FINAL EXAMINATION
PROGRAMME Bachelor of Commerce in Human Resource Management
MODULE Economics 1B
YEAR One (1)
INTAKE July 2018
DATE 30 May 2019
09h00-12h00
TIME
DURATION 3 hours
TOTAL MARKS 100
INSTRUCTIONS TO THE CANDIDATE
1. Questions must be attempted in the answer book provided.
2. All queries should be directed to the invigilator; do not communicate or attempt to communicate with any other
candidate.
3. You have THREE HOURS to complete this paper. You are not allowed to leave the examination room within
the first hour and in the last 15 minutes of this examination.
4. This is a CLOSED BOOK examination.
5. Read ALL instructions carefully.
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SECTION A [40 MARKS]
Answer ALL questions in this section.
QUESTION 1 (20 Marks)
State whether the following statements are True or False. Write down the question number and the word True or
False next to it. E.g. 2.11 True
1.1 Macroeconomics is concerned with the economy as a whole.
1.2 The Lorenz curve illustrates the degree of inequality in the distribution of income.
1.3 One of the problems associated with GDP is that GDP measures the output of a country.
1.4 If 2019 is the base year for real GDP calculations, we know for certain that Nominal GDP equals Real GDP in
2019.
1.5 When all factors of production are in full use, this is called full employment.
1.6 GNP refers to the production resulting from the employment of foreign residents of South Africa.
1.7 Free Marketers are capitalists.
1.8 Classical economies is a theory of total spending in the economy and its effect on output and inflation.
1.9 If government spending is higher than current government revenue, this is known as ‘’the budget deficit’’.
1.10 If inflation was 9% in 2019, and you received a 7% increase in income during the same year, then over the year
your nominal income decreases but real income increases.
QUESTION 2 (20 Marks)
Define the following economic terms:
2.1 Consumer Price Index (CPI)
2.2 Seasonal Unemployment
2.3 Induced Consumption
2.4 Nominal Wage
2.5 Floating Exchange Rate
2.6 Gross National Product (GNP)
2.7 Economic Growth
2.8 Fiscal Policy
2.9 Frictional Employment
2.10 Foreign Exchange Market
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SECTION B [60 MARKS]
Answer ANY THREE (3) questions in this section.
QUESTION 3 (20 Marks)
3.1 Discuss what market failure is. (4 marks)
3.2 Explain in detail how the following factors cause market failure:
3.2.1 Monopoly and imperfect competition. (2 marks)
3.2.2 Public goods. (2 marks)
3.2.3 Externalities. (2 marks)
3.2.4 Asymmetric information. (2 marks)
3.2.5 Common property resources (2 marks)
3.2.6 Income distribution. (2 marks)
3.2.7 Merit goods. (2 marks)
3.2.8 Macroeconomic growth and stability. (2 marks)
QUESTION 4 (20 Marks)
4.1 Distinguish between economic growth and economic development (5 marks)
4.2 Explain ANY THREE (3) sources of economic growth. (6 marks)
4.3 Discuss the arguments for and against economic growth. (9 marks)
QUESTION 5 (20 Marks)
5.1 Explain the macroeconomic concept of nationalisation in detail. (2 marks)
5.2 Discuss SIX (6) advantages of implementing privatisation in the South African economy. (12 marks)
5.3 Discuss TWO (2) arguments against implementing privatisation in the South African economy. (4 marks)
5.4 Discuss what Commercialisation is (2 marks)
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QUESTION 6 (20 Marks)
6.1 With the aid of an example, distinguish between comparative advantage and absolute advantage. (8 marks)
6.2 Discuss how each of the following measures are used by a government to protect domestic firms against foreign
competition and to control the volumes of imports entering the country:
6.2.1 Import tariffs (2 marks)
6.2.2 Import quotas (2 marks)
6.2.3 Subsidies (2 marks)
6.2.4 Non- tariff barriers (2 marks)
6.2.5 Exchange control (2 marks)
6.2.6 Exchange rate policy (2 marks)
END OF PAPER
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