain a disadvantage when applying the protectionism

policy.
 Other countries may retaliate by implementing protectionism
measures as well 
 Industries may become too reliant on protection and lose the
ability to compete efficiently when protection is removed 
 It is difficult to establish which industries that have the potential
to be competitive and will need protection 
 Decisions about when to reduce or remove protection measures
are difficult to make 
 Inefficient producers are protected at the expense of the
consumers who buy the products
 Protected industries may not mature and develop skills to
compete on their own 
 Local consumers may be denied of better-quality products 
(Accept any other correct relevant response) (2)

3.2.5 How can the African Growth and Opportunity Act (AGOA)
negatively affect South Africa?

 South African local businesses may face unfair competition from

American products that are imported at lower prices. 
 Unemployment may increase as local businesses may be
forced to shutdown 
 Local businesses may make less profits due to a decrease in
demand for their products 
 South African businesses may be forced to reduce their prices
to match competition from the US 
 South Africa's quality standards, especially on food products
may be compromised 
(Accept any other correct relevant response) (2 x 2) (4)

3.3 DATA RESPONSE

3.3.1 In which year did South Africa record the highest human
development index?
2019  (1)

3.3.2 Name ONE indicator used to measure human development.

 Per capita income 
 Literacy rate 
 Life expectancy  (1)

3.3.3 Briefly describe the term economic development

The improvement in the standard of living of a country's population
over a period of time 
(Accept any other correct relevant response) (2)

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3.3.4 Why did South Africa experience a decline in social and

economic development in 2020?
 In 2020 many people lost their employment and other sources
of income due to the lockdown restrictions to reduce spreading
of Covid-19 
 Life expectancy decreased because of the threat imposed by
coronavirus on human lives 
(Accept any other correct relevant response) (2)
3.3.5 How can the government improve the standard of living for
the people?
The government can improve the standard of living by:
 improving education and training for the people to gain skills
and knowledge that will help them find employment and
create employment (entrepreneurship) 
 attracting more investments for people to get jobs and
receive some income 
 paying welfare grants to the poor and vulnerable to allow
them to afford their basic needs 
 improving health care services, sanitation and water supply
for the people to live a healthy lifestyle 
(Accept any other correct relevant response) (2 x 2) (4)
3.4 Briefly discuss partnerships and good governance as benchmark
criteria for regional development.
Partnerships
 Regional development is the responsibility of different stakeholders in
the economy 
 Partnerships should be built between central government, local
authorities, civil society, special interest groups, NGOs and the private
sector 
 Partnerships should be formed in order to improve transparency and
encourage more 'buy in' from all role players 
 Partnerships amongst all role players within the economy is
encouraged by the South African government as it builds a more
inclusive economy  (Accept any other correct relevant response)
(2 x 2) (4)
Good governance
 Regional development strategies should be managed effectively and
free of corruption 
 Principles of accountability and transparency should be applied to
ensure efficient financial management and control 
 Projects should be correctly programmed, monitored and
evaluated 
 Good governance requires proper management of public funds in
many provinces and municipalities 
(Accept any other correct relevant response) (2 x 2) (4)
(Allocate a maximum of 4 marks for a mere listing of facts/ (8)
examples)

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3.5 Evaluate the impact of export promotion on local industries in South

Africa.
Export promotion may impact on local industries in the following ways:
Positive impact
 Bigger export markets allow local businesses to sell more products and
generate more income 
 South African industries may produce goods in large quantities and
benefit from economies of scale 
 The average cost of production may be minimised which allows local
businesses to export their product at lower and competitive prices 
 Incentives provided by the government, such as the concessions on
transport costs may increase profits for exporters 
 Export subsidies reduce production costs and increase the
competitiveness of exporting businesses on international markets 
 Local industries will become more innovate and produce better quality
products to gain competitive advantage on international markets 
(Accept any other correct relevant response)
Negative impact
 Producers who receive financial incentives from the government may
lose their creativity and innovation in term of productive efficiency 
 Producer may have a false sense of security as subsidies distort the
actual cost of production 
 Businesses that do not receive the government's financial support may
find it difficult to compete on export markets 
 Export industries may lose the market when foreign countries retaliate
by imposing tariffs and quota on imported goods 
(Accept any other correct relevant response) (4 x 2)
(Allocate a maximum of 2 marks for a mere listing of facts/
examples) (8)
[40]

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QUESTION 4: MACROECONOMICS AND ECONOMIC PURSUITS

40 MARKS – 30 MINUTES

4.1 Answer the following questions.

4.1.1 Name any TWO characteristics of public goods.

 Non-excludable 
 Non-rivalry 
 Indivisible 
 Infinite/Endless consumption 
 Non-rejectable 
(Accept any other correct relevant response) (2 x 1) (2)

4.1.2 How can South African workers benefit from import

substitution?
More South African workers will get employed to produce the
goods that substitute foreign products / Workers will gain new
knowledge and skills from producing products that were previously
imported
(Accept any other correct relevant response) (1 x 2) (2)

4.2 DATA RESPONSE

4.2.1 Identify the item that records an investment made in a specific

asset, with a fixed future value such as gold

Net financial derivatives  (1)

4.2.2 Name the item that caters for any omissions and errors in the
balance of payments.

Unrecorded transactions  (1)

4.2.3 Briefly describe the term portfolio investment.

The purchasing of financial assets such as shares on the stock

exchange 
(Accept any other correct relevant response) (2)

4.2.4 Explain the purpose of Special Drawings Right (SDR)

allowances in Reserve Assets.
To finance the Balance of Payments disequilibria/deficit
experienced by member countries 
(Accept any other correct relevant response) (2)

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4.2.5 Use the information in the table above to calculate the memo
item (A). Show ALL calculations.
Net direct investment 32 367
Net portfolio investment -4 688 
Net financial derivatives -3 465 
Net other investments 9 594 
Memo item: Balance on Financial Account
excluding reserve assets 33 808  (4)
4.3 DATA RESPONSE

4.3.1 Identify the Industrial Development Zone that manufactures

vehicles.
 Coega IDZ 
 East London IDZ  (1)

4.3.2 Name the key economic activity that Saldanha IDZ specialises
in.

Steel industries  (1)

4.3.3 Briefly describe the term corridor

A track of land that forms a passageway allowing access from one

area to another and providing advantages for the mining,
agriculture and manufacturing industries 
(Accept any other correct relevant response) (2)

4.3.4 Why is it necessary for the government to provide incentives

to businesses?

 To encourage businesses to produce more output of a specific

product 
 To attract more investments to a particular economic activity or
product 
 To attract businesses to neglected areas
 Financial incentives are provided to motivate producers by
reducing the cost of production 
 To diversify trade 
(Accept any other correct relevant response) (2)

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4.3.5 How can South Africa benefit from the introduction of Special
Economic Zones (SEZ)?
South Africa can benefit from the introduction of SEZ in the
following ways:
 Economic growth is stimulated by attracting more
investments in key growth areas 
 Broader industrial areas that are not linked to airports or
ports are created 
 Job opportunities created especially in manufacturing sector
will promote further skills development 
 Production of a wide variety of goods and services will
diversify the economy 
(Accept any other correct relevant response) (2 x 2) (4)

4.4 With the aid of a well labelled Phillips curve, explain the relationship
between inflation and unemployment
Correct drawing(shape)
PHILLIPS CURVE and labelling of PC = 1 mark
  Correct labelling of
vertical axis = 1 mark
Correct labelling of
horizontal axis = 1 mark
Any correct indication of
the trade-off from point
A to B and B to C = 1 mark
Max 4


 The curve illustrates that there is a trade-off or inverse relationship

between unemployment and inflation 
 The negative relationship implies that the government can choose how
much unemployment they wish to trade-off for inflation 
 Point A represents the natural unemployment rate of 14% where
inflation rate is 0% 
 When the government implement demand-side policies to reduce
unemployment from 14%, inflation will increase 
 Between point A and B, if unemployment rate decreases from 14% to
10%, inflation rate will increase from 0% to 2%. 
 Between point B and C, if unemployment rate decreases from 10% to
8%, inflation rate will increase from 2% to 6%. 
(Accept any other correct relevant response) Max 4
(Allocate a maximum of 4 marks for a mere listing of facts/
examples) (8)

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4.5 Analyse the demand-side and supply-side factors that influence

economic growth in South Africa.
Positive factors
 Government subsidies in form of cash grants paid to the SMMEs help to
improve the competitiveness of small businesses 
 Increase in government expenditure on infrastructure development
especially in neglected areas will attract investments to different regions of
the country 
 Foreign direct investments help to create new job opportunities and
contribute to the real GDP 
 Increasing investments in skills development improves the skills of the
South African workers and productivity which will increase production
output 
 Demand for clean energy produced from solar and other sources results
in the establishment of new companies which will create jobs 
 Reduction of corruption in state-owned enterprises will improve efficiency
of infrastructural services thereby increasing production 
(Accept any other correct relevant response)
Negative factors
 Poor health care services and education may result in lower labour
productivity which will reduce production output 
 Inadequate infrastructures such as roads, railway lines and bridges make
transportation more expensive and slows the overall efficiency of the
country 
 Low investors' confidence towards the South African economy reduces
the ability of the economy to attract foreign direct investments 
 Low levels of savings have reduced the availability of loanable funds
resulting in less private investments 
 Political, industrial and social instability reduce investors' confidence
leading to a net capital outflow 
 Electricity shortages lead to lower output as production is lost through the
nation-wide power cuts 
 Rising prices of imported production inputs such as oil and agricultural
input prices lead to higher production costs which may discourage some
producers 
 High inflation rate, recorded above the upper-limit of the inflation target,
resulted in low consumer spending, discouraging production of goods and
services 
(Accept any other correct relevant response) (4 x 2)
(Allocate a maximum of 2 marks for a mere listing of facts/examples) (8)
[40]

TOTAL SECTION B: 80

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SECTION C

Answer any ONE of the two questions in this section.

QUESTION 5: MACROECONOMICS 40 MARKS – 40 MINUTES

 Discuss in detail the markets within the four-sector circular flow model.
(26 marks)
 How can the increases in injections impact on the South African
economy? (10 marks)

INTRODUCTION
The circular flow is a simplified economic model that illustrates the inter-relationship
between the economic participants OR
A market is a mechanism that brings buyers and sellers together to exchange different
types of products 
(Accept any other correct relevant introduction) (Max 2)

BODY: MAIN PART

FOUR TYPES OF MARKETS IN THE CIRCULAR FLOW

(a) Product/Goods market 

 Product market is where goods and services are bought and sold 
 Firms, government and foreign sector supply goods and services and their
movement is called real flow
 Consumers, firms, government and foreign sector buy goods and services and
their payments represent money flow
 Goods are defined as any tangible items such as food, clothing and cars that
satisfy some human needs 
 In capital goods market products such as buildings and machinery are
exchanged 
 Consumer goods market involves the trading of durable consumer goods, semi-
durable consumer goods and non-durable consumer goods 
 Services are defined as non-tangible actions and includes wholesale and retail,
transport and financial markets 

(b) Factor/Resources/Input market 

 Factor market is where factors of production are exchanged,  e.g. the labour
market, property market and the financial markets 
 Households are the owners of factors of production and they sell them to firms
to produce goods and services 
 The factors of production are labour, entrepreneurship, capital and land and
they are exchanged for wages, profit, interest, and rent respectively 
 Factor services are real flows and they are accompanied by counter flows of
income on the factor market 

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(c) Financial markets 

 Financial markets render financial services to the other participants in the
economy by gathering surplus funds and lending them to those who needs
funding 
 Banks, insurance companies and pension funds form part of the financial
market
 Financial markets are not directly involved in production of goods and services,
but act as a link between households and businesses with surplus income and
other participants who require it 

Money market 
 The money market is the market for short-term and very short-term savings and
loans 
 The South African Reserve Bank (SARB) is a key institution in the money
market
 The SARB administers the function of legislating and managing the money
market 
 Money market includes inter-bank lending for a period as short as overnight 
 The securities traded include short term deposits, short term debentures and
treasury bills 

Capital market 
 The capital market is the market for long-term savings and loans 
 The Johannesburg Securities Exchange (JSE) is a key institution in the capital
market 
 The securities traded in this market are long term deposits, mortgage bonds and
shares 

(d) Foreign exchange market 

 The foreign exchange market is a multi-national market where currencies of all
the countries are traded,  e.g. The South African rand can be exchanged for
the US dollar 
 The foreign exchange market originates when one country imports goods from
another country and domestic currency have to be exchanged in order to pay for
such imports 
 Foreign exchange can be bought and sold at the banks and foreign exchange
agencies 
 The South African rand is freely traded in the forex markets and its value is
determined by the market forces of demand and supply 
(Accept any other correct relevant response)
(Allocate a max of 8 marks for headings/subheadings/examples) (Max 26)

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ADDITIONAL PART
Increases in injections may impact on the South African economy as follows:
 Increase in investments will expand the tax base thereby increasing tax revenue
for the government 
 The government's capacity to develop infrastructure such as energy and
transport will increase 
 Establishment of new businesses and infrastructure development projects will
create more employment 
 Consumer spending may increase as households receive more income leading
to an increase in aggregate demand 
 Increase in government expenditure on welfare payments and social
development improves the standard of living especially for the poor people 
 Increase in government spending in the form providing subsidies and incentives
to businesses will encourage production of more goods and services 
 Increase in subsidies may reduce the cost of production which will reduce
inflation in the economy 
 Increase in South African exports may result in the appreciation of the rand
which will reduce the cost of importing production inputs such as oil 
 Increase in export production contribute to an increase in the real GDP of the
country 
 Balance of payments problems may decrease as the trade balance increases
due to an increase in exports 
 Through the multiplier process, the country's national income will increase by a
bigger margin 
(Accept any other correct relevant response) (Max 10)
(Allocate a maximum of 2 marks for a mere listing of facts/ examples)

CONCLUSION
Markets ensure availability of consumer goods and services to households and
government while allowing businesses access to factors of production. 
(Accept any other relevant higher order conclusion.) (Max 2) [40]

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QUESTION 6: ECONOMIC PURSUITS 40 MARKS – 40 MINUTES

 Discuss in detail the various social indicators. (26 marks)

 How can urbanisation influence the standard of living for the South African
population? (10 marks)
INTRODUCTION
Social indicators are measures that economists use to evaluate the performance of a
country in terms of the social well-being of its citizens 
(Accept any other correct relevant introduction) (Max 2)
MAIN PART
1. Demographics 
 This deals with the characteristics of the population, such as size, race, age,
gender, income geographic distribution, language, education, occupation and
religion 
 These are definable issues related to human well-being over a period of
time 
 The size of the population is important for infrastructure and social programmes
(a) Population growth: 
 Population growth is the increase in the number of people in a population
or dispersed group 
 In South Africa population numbered 59,4 million in 2020, an increase of
1,23% from 2019 
 Population growth is slowing down as the current population in 2022 is
approximately 60 million, an increase of 0,84% from 2021 
 Measuring population growth is important for delivering social services
and for identifying the size of the tax base (the total number of people
paying taxes) 
 Understanding population growth is important for predicting, managing,
monitoring, and eradicating pest and disease outbreaks 
 Population growth usually has implications for indicators related to
education, infrastructure and employment 
 Human settlements and the use of natural resources are also related to
population growth 
(b) Life expectancy 
 The term 'life expectancy' refers to the number of years a person can
expect to live 
 Life expectancy is based on an estimate of the average age that
members of a particular population group will be when they die 
 In 2019, life expectancy for women in South Africa was about 67,68
years, while life expectancy for men was about 60,73 years on
average 
 It is a measure that is often used to determine the overall health of a
community 
 Changes in life expectancy are often used to describe trends in
mortality 



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 An increase in life expectancy may increase the productivity of available

human resources, e.g., by improving health of workers 
 Life expectancy for a particular population group depends on factors such
as their lifestyle, access to healthcare, diet and economic status 
2. Nutrition and Health 
 The standard of living of the population is related to the quality of nutrition and
health 
Nutrition
(a) Child malnutrition 
 Malnutrition is expressed in two ways – weight for age (under-weight)
and height for age (dwarfism) 
 The proportion of underweight children is the most important indicator of
malnutrition 
 In South Africa malnutrition is one of the leading causes of child deaths,
and the number of affected children is increasing 
 The main causes of childhood malnutrition are household food insecurity,
inadequate care and unhealthy household environment, and lack of
health care services 
(b) Overweight children/Obesity 
 There is an association between obesity of children and other
diseases
 South Africa has a combined overweight and obesity prevalence of
13,5% in children aged 6–14 years, which is higher than the 10% global
prevalence in school children 

Health
(a) Infant mortality/Child mortality 
 Infant mortality refers to the number of children who die before the age of
one year and it is one way of measuring the health of a population 
 The infant mortality rate is the number of infant deaths for every 1 000 live
births 
 Infant mortality rate of South Africa decreased gradually from 93,59 deaths
per thousand live births in 1971 to 25,11 deaths per thousand live births in
2020 
 The main causes of infant mortality in South Africa are HIV and AIDS,
pregnancy and childbirth complications, and malnutrition, which are all
related to poverty 
 Reducing infant mortality requires increased health sector spending and
improved health systems functioning 
(b) Under-five mortality 
 Under-five mortality is the number of children that will die before the age of
5 years 
 Under-five mortality rate of South Africa fell gradually from 143,8 deaths per
thousand live births in 1971 to 32,6 deaths per thousand live births in 2020

(c) Health expenditure 
 Health expenditure measures the amount of money spent on health as a
percentage of GDP 
 In 2019, health expenditure as a share of GDP for South Africa was
9,1% 

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(d) Access to safe drinking water 

 Access to safe drinking water measures the percentage of a population that
has reasonable access to safe drinking water 
 In South Africa the most improved water source was piped water inside the
house with about 44% of households having such access 
 South Africa is expected to experience a water deficit of 17% by 2030, and
climate change may worsen the situation 
(e) Access to sanitation facilities 
 Access to sanitation facilities measures the percentage of a population with
at least adequate sanitation facilities that can prevent human, animal and
insect contact 
 In South Africa about 80% of households use an improved sanitation
facility
 Approximately, 61% of households have flush toilets connected to the public
sewer and about 12% of households have pit toilets with ventilation
pipes 
 Poor sanitation causes economic losses associated with the direct costs of
treating illnesses and lost income through reduced productivity 

3. Education 
 People's standard of living is directly related to their level of formal education
 Five or six years of schooling is a critical threshold for the achievement of
sustainable literacy and numeracy skills 
(a) Public expenditure 
 Public expenditure measures the percentage of the national budget that is
directed towards education 
 In South Africa education receives the greatest share of government
spending, with 21% of non-interest allocations set aside for basic and higher
education 
 Government expenditure on education, as a percentage of GDP in South
Africa was about 6,2 % in 2020 
(b) Secondary enrolment 
 Secondary enrolment shows the percentage of an age group attending high
school 
 Secondary school enrolment, in South Africa has been improving over the
last decade 
(c) Primary completion 
 Primary completion refers to the percentage of an age group that has
completed primary education 
 The percentage is an indicator of the efficiency of the education system 
 The primary school completion percentage for South Africa increased from
77,07% in 1991 to 92% in 2019 
(d) Youth literacy rate 
 Youth literacy rate is the percentage of people ages 15-24 who can both
read and write 
 Youth literacy rate of South Africa increased from 97,6% in 2007 to 99% in
2015, growing at an average annual rate of 0,24% 
 Literacy not only enriches an individual's life, but it creates opportunities for
people to develop skills that will help them provide for themselves 
 Literacy improves the ability of individuals to access information 

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4. Services 
 Services are vital to enhance people's lifestyle and level of economic and social
development 
(a) Electricity 
 The percentage of households connected to the country's main electricity
supply increased to 84,7% in 2018 
(b) Refuse removal 
 Approximate 66,4% of households in South Africa had access to refuse
removal by the local authorities once a week in 2018 

(c) Water supply 

 In South Africa about 89% of households had access to clean water in
2018
(d) Sanitation 
 Just over 83% of households in South Africa had access to functioning basic
sanitation in 2018 
 e.g. flush toilets/pit toilets with ventilation pipes/and chemical toilets 

5. Housing and urbanisation 

 The standard of living of the population is directly related to the quality of their
housing and services 
Housing
 In 2017, about 80% of South Africans were living in formal dwellings 
 A further 14% was living in informal housing, which are mostly squatter
settlements on the periphery of cities and towns and in the gardens of formal
houses 
 The remaining 6% was living in traditional homes in rural villages 
 Many South African citizens are poor and cannot afford property 
 The government supplies housing subsidies and the private sector provides
housing loans 
 The government built 2,7 million low-cost houses over the past 15 years, but
there is still an estimated backlog of 2 million more 
 Adequate housing can also facilitate labour mobility within the economy and
help the economy adjust to adverse shocks 
Urbanisation
 Urbanisation occurs because people move from rural areas (countryside) to
urban areas (towns and cities) 
 Urbanisation is the process of increasing the proportion of people living in towns
and cities
 South Africa is urbanising rapidly with 63% of households already living in urban
areas 
 The statistics are expected rise to 71% by 2030 which will increase demand on
basic infrastructure requirements 
 Urbanisation is measured/caused by natural growth of the urban population,
rural-urban migration and the establishment of new towns 
(Accept any other correct relevant response)
(Allocate a max of 8 marks for headings/subheadings/examples) (Max 26)

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ADDITIONAL PART
Urbanisation can influence the standard of living for the South African
population as follows:
Positive influence
 More people will have access to employment in manufacturing industries which
will increase income levels 
 Children will have access to better quality education because most schools in
urban areas have better infrastructural facilities 
 Illnesses and diseases will decrease due to improved access to proper
sanitation and clean water 
 South Africans will have access to a variety of goods and services thereby
improving the quality of their lives 
 People may take advantage of the entrepreneurial opportunities available in
towns to start small businesses, thereby creating sources of income 
( Accept any other correct relevant response)
Negative influence
 Movement of people from rural to urban areas may causes overpopulation of
cities and towns which may result in more criminal activities 
 Excess demand for services may result in poor services delivery by the
government 
 Overpopulation may also result in the development of informal settlements that
are associated with poor water supply and sanitation 
 Illnesses and diseases may increase in overpopulated towns 
 Informal settlements may result in illegal connections of electricity putting
human lives in danger 
 Traffic congestion in cities and towns may increase road accidents resulting in
loss of lives 
(Accept any other correct relevant response) (Max. 10)
(Allocate a maximum of 2 marks for a mere listing of facts/ examples)

CONCLUSION
Social indicators are the best yardsticks in checking the development and progression
of communities as a result of government initiatives to improve the lives of the society
at large 
(Accept any other relevant higher order conclusion) (Max. 2) [40]

TOTAL SECTION C: 40
GRAND TOTAL: 150

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