ALIGNED-ECON314.

1-1-ENG
Requirements for this paper/Benodighede vir hierdie vraestel: Resources/Hulpmiddels:

Answer Scripts/ Multi-choice cards (A4)/

Antwoordskrifte: X Multikeusekaarte (A4)
Attendance Slips (Fill-in Paper)/ Graph Paper/
Presensiestrokies (Invulvraestel): GrafiekPapier
Scrap Paper/ Calculators/
Rofwerkpapier Sakrekenaars
Multi-choice cards (A5)/ Laptop (Power not provided)/
Multikeusekaarte (A5) X Skootrekenaar (Krag word nie voorsien nie)

Type of Assessment/ Duration/ 3 Hrs 00 Min

Tipe Assessering:
Exam Opportunity:1 Tydsduur:

Paper Number/ Maximum Marks/ 100

1
Vraestel Nommer: Maksimum Punte:

Module Code/ Module Description/

ECON314 PUBLIC ECONOMICS
Modulekode: Module Beskrywing:

Examiner(s)/ Mrs L Mothibi-PC;Prof EPK Kleynhans- Date/

Eksaminator(e): PC;Mrs P Maziya-VC;Prof D Daw -MC; 2022/06/10
Datum:

Time/
Tyd: 09:00
Internal/Interne
Prof C Claassen-PC;
Moderator(s): Qualification/
Kwalifikasie: BCOM
External Moderator(s)/ Dr C Coetzee
Eksterne Moderator(s):

Submission of answer scripts/Inhandiging van antwoordskrifte: ORDINARY

Instructions:

1. Answer ALL questions in sections A, B & C.

2. The ceteris paribus condition applies to all questions.
3. Read and fully understand a question before answering.
4. Where possible, provide examples.
5. It is in your best interest to write neatly and legibly.

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 SECTION B: SHORT-MEDIUM QUESTIONS [20]

Answer all the questions in this section.

Question 1 [10]
The minister of finance, Enoch Godonngwana, announced in the 2022 budget speech that there would be an
increase in excise duties for alcohol and tobacco. This could be seen as a good example of selective tax.
Against this background, answer the following questions:

(2)
1.1 Distinguish between selective tax and general tax, giving one example of each.

1.2 In each of the following two scenarios, identify the type of tax system depicted:
Mickey, a sales consultant, graduated with a master's degree in October 2020. Due to his
new qualification and experience, his boss decided to promote him to assistant sales
manager in 2021. His promotion not only came with a new title, but also with a new salary.
1.2.1 (1)
Before Mickey was promoted, he earned R40 000 and paid 7% towards income tax.
However, with this new promotion, Mickey will earn R55 000, and he will contribute 13%
towards income taxation.
1.2.2 Which tax system is depicted in the table below? (1)

Income Percentage of Amount of tax

income paid in
tax

Family A 10 000 20% 2 000

Family B 50 000 20% 10 000

Family C 100 000 20% 20 000

1.3 The tax system evolves from time to time as new taxes are introduced and others are (4)
amended. The important question is whether these changes are good or bad. Against this
background, briefly discuss the properties of a good tax system.
The dominant source of finance for public expenditure is taxation. However, government
1.4 expenditure may also be financed in other ways in addition to taxation. Identify any two other (2)
important sources of government finance besides taxation.

Question 2 [8]
Government's fiscal policy seeks to support structural reforms in the South African economy. Nowadays, much
attention is given to the connections between fiscal policymaking frameworks and fiscal outcomes.

2.1 As a third-year ECON 314 student, explain fiscal policy to a first-year economic student. (1)
2.2 Like all other forms of economic policy, fiscal policy has both an active and passive element.
Distinguish between the active and passive elements of fiscal policy and give an example (2)
of each.
2.3 Distinguish between numerical fiscal rules and procedural fiscal rules. (2)
2.4 Identify the six main macro-economic goals the government uses to achieve this. (3)

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 Question 3 [2]

The summary of views on the impact of government debt consists of a matrix of possibilities
associated with various viewpoints and basic economic considerations of efficiency, equity and
macro-economic stability. Against this backdrop, answer the following question: (2)

Fill in the table below by summarising the views on the impact of public debt.

Viewpoint Equity Macro-economic stability

Internal-external debt
argument

Ricardian equivalence

SECTION C: CASE STUDIES [60]

Answer all the questions in this section.

Question 1 [20]
Read the following article extract and answer the questions that follow.

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1.1 Shaw (2010) argues that education is, to some extent, a private good, although it is often
viewed as a public good. Do you agree with Shaw's perspective that education is a private (5)
good? Justify your answer.

1.2 Assuming that education is a "bad" public good, make use of a graph and briefly analyse
(7)
why this would cause a market failure.
1.3 Education is assumed to confer a positive externality to the individual concerned and the (8)
society at large. Based on this assumption, briefly justify how education could be considered
a positive externality. Use a graph in your discussion.

Question 2 [20]
Read the following article extract and answer the questions that follow.

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 Critically explain why there is usually a conflict between the constitutional rights of citizens
2.1 (2)
and affordability when the government compiles the state budget.

According to Wagner's theory of the stages of development, why can it be argued that South
2.2 Africa has not yet fully reached the middle phase if the growth in the types of government (4)
expenditure is taken into account?

As a result of the Corona pandemic and the war in Ukraine, government spending has
increased significantly. According to Peacock and Wiseman's Displacement Theory, why
2.3 (4)
may one expect that this increase in government spending will not diminish again after the
pandemic and the war? Explain your answer.

The Meltzer–Richard Hypothesis claims that an increase in government spending is not for
economic reasons but due to the functioning of the democratic system and that government
2.4 (3)
spends more for political reasons. How does this hypothesis work, and do you agree with
it? Motivate your answer.

2.5 According to theories based on Solow-type production functions, higher spending on capital (3)
goods by government, such as infrastructure, usually leads to the crowding-out of private

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 investment spending, but it can also have positive economic consequences. How is this
possible? Explain your answer.

Imagine that the government adds a general ad valorem wealth tax on all producers while
the country's citizens are, in general, very price inelastic. Who will pay most of this tax?
2.6 Producers or consumers? Draw a graph that shows the shift in the general supply curve (4)
that illustrates where the most incidence will lie and indicate clearly what section is paid by
consumers and what part by producers.

Question 3 [20]
Read the following article extract and answer the questions that follow.

transported to local hospitals by ambulance. It is alleged that while travelling on the dark stretch of road
the driver lost control of the vehicle causing it to overturn multiple times," the group said.

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 3.1 Graphically illustrate and briefly analyse the market failure caused by drunken driving. (7)

3.2 Propose and evaluate five possible policies that might help reduce the social costs of drinking (10)
and driving in South Africa.

3.3 Briefly analyse how the Coase theorem can be used as a solution if the private right of (3)
ownership can be awarded to the victims of drunken driving accidents.

TOTAL: 100
File reference: 8.1.7.2.2

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 ALIGNED-ECON314.1-1-AFR
Requirements for this paper/Benodighede vir hierdie vraestel: Resources/Hulpmiddels:

Answer Scripts/ Multi-choice cards (A4)/

Antwoordskrifte: X Multikeusekaarte (A4)
Attendance Slips (Fill-in Paper)/ Graph Paper/
Presensiestrokies (Invulvraestel): GrafiekPapier
Scrap Paper/ Calculators/
Rofwerkpapier Sakrekenaars
Multi-choice cards (A5)/ Laptop (Power not provided)/
Multikeusekaarte (A5) X Skootrekenaar (Krag word nie voorsien nie)

Type of Assessment/ Duration/ 3 Hrs 00 Min

Tipe Assessering:
Exam Opportunity:1 Tydsduur:

Paper Number/ Maximum Marks/ 100

1
Vraestel Nommer: Maksimum Punte:

Module Code/ Module Description/

ECON314 PUBLIC ECONOMICS
Modulekode: Module Beskrywing:

Examiner(s)/ Mrs L Mothibi-PC;Prof EPK Kleynhans- Date/

Eksaminator(e): PC;Mrs P Maziya-VC;Prof D Daw -MC; 2022/06/10
Datum:

Time/
Tyd: 09:00
Internal/Interne
Prof C Claassen-PC;
Moderator(s): Qualification/
Kwalifikasie: BCOM
External Moderator(s)/ Dr C Coetzee
Eksterne Moderator(s):

Submission of answer scripts/Inhandiging van antwoordskrifte: ORDINARY

Instruksies:

1. Beantwoord ALLE vrae in Afdelings A, B en C.

2. Die ceteris paribus-beginsel geld telkens.
3. Lees elke vraag deeglik en maak seker jy verstaan wat gevra word alvorens jy ʼn vraag beantwoord.
4. Gee voorbeelde, waar moontlik.
5. Dit is in jou belang om netjies en leesbaar te skryf.

ECON314 1/12
 AFDELING B: KORT TOT MEDIUM LENGTE VRAE [20]

Beantwoord al die vrae in hierdie afdeling.

Vraag 1 [10]
Die minister van finansies, Enoch Godonngwana, het gedurende sy 2022-begrotingsrede aangekondig dat die
aksynsbelasting op alkohol en tabak verhoog gaan word. Hierdie kan as ʼn goeie voorbeeld van selektiewe
belasting gesien word. Gebruik hierdie inligting om die volgende vrae te beantwoord:

1.1 Onderskei tussen selektiewe en algemene belasting en gee een voorbeeld van elk. (2)
1.2 Identifiseer die tipe belastingstelsel in elk van die volgende scenario’s:
Mickey, ʼn verkoopskonsultant, het in Oktober 2020 met ʼn meestersgraad gegradueer. As
gevolg van sy nuwe kwalifikasie en ondervinding het sy baas besluit om hom in 2021 tot
assistent-verkoopsbestuurder te bevorder. Sy bevordering het nie net met ʼn nuwe titel
1.2.1 (1)
gepaardgegaan nie, maar ook met ʼn verhoging van sy salaris. Voordat Mickey bevorder is,
het hy R40 000 verdien en 7% vir inkomstebelasting betaal. Met hierdie nuwe bevordering
sal Mickey nou egter R55 000 verdien en hy sal 13% tot inkomstebelasting bydra.
1.2.2 Watter belastingstelsel word in die tabel hieronder aangedui? (1)

Inkomste Persentasie van Hoeveelheid

inkomste aan belasting
belasting betaal

Gesin A 10 000 20% 2 000

Gesin B 50 000 20% 10 000

Gesin C 100 000 20% 20 000

1.3 Die belastingstelsel ontwikkel namate nuwe belastings ingestel en ander gewysig word. Die (4)
belangrike vraag is of sulke veranderinge goed of sleg is. Aan die hand van hierdie inligting,
bespreek kortliks die eienskappe van ʼn goeie belastingstelsel.
Die belangrikste bron van finansiering van owerheidsbesteding is belasting.
1.4 Owerheidsbesteding kan egter ook op ander wyses gefinansier word. Identifiseer enige (2)
ander vier belangrike bronne van owerheidsbesteding naas belasting.

Vraag 2 [8]
Die regering se fiskale beleid poog ook om strukturele verandering in die Suid-Afrikaanse ekonomie teweeg
te bring. Daar word deesdae baie aandag geskenk aan die verwantskap tussen fiskale beleidsraamwerke en
fiskale uitkomstes.

As ʼn derdejaarstudent wat ECON314 neem, verduidelik aan ʼn eerstejaarstudent wat fiskale

2.1 (1)
beleid behels.
Soos die geval met ander ekonomiese beleide is, het fiskale beleid ʼn aktiewe en passiewe
2.2 komponent. Onderskei tussen die aktiewe en passiewe komponente van fiskale beleid en (2)
gee voorbeelde van elk.
2.3 Onderskei tussen numeriese en prosedurele fiskale reëls. (2)
2.4 Identifiseer die belangrikste ses makro-ekonomiese doelstellings. (3)

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 Vraag 3 [2]
Die opsomming van sienings oor die impak van staatskuld, bestaan uit ʼn matriks moontlikhede wat verband
hou met verskeie standpunte en basiese ekonomiese oorwegings rakende doeltreffendheid, billikheid en
makro-ekonomiese stabiliteit. Met inagneming van hierdie inligting, beantwoord die volgende vraag:

Voltooi die onderstaande tabel deur die onderskeie sienings rakende die effek van staatskuld in
(2)
te vul.

Standpunt Billikheid Makro-ekonomiese

stabiliteit

Interne-eksterne
skuldargument

Ricardiaanse gelykheid

AFDELING C: GEVALLESTUDIES [60]

Beantwoord al die vrae in hierdie afdeling.

Vraag 1 [20]

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1.1 Alhoewel onderwys dikwels as ʼn openbare goed beskou word, reken Shaw (2010) dat (5)
onderwys tot ʼn mate ʼn privaat-goed is. Stem jy saam met Shaw se siening dat onderwys ʼn
voorbeeld van privaat-goedere is? Motiveer jou standpunt.

Maak die aanname dat onderwys ʼn “slegte” openbare goed is. Gebruik ʼn grafiek en analiseer
1.2 (7)
kortliks waarom dit tot markmislukkings kan lei.

1.3 Daar word aanvaar dat onderwys positiewe eksternaliteite aan beide die betrokke individu en (8)
die gemeenskap oor die algemeen verleen. Aan die hand van hierdie aanname, regverdig
kortliks hoe onderwys as ʼn positiewe eksternaliteit beskou kan word. Maak van ʼn grafiek in
jou bespreking gebruik.

Vraag 2 [20]

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2.1 Verduidelik krities waarom daar gewoonlik teenstrydigheid tussen die grondwetlike regte (2)
van landsburgers en bekostigbaarheid plaasvind wanneer die owerheid die staatsbegroting
saamstel.

Waarom kan daar, indien die groei in tipes staatsbesteding in ag geneem word, volgens
2.2 Wagner se teorie oor die fases van ontwikkeling, aangevoer word dat Suid-Afrika nog nie (4)
heeltemal die middelfase bereik het nie?

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 As gevolg van die Corona-pandemie en die oorlog in die Oekraïne het owerheidsbesteding
aansienlik toegeneem. Waarom kan mens volgens Peacock en Wiseman se
2.3 Verplasingsteorie (“Displacement effect”) aanvoer dat hierdie styging in (4)
owerheidsbesteding nie weer na die pandemie en die oorlog gaan verminder nie?
Verduidelik jou antwoord.

Die Meltzer-Richard-hipotese beweer dat hierdie toename in owerheidsbesteding nie om

ekonomiese redes is nie, maar as gevolg van die werking van die demokratiese stelsel en
2.4 (3)
dat die owerheid meer om politieke redes spandeer. Hoe werk hierdie hipotese en stem jy
daarmee saam? Motiveer jou antwoord.

Volgens teorieë wat op Solow-tipe produksiefunksies berus, lei hoër owerheidsbesteding

op kapitaalgoedere, soos byvoorbeeld infrastruktuur, gewoonlik tot verdringing van privaat
2.5 (3)
investeringsbesteding, maar dit kan ook positiewe ekonomiese gevolge hê. Hoe is dit
moontlik?

Gestel die regering besluit om ʼn algemene ad valorem-welvaartbelasting op alle produsente

te hef, terwyl die landsburgers oor die algemeen baie prys onelasties is. Wie sal die meeste
van hierdie belasting betaal? Produsente of verbruikers? Teken slegs ʼn grafiek wat die
2.6 (4)
verskuiwing in die algemene aanbodkromme illustreer. Wys waar die grootste impak van
die belasting geleë sal wees en toon duidelik aan watter deel van die belasting die
verbruikers moet betaal en watter deel deur produsente betaal sal moet word.

Vraag 3 [20]

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3.1 Analiseer kortliks en illustreer met behulp van ʼn grafiek die markmislukking wat deur (7)
dronkbestuur veroorsaak word.
3.2 Stel vyf moontlike beleidsopsies voor wat die sosiale kostes van dronkbestuur in Suid-Afrika (10)
kan verminder en evalueer jou voorstelle.
3.3 Ontleed kortliks hoe die Coase-teorie gebruik kan word as oplossing indien privaat regte aan (3)
die slagoffers van dronkbestuurongelukke toegeken kon word.

ECON314 12/12
 TOTAAL: 100
File reference: 8.1.7.2.2

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