CURRI

CULUM GRADE10-
12DI
RECTORATE

NCS(
CAPS)SUPPORT

LASTPUSHREVI
SIONDOCUMENT

TEACHERGUI
DE

ECONOMI
CS:PAPER1&2

GRADE12

2023
0|
Page
NO. TOPI
C

PAPER1

1. CI
RCYLARFLOW:NATI
ONALACCOUNTSAGGREGATESANDTHE

MULTI
PLI
ER

2. BUSI
NESSCYCLES:NEW ECONOMI
CPARADI
GM

3. FOREI
GNEXCHANGEMARKETS

4. PROTECTI
ONI
SM ANDFREETRADE

5. ECONOMI
CGROWTHANDDEVELOPMENT

PAPER2

1. COSTSANDREVENUES

2. PERFECTMARKETS

3. MONOPOLY

4. MONOPOLI
STI
CCOMPETI
TION

5. OLI
GOPOLY

6. MARKETFAI
LURES

7. I
NFLATI
ON

1|
Page
8. ENVI
RONMENTALSUSTAI
NABI
LITY

TOPIC1:CI RCULARFLOW
ACTIVITY1
1.
1.Variousopt i
onsar epr ovidedaspos sibleans werstot hef ol
lowingquestions.
Choos et heans werandwr iteonlythel et t
er(A- D)nextt otheques ti
onnumber s
(1.
1.1.to1. 1.5)int heANSWERBOOKe. g.1.1.6.A
1.
1.1.Theval ueofal lfinalgoodsands ervicespr oducedwi thintheboundar i
esofa
c ountr yisknownasGDPat ___
_______
_ ___
_
A.bas i
cpr i
ce
B.c urrentpr i
ce
C.c ons tantpr ice
D.f actorc ost
1.
1.2.Thec ont i
nuousmovementoff actorsofpr oduc t
ion,goodsands ervi
ces
amongt hepar ti
c ipantsint heeconomyi scall
ed_ __
________
____
___
___
A.l eakages
B.i njec ti
ons
C.r ealflow
D.moneyf l
ow
1.
1.3.Amar ketf orshor t-terml oans,very-s hortloansandi nves t
ment s
,isknownas
t he_ _
_ __
___ _
_____mar ket
A.Money
B.c api t
al
C.pr oduc t
D.f i
nanc i
al
1.
1.4.Themet hodofc alculati
ngGDPwher ebyc ompens ationofempl oyeesistaken
intoc ons iderationi sc al
led_ __
___
_ ___
___ _
_____
A.expendi t
uremet hod
B.pr oduc ti
onmet hod
C.i nc omemet hod
D.val ue- addedmet hod
1.
1.5.Anaddi t
iont ot hec ountry’sstockofc apit
alorc apit
algoodsi scall
ed
_ __
__________.
A.gr os sdomes ticpr oduc t
B.gr os sdomes ticexpendi t ur
e
C.gr os sc apit
alf or mati
on
D.gr os sdomes tici ncome
(5×2)10

1.
2.Chooseadesc
ript
ionfr
om theCOLUMNBt hatmat
chestheit
em i
nCOLUMNA.
Writ
eonlyt
helett
er(A-I
)nexttot
heques
tionnumbers(
1.2.
1.to1.
2.8.
)int
he

2|
Page
 ANSWERBOOK.
COLUMNA COLUMNB
1.
2.1.Hous
ehol
d D A.moneyr ecei vewi thoutanypr oductive
servicer ender ed
1.2.
2.Marginalpropens
ityt
o F B.tot alinc omeear nedbyt hef ac t
orsof
save produc t ion
1.2.
3.Res
idualit
ems J C.c ommi tt
edt omai ntainingi nt ernati
onal
peac e,s ec urity,soc i
aldevel opmentand
humanr ight s.
1.2.
4.System ofnati
onal C D.theowner soft hef actorsof
account produc t ioni nt heec onomy.
1.2.
5.Autonomous G E.Invol vess hor tandl ong- term
consumpt ion borr owi ngs
1.2.
6.Transferpayment A F.thepr opor tionofi ncomet hat
hous ehol ds
donotc ons ume
1.
2.7.Fi
nanc
ialmar
ket E G.s pendi ngt hatt akepl ac eir
r es pecti
ve
ofthel evelofi ncome.
1.
2.8.Gr
ossdomes
tic B I
.thepr opor tionoft heirdi spos abl e
i
ncome i
nc omet hathous ehol dss pend
J.us edf orbal anc ing nat ionali nc ome
fi
gur es

(8×1)8
1.
3 GiveONEt er
mf oreac hoft hef ol
l
owingdes cr
ipti
ons .Wri
teonl yt hec orr
ec t
term nextt otheques ti
onnumberi nt
heans werbook.Abbr eviati
ons ,
Acronymsandexampl eswi l
lNOTbeac cepted.
1.3.
1 Amodelwhi chi l
lustratesthef l
owsbetweenpar tic
ipantsint heec onomy.
Circularf l
ow
1.3.
2 Thet ot alvalueofal lfi
nalgoodsands er
vicespr oduc edwithint hebor dersofa
count ryinagi venper i
od.
Gros sdomes ticpr oduc t
1.3.
3 Thepr opor ti
onofaddi ti
onalincomethathous ehol dschooset os pendon
goodsands ervices.
Mar ginalpr opens i
tyt ocons ume
1.3.
4 As mal lini
t i
alinc r
eas eins pendingwhichpr oduc eapr oporti
onat elylarger
i
nc reas einaggr egat enationalinc
ome.
Mul ti
plieref f
ec t
(4×1)
4
ACTIVITY2
2.1.Answert hef oll
owi ngques ti
ons
2.1.
1 Li sttheTWOf lowsi nt hec i
rcul
arfl
ow.
(2)
 Realf l
ow
 Moneyf l
ow
3|
Page
2.
1.2.Whati stherel
ati
onshi
pbet weent hesiz
eoft hemulti
pli
erandthemar gi
nal
propensityt
o
consume( mpc)? (2)
 Apos i
ti
vecorr
elati
on/relat
ionshipexis
tsast hebi
ggermpcwi l
lresul
ttoa
biggersizeoft
hemul t
ipl
ierandt hesmallert
hempc ,thesmal
lerthemultipl
i
er

(Acceptanyothercorr
ectrelevantres
pons e)

2.
2.St
udyt
het
abl
ebel
owandans
wert
heques
tionst
hatf
oll
ow.

NATI
ONALACCOUNTAGGREGATESSOUTHAFRI
CA
GROSSDOMESTI
CPRODUCT

Rmi
l
li
ons
Pr
imar
ysec
tor 324365
Sec
ondar
ysec
tor 556708
Ter
ti
arys
ect
or 1789431
Gr
ossval
ueaddedatbas
icpr
ices A
Gr
ossdomes
ticpr
oduc
tatmar
ketpr
ices 2964261
[
Source:SARBQuar t
erlyBull
etin]
2.
2.1 I
dent i
fythes ec tort hatcontributest hemos ttothegrossdomes t
icproduct.
(1)
Terti
arysec t
or 
2.
2.2 Namet heal ternat i
vet erm us edforgr ossval ueaddedinnationalaccounts.
(
1)
Gr ossDomes ti
cPr oduc t
/GDP
2.
2.3 Bri
eflydesc r
ibet het erm grossnat i
onalpr oduct .
(
2)
Grossnationalpr oduc tisthemar ketvalueofal lfi
nalgoodsands ervi
cesthat
areproduc ed
byper manentr es i
dent sofac ountryinayear .
(Acceptanyot herc orr
ectrelevantr espons e)
2.2.
4 Howar ebas icpr i
cesc onver t
edt omar ketpr i
ces?
(2)
Taxesonpr oduc tsar
eaddedt oands ubsi
diesonproductsares
ubt
rac
ted
from GDPat
basicpri
cestogetgr os sdomes t
icproductatmarketpri
ces.
(Acceptanyot hercorrectrel
evantresponse)
2.
2.4 Calcul
atetheval ueofA.( Showallcal
culat
ions)
(4)
R324365+R556768+R1789431
=R2760564

4|
Page
ACTIVITY3
3.1 St udyt het abl ebel owandans wert heques ti
onst hatfoll
ow.
NATI ONALACCOUNTAGGREGATESOFSOUTHAFRI CA
SUMMARYOFGROSSDOMESTI CPRODUCT Rmi l
l
ion
(atcurrentpr ices ) 2021
Compens ati
onofempl oyees 2861309
Netoper at i
ngs urpl us 1795000
Consumpt i
onoff i
xedc apital 797230
Grossval ueaddedatf actorc ost 5453539
Taxesonpr oduc ti
on 131563
Less:Ot hers ubs i
di esonpr oduc tion 12494
Grossval ueaddedatbas i
cpr i
ce 5572608
Taxesonpr oduc ts 666769
Subsidiesonpr oduc ts 13965
Grossdomes t
icpr oduc tatmar ketpr ices A
SourceQuar t
erlyBul l
et i
n,SARB,J une
2022
3.2.
1 I dent ifythei tem t hatc ontribut esthemos ttot henat i
onalinc omei nt hetabl
e
above. (
1)
Compens at i
onofempl oyees
3.2.
2 Gi veanyONEexampl eoft axesonpr oduc t
s.
(1)
Val ueAddedTax
Exc iset ax(s int ax, carbont ax ,fuellevy)
(Ac ceptanyot herc orrec trelevantr es pons e)
3.2.
3 Br ief l
ydes c r
ibet het er m gros sdomes ti
cpr oduct .
(
2)
Gr os sdomes ticpr oduc trefer st otheval ueallfinalgoodsands er
vices
produc edwi t hint he
bor der sofac ount r
y.
(Ac ceptanyot herc orrec trelevantr es pons e)
3.2.
4 Expl aint hepur pos eofus i
ngt heSys tem ofNat ionalAc count.
(2)
TheSys tem ofNat i
onalAc count s(SNA)i stheuni versalmet hodofpr esenti
ng
nat ionalac count saggr egat espr escribedbyt heUni t
edNat i
ons .I
tenabl es
compar i
sonofac ount ry’snat ionalac c ount saggr egateswitht hoseofot her
count ri
es .
(Ac ceptanyot herc orrec trelevantr es pons e)
3.2.
5 Cal culatet heval ueofgr os sdomes t
icpr oductatmar ketpricel abell
ed( A)in
thet ableabove.
Showal lc alcul ati
ons .
(4)
R5572608+R 666769–R 13965=R6225412

ACTI
VITY4
5|
Page
4.
1.1 NameanyTWOf inancialmar ketsinthec i
rcul
arfl
ow.
(2×1)
2
 Moneymar ket
 Capitalmarket
 Foreignexchangemar ket 
4.
1.2 Howdol ows avingsnegat ivelyaffecttheSouthAfri
canec onomy?
(1×2)
2
 TheSout hAfricanec onomywi llnotbeabl etobui
ldupi t
sc apit
als
toc
k
 Businesseswillnotablet oinves tandex pandthei
rbusinesses.
(
Acceptanyot herc orr
ec trel
evantr esponse)

4.
2 St
udyt
hepi
echar
tbel
owandans
wert
heques
tionst
hatf
oll
ow.

Adapt
eds
our
ce:ht
tps
://
www.
sout
haf
ri
canmi
.
com

4.2.
1 I
dent i
fyt hei
ndustrywhi chc ontri
but edthemos ttowardseconomicgrowthin
thediagr am.(1)
Manuf acturi
ng
4.2.
2 Namet hemet hodusedt oc alculateGr os
sdomes t
icproducti
nthediagram
above. (1)Produc tionmet hod
4.2.
3 Bri
eflydes cr
ibetheterm gr ossnat i
onalproduction.
(2)
Theout putthatac ountrypr oduc edbyt hefactorsofproduct
ionownedby
theper manent
resi
dent softhatcountry,regardlessofwher ethepr oducti
ontakeplace.
(Acceptanyot hercorrectrelevantr esponse)
4.2.
4 Whyi st hevalueofthemul t i
pli
erinaf our-sect
ormodels mall
erthanthatofa

6|
Page
 two-sec tor (2)
model ?
Thes i
zeoft hemul ti
pli
erwillbes mal l
erast herewi l
lbemor eleakages(t
axes
andimpor t
s)
i
nt heec onomy.
(Acceptanyot herc or
rectrelevantres ponse)
4.
2.5 Whyi st hemul ti
pli
eref f
ectimpor tantint heec onomy?
(4)
 Createsj obsandi nvestmentoppor tuniti
esinal lt
hes ectors.

 I
talsos pur sgrowt hinthes ervi
cess uc hasfinanceandt ransportat
ion
 Fir
mswi llbeablet oproduc emor equal i
typroduc tsthataregl obal
ly
compet itive
(Acceptanyot herc or
rectrelevantres ponse)

ACTI
VITY5
5.
1 St
udythegraphbel
owandans
wert
heques
tionst
hatf
oll
ow.

E=Y

C1=60+0.
12 E
TURE

C=20+0.
5Y
EXPENDI
E)

6
(

E
4
0
20

45
0
40 12
OUTPUT/
INCOME(
Y)

5.
1.1 I
dent
if
yt heor
igi
nalc
ons
umpt
ionf
unc
tionont
hegr
aph.
(
1)

7|
Page
 C=20+0. 5Y
5.1.
2 Name any one par t
icipantthati si nvolved in deri
ving mac r
o-economi c
mul tipli
er . (1)
Bus iness es/households 
5.1.
3 Br ieflydes cr
ibethet erm autonomousc onsumpt i
on.
(2)
Aut onomousc ons umpt i
oni sthespendi ngt hatdoesnotdependont hel evel
ofincome.
(Acc eptanyot herc orrectrel
evantres ponse)
5.1.
4 Howdoesani ncreasei ntaxinfl
uenc ethevalueofthemul ti
pli
er?
(2)
Ani nc reas eintaxdec reasesreduc est hevalueoft hemultipl
ierbyreduc i
ng
cons umpt i
on
spendi ng.
(Acc eptanyot herc orrectrel
evantres ponse)
5.1.
5 Us i
ng t he formul a ∆Y/ ∆J,calcul
atet he value ofmul t
ipl
ierf orthe above
diagr am.
Showal lcalcul
ati
ons .
(4)
K=∆Y/ ∆J 
K=80/ 40
K=2

ACTIVI
TY6
6.
1.1 Lis
tTWOf ac
torsusedtocalculat
emac ro-economicmult
ipl
i
er.
(
2)
mps andmpc
6.
1.2 Howdoesani ncr
easeinempl oymentpositi
velyaf
fec
ttheGDP?
(
2)
Ani ncr
easeinemploymentwi lll
eadtoani ncreasei
nthec ount
ry’
sec
onomi
c
growthandc onsumerspendingwi l
lri
se.
(Acceptanyothercor
rectrel
evantresponse)

6.
2 St
udyt
hei
nfor
mat
ionbel
owandans
wert
heques
tionst
hatf
oll
ow.

8|
Page
 0.
5

I
nKeynes i
aneconomics,MPSi sus edtodeterminetherel
ati
onshi
pbet weens avings
andc hangesinincome.Itshowst heimportantaspect
sthatareassociat
edwit h
expenditurehabit
sinahous eholdbec aus
es avi
ngsandc onsumpt
ionar edependent
oneac hother.
Analystsbeli
evethatanincreaseingovernments pendi
nghasamul t
ipli
eref
fecton
theec onomy,whileupl
if
tingli
vings t
andardsforthepoor.

6.2.
1 I
dent if
yanexampl eofal eakagei nt heaboveext r
ac t
.
(1)
Savings 
6.2.
2 Namet hef actorthati nfl
uenc esthes i
zeoft hemul ti
plier.
(1)
mpc/ mps 
6.2.
3 Briefl
ydes cr
ibethec onc epti nducedcons umpt ion.
(2)
I
nduc edc onsumpt ioni scons umpt iont hatdependsont helevelofincome.
(Acceptanyot herc orrectr elevantr espons e)
6.2.
4 Howdoesani ncr
eas ei ns pendi ngbyf irmsaf fec tthes iz
eoft hemul t
ipli
er?
(2)
Ani ncreas einspendi ngbyf irmsc reat esmor ehous ehold’sdispos
ablei ncome
thusinc r
eas i
ngc ons umers pendi ng.Thi sresultst oani ncreas
ei nthes i
zeof
themul tipli
er
(Acceptanyot herc orrectr elevantr espons e)
6.2.
5 Suppos et hemar gi nalpr opens i
tyt os avei s0.5,c alculatethevalueoft he
mul t
ipli
er.Showal lc alcul
at ions.
(4)
K=1/ mps  = 1/ 0.5 K=2

9|
Page
ACTI
VITY7
7.
1 St udyt
hegr
aphbel
owandans
wert
heques
tionst
hatf
oll
ow.

EXPENDI
TURE

E=Y

C=30+0.
6
Y

e
75
30

45
0 75
OUTPUT/
INCOME

7.1.
1 Ident i
f ytheval ueoft heaut onomousc onsumpt i
oni ntheabovegr aph.
(1)
30
7.1.
2 Whatdoest hel i
neE=Yr epresent?
(1)
Keynes i
anEqui li
bri
um/Li neofequal i
ty/45degr eel i
ne.
7.1.
3 Br i
eflydes cribethet erm mar ginalpropensitytocons ume.
(2)
Margi nalpropens it
yt oc onsumei sthepor tionofincomet hatisspentandnot
saved.
(Acceptanyot herc orrectrelevantresponse)
7.1.
4 Expl aint herelati
ons hipbet weent hemar ginalpropensit
yt oconsumeandt he
multi
plier
. ( 2)
Thebi ggert hempc ,thebi ggerthemul ti
plierandt hesmal l
erthempc ,t
he
smallert hemul ti
pli
er
(Acceptanyot herc orrectrelevantresponse)
7.1.
5 Copyt heabovegr aphi nyourans werbookandi ndicat
et henewc onsumpti
on

10|
Page
 c
urveandt
henewequi
l
ibr
ium poi
ntaf
teri
nves
tmenti
ncr
eas
edby45mi
l
li
on.
(4)

Label
li
ngonaxi s(i
ncreasei
nexpendi
tur
e/ 75)=1
Newc onsumpt i
onf uncti
ons
=1
Newequi l
ibri
um incomeandexpenditur
e/188=1
Equil
i
brium point/e1=1

ACTI
VITY8
8.
1 Di scussther oleoff irmsi nt hec ir
cularf l
ow. ( 8)
 Fi r
mspur chas ethef actorsofpr oduc tionf r
om hous eholdsi nthef actormar ket.

 Bus i
nessess ellt
hes egoodsands ervicest ohous eholds ,gover nmentandt he
forei
gns ec tor.
 Bus i
nessesr ec eiveani nc omef rom theot herthreepar tic i
pants .
 Fi r
msac tasbuyer sint hef actormar ketands ell
ersint hegoodsmar ket,wi t
h
profi
tast hei raim.
 Fi r
msus et hef ac t
orsofpr oduc t
iont opr oduc egoodsands ervices.
(Acceptanyot herc orrectr elevantres pons e)
8.
2 Br i
eflydis c
us stheexpendi tur emet hodandt heinc omemet hodt odet ermi ne
Grossdomes ticproduc ts
.
(8)
EXPENDI TUREMETHOD
 GDPatmar ketpr i
cei sdet ermi nedbyaddi ngt hespendi ngoff ourmai n
sectorsoft heec onomy–hous eholds ,government ,bus i
nes sesandt hef oreign
sector.

11|
Page
  Us i
ngt hemet hodt odet er mi neGDPyi eldsGDPatmar ketpr ic e.
 AlsoknownasGDP( E)
I
NCOMEMETHOD
 GDPatf actorc os tbyaddi ngal lthei nc omeear nedbyt heowner soft he
fact orsofpr oduc tion( Gr os sdomes t i
ci nc ome) . 
 Thismet hodyi eldt oGDPatf ac torc os t .
 AlsoknownasGDP( I).
(Ac ceptanyot herc or rectr el evantr es pons e)
8.
3 Howc ant hehous ehol dsc ont ributet obui ldingt heec onomy?
(8)
 Bys uppl yingf ac tor sofpr oduc tiont hatar eus edi nt hepr oduc tionofgoods
ands er vices.
 Hous ehol dspr ovides avingsf ori nves tment sint heec onomywhi c hc ontri
butes
direc tl
yt oincreas edpr oduc tionofgoodsands er vic es.
 Buyi ngSout hAf ri
c angoodswhi chwi l
ls ti
mul at el oc alpr oduc tionandi ncrease
penet rationt ogl obalmar ket s .
 Payi ngt axeswhi c hl eadsbet ters ervi cedel iver yandi nfras tr
uc t ure
devel opmentbyt hes tate.
(Ac ceptanyot herc orr ectr el evantr espons e)
8.
4 Howdof i
nanc i
almar ket sbenef i
ttheec onomy?
(8)
 Financ i
almar ket shel pt oef f i
c ient l
ydi rec tthef lowofs avingsandi nves tment
i
nt heec onomy.
 Theydot hisinwayst hatf ac il
itat et heac cumul at i
onofc apitalandt he
produc tionofgoodsands er vic es.
 Themar ketsmakei teas yf orbuyer sands ellerst ot radet heirf inanc i
al
holdi ngs .Financ i
almar ket spr ovi def inanc ef orc ompani ess ot heyc anhi re,
i
nves tandgr ow.
 Financ ialmar ket spl ayavi t alr olei nf ac i
li
tat i
ngt hes moot hoper ationofot her
mar ketsbyal loc at i
ngr es our cesandc reat i
ngl i
qui dityf orbus ines s esand
ent repr eneur s.
 Financ i
almar ket sc r
eat es ec ur itiespr oduc tst hatpr ovi dear et ur nf ort hose
whohaveexc es sf unds( Inves t ors /
lender s)andmaket hes efundsavai lableto
thos ewhoneedaddi tionalmoney( bor rower s) .
(Ac ceptanyot herc or rectr el evantr es pons e)
8.
5 Eval uat et hef unc t i
oni ngofmar ket si nt hec ir
c ularf lowmodel .
(8)
Pos iti
vei mpac t:
 Fac ili
tatet heexc hangeoff ac tor sofpr oduc tionf orec onomi cac tiviti
es,such
asc apitalf orinves tment st hr ought hef ac tormar ket .
 Allowi nghous ehol dst oear nani nc omef r
om t hes aleoft hef ac tor sof
produc tionwhi c hwi llenabl et hem t opur chas egoodsands er vicesi nt he
produc tmar ket .
 Enabl i
nghous ehol ds ,thebus ines ss ec torandot herpar ti
c i
pant st oac cess
fundsf ort radingandpr oduc t i
ont hr oughf inanc i
almar ket ssuc hasbanks .

12|
Page
  Enabl i
ngi ndus tr
iest oobt ai nc apitalgoodsf rom ot herc ount ri
est hatar enot
domes ticallyavai l
abl e,thr oughf oreignexc hangemar ketss uchasmac hinery.

 Earningval uabl ei nc omef rom expor tsthr ought hef oreignexc hange
market s 
Negat ivei mpac t:
 Market sf ailtopr ovi der elevants kill
sr equi r
edi nt heec onomy,empl oyment
possibiliti
eswi l
lbel imited,i fthef actormar keti sinef fective.
 SMMEsf ailt oprovi dequal i
tygoodsduet ol ackofc apital.
(Acceptanyot herc orrectr elevantr es pons e)
8.
6 Cal culat et hec hangei naggr egat einc omei fther eisani njecti
onofR20bi ll
i
on
i
ntot heec onomywi thamar ginalpr opens i
tyt os aveof0, 3.Expl ainhowt he
multiplieref fectc oul dinf l
uenc ethegover nmentt oc r
eat emor ejobs .Show
ALLc alculations. (8)
Calculat i
on:
k=1/ mps
k=1/ 0.3
k=3.3
 Changei nNat i
onalI ncome=R20bnx3. 3
=R66bn/R66, 6/R67( Max4)
 Duet ot hei njectionofR20bi nt heec onomy,j obsar ec reat edandr esult
edi n
i
ncreas ednat i
onali nc ome.
 Inc
reas edi nnat ionali nc omer es
ultedi ni ncreas eds pendi ngint heec onomy
whichwi llultimat elyl eadt oevenmor ejobsbei ngc reat ed–knoc k-onef fect.

 Gover nmentc anal sodec reas etaxat ion,put ti
ngmor emoneyi nt hepoc ketsof
thec ons umer .Theext r
amoneywi l
lbes pentbyt hec ons umer ,leadi ngto
i
ncreas edempl oyment .
 Gover nmentc andec reas ec ompanyt axest hatmi ghtl eadt oincreas ed
i
nves tmentbybus ines sesf oc usi
ngonl abouri nt ensivepr oduct i
onmet hods.

(Acceptanyot herc orrectr espons e)

BUSINESSCYCLES
1.
1 Var i
ousopt i
onsar epr ovidedaspossi
bleanswer
stothefol
lowingques
tions
.
Choosethec orrectans werandwrit
eONLYt hel
ett
er(A-D)nexttot
he
quest
ionnumber( 1.1.
1–1. 1.
5)
1.
1.1 Thepoli
cyt hatisusedt odampenanover -
heart
edeconomy?
A.fi
scalpolicy
B.expans i
onaryf i
scalpol i
cy
C.restr
icti
vefiscalpolicy
D.monet arypolicy

1.
1.2 Thenegat
iveec
onomi
cgr
owt
hforatl
eas
ttwoc
ons
ecut
ivequar
ter
sisknown

13|
Page
as…
A. boom.
B. depressi
on
C. rec
es s
ion
D. rec
over y

1.
1.3 Thever
tic
aldist
ancebet
weent
het
roughandpeaki
scal
l
ed…
A. peak
B. l ength
C. t rend
D. ampl i
tude.

1.
1.4 Cyc
lesthatlasts7-11year
sandar
ecaus
edbyc
hangesi
nthel
evelof
i
nvest
mentsarec all
ed…
A. j uglar.
B. ki tchin.
C. kuz net.
D. kondr atief
.

1.1.5 Thei ndicatort hatc hangesaftert

heec onomyhasc hangedi sknownas …….
A. l eading
B. l aggi ng
C. ec onomi c
D. c oinc ident (
5x2)10
1.2 Choos ethedes cri
ptionfrom COLUMNBt hatmat chest hei tem i nCOLUMNA.
Wr i
teonl yt hel ett
er( A-I
)nexttotheques ti
onnumber s( 1.2.1t o1.2.8)inthe
ANSWERBOOK
COLUMNA COLUMNB
1.2.1Openmar ket EA.Whenbanksar er eques tedt oactinamanner
transact
ions Cthatisdes i
rablet oec onomi ccondi t
ions
1.2.2Suppl ysi
deappr oach FB.Compul s
or ypaymentt ot hegover nmentmade
1.2.3Peak Abyt hosewhor ec eivei nc ome
1.2.4Mor alsuas i
on I
 C.Anas sumpt i
ont hati ft heec onomyi s
1.2.5Kit
c hi
nc yc l
e Gsti
mul atedtopr oduc emor egoodsands ervi
ces
1.2.6Inf
lati
on Beconomi cgr owt hwi l
loc cur .
1.2.7Taxation HD.Theper i
odofpr osper ityinabus i
nes scycl
e.
1.2.8Deregulat i
on E.Thebuyi ngands ell
ingofgover nment
securiti
estoc ont rolmoneys upply
F.Thehi ghert urningpoi ntofabus i
nes scycl
e.
G.Thes ust
ainedandc ons i
derableincreasein

14|
Page
 t
hegener alpri
cesofgoodsandservices.
H.Removalofr ul
estoinc
reas
eeffi
ciencyof
markets
I
.Theyarec ausebychangesi
nthei nventor
y
l
evels

(8X1)8
1.
3 Gi veONEf orEACHoft hef ollowingdes c r
iptions.Wr i
teonlytheterm nextt
o
theques tionnumber s(1. 3.1to1. 3.6)intheANSWERBOOK.Abbr eviati
ons,
acronymsandexampl esWI LLNOTbeac c
ept ed.
1.
3.1 Ani ndicat ort hatinf ormst hehous ehol
d,inves torsandt hegovernmentabout
thec urrents tateoft heec onomy.
Coinc i
denti ndicat or
1.
3.2 Ameas ur eempl oyedbyt her es ervebankt os t
imulatet heeconomy.
Expans ionar ymonet ar ypol icy
1.
3.3 Ther ateatwhi chonec urrenc yc anbeex changedf oranother.
Exchanger ate
1.
3.4 Thewor stphas eofabus inessc yc l
ewher eunempl oymenti sthehighest.
Depr ession
1.
3.5 Themovementoft heec onomyi nagener aldi recti
on.
Trend
1.
3.6 Thec aus esofbus ines sc yc l
est hatdevel opi nsidetheec onomy.
Endogenousr eas ons 
(6X1)6
ACTIVI
TY2
2.
1 Ans wert hef oll
owi ngques t
ions
2.
1.1 GiveanyTWOt ypesofbus i
nes sc ycl
es.
(2)
 Ki tchinc yc l
e
 J uglarc ycle
 Kuz netc yc l
e
 Kondr atief
2.
1.2 Whati sapur poseofanampl itudeasaf eatur eunder pi
nningforecast
ingof
busines s
cycles?
(2)
Thepur pos eofanampl itudei st omeas uret hes everit
yoff l
uctuat
ionsof
economi cac t
iviti
es
int heec onomy.
(Acceptanyot herr elevantc or r
ec tanswer)

15|
Page
2.
2St
udyt
hegr
aphbel
owandans
wert
heques
tionst
hatf
oll
ow.

Leveleconomi
c
act
ivi
ti
es

5
Tr
end

4 Peak

1
Tr
ough
0
2015 201 2017 2018 2019 202 Ti
me
6 (
Years
)

2.2.
1 I
dent i
fyt helowes tturningpointont hegr aphabove.
(1)
Trough 
2.2.
2 Whatt ypeoft rendiss hownont hebus i
nesscycl
eabove?
(1)
Pos i
ti
vet rend
2.2.
3 Briefl
ydes cribethet erm busi
nes scycle.
(2)
Bus i
nes scycleisafluctuati
onint helevelofeconomicact
ivi
ti
eswhichr
esul
tin
contrac t
ionorex pans i
onovert ime.
(Acceptanyot herrelevantcorrectans wer)
2.2.
4 Howar ebus inesscyc l
esmeas ured?
(2)
 Lengt hisus edt omeas urebusinessc ycl
efrom peakt
opeakortroughto
trough
(Acceptanyot herrelevantcorrectans wer)

16|
Page
2.
2.5 Cal
cul
atet
heval
ueofampl
i
tudebet
weent
heyear
s2018and2019.
(4)
A=x-y
A=5-1
A=4

2.2.
6 Uset
heGDPdat
abelowtoc
alcul
ateaf
iveyearmovi
ngaver
agefor2020.
(4)
Year 2016 2017 2018 2019 2020 2021 2022
GDP(R(
bn) 6 6 7 9 5 8 11

6+6+7+9+5=33/
5=6.
6

ACTIVI
TY3
3.
1 Ans wert hefoll
owingques t
ions
3.
1.1 GiveTWOper iodsofabus i
nessc ycl
e (2)
 Cont ract
ion/ downs wing
 Ex pansi
on/ups wing
3.
1.2 Whatdoesapos i
ti
vet rendlineimplyabouttheec onomyofthecountry?
(
2)
Apos i
tivetr
endl i
nei mpliesagr owthinthelevelofeconomi
cact
ivi
tiesinthe
economy.
(Acceptanyot herrelevantcorrectanswer)
3.
2 St udythegr aphbel owandans werquestionsthatfol
low.

THERELATI
ONSHI
PBETWEENUNEMPLOYMENTANDI
NFLATI
ON

17|
Page
3.
2.1 I
dent
if
ytheval
ueofi
nfl
ati
onwhenunempl
oymentr
atei
sat14%?
(
1)
0%
3.
2.2 Whati
sdepi
ctedbyt
hegr
aphabove?
(
1)
Phi
ll
ipsc
urve
3.
2.3 Bri
efl
ydescr
ibet
het
erm newec
onomi
cpar
adi
gm.
(
2)
Newec
onomi
cpar
adi
gm i
sapol
i
cyt
hatf
ocus
esondemandands
uppl
ysi
de
pol
i
ciest
o
s
moot
houtbus
ines
scyc
les
.
(
Acc
eptanyot
herr
elevantc
orr
ectans
wer
)
3.
2.4 Whydoesi
nfl
ati
oni
ncr
eas
eifunempl
oymentdec
reas
es?
(
2)
Ani
ncr
eas
einempl
oymentenabl
espeopl
etoear
ninc
omewhi
chi
ncr
eas
e
t
hei
rdi
spos
abl
einc
ome.
I
ncr
eas
esi
ndi
spos
abl
einc
omes
timul
atet
heaggr
egat
edemandwhi
chl
eads
t
oinc
reas
e
i
npr
iceast
hedemandi
ncr
eas
esf
ast
ert
hant
hes
uppl
y.
(
Acceptanyotherrel
evantcorr
ectans
wer )
3.
2.5 Howc anareduct
ionincashreser
vesrequi
rement
sst
imul
atet
heec
onomi
c
ac
tivi
ti
es? (
4)
 Thebankswi
l
lhavemor
emoney/
cas
havai
l
abl
etoof
fert
othei
rcl
i
ent
s
l
eadi
ngt
oan
i
ncr
eas
einaggr
egat
edemand.
 Thel
evelofs
pendi
ngbyc
ons
umer
swi
l
linc
reas
eandr
eal
i
sehi
ghpr
ofi
t
mar
ginsl
eadi
ng
t
oani
ncr
eas
eint
hel
evelofempl
oymenti
nthec
ount
ry.
 Fi
rmswi
l
lhaveac
ces
stoc
redi
tthatc
oul
dbeus
edt
oinc
reas
epr
oduc
tion
l
eadi
ngt
o

18|
Page
 ec
onomi
cgr
owt
h.
(
Acc
eptanyot
herr
elevantc
orr
ectans
wer
)
ACTI
VITY4
4.
1 Ans
wert
hef
oll
owi
ngques
tions
.
4.
1.1 Li
stanyTWOi
nst
rument
soft
hemonet
arypol
i
cy.
(
2)
 I
nter
estr
ates

 Moneys
uppl
y
 Cas
hres
erver
equi
rement
s
 Mor
als
uas
ion
4.
1.2 Howc
anamovi
ngaver
agebeus
edt
ofor
ecas
tbus
ines
scyc
le?
(
2)
As
tat
ist
icalc
alc
ulat
ionofamovi
ngaver
agei
sper
for
medi
nas
eri
esofdat
ato
s
potoutt
het
rendandf
orec
ast
ersc
ans
moot
houtmi
norf
luc
tuat
ionsi
na
s
eri
esofdat
a.
(
Acc
eptanyot
herr
elevantc
orr
ectans
wer
)

4.
2 St
udyt
heext
rac
tbel
owandans
wert
heques
tionst
hatf
oll
ow.

SOUTHAFRI
CANLEADI
NGBUSI
NESSCYCLEI
NDI
CATOR
Thec
ompos
itel
eadi
ngbus
ines
sindi
cat
ori
nSout
hAf
ri
cadr
opped0.
1%mont
h-on-
mont
hinJ
une2023f
rom a1.
7%f
alli
nthepr
evi
ousper
iod.I
tmar
kedt
hes
oft
est
dec
li
nei
nthec
urr
entc
ont
rac
tions
equenc
eass
ixoft
heni
neavai
l
abl
ecomponent
t
imes
eri
esi
ncr
eas
edbutwass
li
ght
lyout
wei
ghedbyt
her
emai
ningt
hree.

Sour
ce:
htt
p:www.
tr
adi
ngec
onomi
cs.
com/
sout
h-af
ri
ca
4.
2.1 I
dent
if
yaper
iodofbus
ines
scyc
lef
rom t
heext
rac
tabove.
(
1)
Cont
rac
tion/
Downs
wing
4.
2.2 Nameaf
eat
uret
hati
sus
edt
ofor
ecas
tbus
ines
scyc
lesf
rom t
heext
rac
tabove.
(
1)

19|
Page
 Leadi
ngbus
ines
scyc
lei
ndi
cat
or/
Leadi
ngi
ndi
cat
or
Compos
itei
ndi
cat
or
4.
2.3 Br
ief
lydes
cri
bet
het
erm bus
ines
scycl
e.
(
2)
Bus
ines
scyc
lei
ssuc
ces
siveper
iodsofgr
owt
handdec
li
nei
ntheec
onomi
c
ac
tivi
ti
es.
(
Acc
eptanyot
herr
elevantc
orr
ectans
wer
)
4.
2.4 Howc anani nc r
eas einmoneys upplypos it
ivel
yinfl
uenc et
hebus i
nesssect
or?
(2)
 Whenmoneys uppl yincr
eases,themar ketdemandi ncreas
ess i
mult
aneousl
y
and
busines s
escanr eali
sehighpr ofi
tmar gins.
 Ani ncreasei
nmoneys upplyall
owst hebus inesssectortotakeadvantageof
resources
therebyoper atingatt heiroptimum c apac it
y.
(Acceptanyot herr el
evantc or
rec tans wer)
4.
2.5 Howc ouldthef iscalpoli
cybeus edtos ti
mul at
etheec onomicacti
vit
yina
c
ount
ry? (
4)
 Adec
reas
eint
axi
ncr
eas
esdi
spos
abl
einc
omeofc
ons
umer
swhi
chr
esul
tst
o
i
ncr
eas
einaggr
egat
edemand.
 Ani
ncr
eas
eingover
nments
pendi
ngc
reat
esmor
ejoboppor
tuni
ti
esl
eadi
ngt
o
ani
ncr
eas
einpr
oduc
tionofgoodsands
ervi
cesi
ntheec
onomy.
(
Acc
eptanyot
herr
elevantc
orr
ectans
wer
)

ACTIVI
TY5
5.1 Ans wert hef ollowi
ngques ti
ons
5.1.
1 NameTWOvi ewsofbus inesscycl
es? (
2x1)
(2)
 Monet ari
stview
 Keynsianview
5.1.
2 Howc aninter estr
atesbeus edtodampenanover heati
ngec onomy?
(2)
TheSout hAf ricanreser
vebankmayi ncr
easei
nterestr
atestomakec r
edi
t
moreexpens iveandunaf for
dable.
(Acceptanyot herrel
evantcorrectanswer)
5.2 St udyt heext ractbel
owandans werthequest
ionsthatfol
low.

20|
Page
 Sour
ce:
Stat
sSA

5.2.
1 I
dent if
yt hebas eyearf rom t hegr aph.
(1)
2015
5.2.
2 Whenwast hel owes tturningpoi ntinSout hAfri
canec onomyac c or
dingtothe
graph
above?
(1)
Q2: 2020
5.2.
3 Brieflydes cribet het m ext
er rapolati
on.
(2)
Extrapol ati
oni sthet echni quet hatisus edtopredi
c tt
hef ut
ur eofabus i
ness
cyclef rom
previ ousdat a.
(Acc eptanyot herrelevantc orrectanswer )
5.2.
4 Brieflyexplai nt heimpor tanc eofmeas uri
ngtheeconomi cgrowt h.
(
2)
Economi cgr owt hismeas ur edt odet erminethevalueofther ealgross
domes ticpr oduc t
overagi venper i
odoft ime.
Economi cgr owt hisusedt oc ompar et heeconomicperformanc eofac ount
ry
agai nst
otherc ountr i
esbyt heWor l
dBank.
(Acc eptanyot herrelevantc orrectanswer )
5.2.
5 Howdoesl owec onomi cgr owthaf f
ec ttheeconomy?
(
4)
Lowec onomi cgrowt haf fec t
st heeconomyby:

21|
Page
  decreasi
ngi nthelevelofemploymentwhichresul
tstoinc
reas
einpovert
y.

 reduci
ngt helevelofincomewhi c
hdecreasesaggregat
edemand
 decreasi
nggover nmentr evenueasaresul
tofincr
easedunemployment
andlow
investments
(
Acceptanyot herrel
evantc orr
ectanswer
)

ACTIVI
TY6
6.
1 Br ieflydi s cus sendogenousandexogenousr eas onsasc aus esofbus i
nes s
cyc l
e
fl
uc tuat i
ons . ( 8)
Endogenousr easons Exogenousr eas ons
 TheKeynes ian( endogenous )  TheMonet arist( exogenous )
viewt hatmar ketsar einher entl
y believesmar ket sar ei nher ent ly
uns tabl e,t her eforegover nment stablebynat ure,depar turesf rom
i
nt ervent i
oni snec essaryt o thedi sequi librium s tat ear e
stabi l
izet heec onomy. caus edbyf ac tor sout sidet he
 Theyar guet hatc hangesi nt he mar kets ys tem.
valueoft ot alexpendi turebr i
ng  Exogenousf ac tor sar eal s oc alled
aboutc hangesi ndemand. suns pott heor y/exogeneous
 Gover nmentc ani ntervene ap proac h/ mo net ar i
s tappr oac h.
throughf iscalpol icywhi ch 
i
nc ludest axesandgover nment  Mar ketf or ces( s uppl yand
spendi ng. demand)ki c ki nandbr ingt he
 Dur ingar ec es s
ion,t he eco nomy ba ck toi ts na turals tate
gover nmentc ani ncreasei ts orequi libr i
um r out e.
spendi ngandr educ etaxest o  Themonet aristbel ievest hatt he
stimul at eec onomi cac t
ivit
y. growt hoft heec onomyi s
 Thi swi llinc reas et helevelof deter minedbyt henat uralgr owt h
ec onomi cac tivi
tye. g.pr oduc t
ion, i
nt h esu p ply o f av ailab l
e
empl oyment ,inc omeand resour ces .
demand.  I
fi mbal anc esoc cur,t hemar ket
 Dur ingt hepeakt hegover nment forceswi l
lal waysbr ingt he
cani nc reas et axesandr educ e mar ketsbac kt ot heequi l
ibri
um.
gover nments pendi ng.  
 Thi swi llres ultinr educedi ncome,  Theybel ievet hatany
reduc eddemandf orthef actors gover nmenti nt ervent ionups et
ofpr oduc ti
onandexpendi ture. thei nher ent l
ys tabl emar ket
 system r es ultingi nf luctuat i
onsi n
(
Acceptanyot herc orrec trel
evant thel evel o fe co no mi c a cti
v i
ty,
r
esponse) therefor egover nments houl dnot

22|
Page
 inter
venei nthemar ket.
 Theybel ievet hatmaj orcausesof
fluct
uationsar ec aus edby
inappropr i
ategover nment
polici
ese. g.undes i
rabl eincreases
anddec reas esinmoneys upply,
weat herc onditi
onset c.
(
Acceptanyot herc orrec trel
evant
r
esponse)

ACTI
VITY7

Di
scus
sindet
ailt
hef eat
uresunderpi
nni
ngforec
asti
ngofbus
ines
scycl
es.
(
26)
Howcanopenmar kettr
ansact
ionsbeusedasatooltos
moothenbus
ines
scyc
les
?
(
10)

I
ntroducti
on
Businesscyc
leissucc
essiveper
iodsofgrowthanddec
li
nei
ntheec
onomi
cac
tivi
ti
es
 ( max2)
(Ac
c eptanyotherrel
evantcorr
ectanswer)

Body:
Mainpar
t
1. Leadi ngec onomi ci ndicators
 Thesear eindi cat
orst hatc hangebef or etheec onomychanges
● Theygi vec onsumer s,bus i
nes sesandpol i
cymaker sagli
mps eofwherethe
ec
onomyi sheadi ng.
● Theyr eacht hepeakbef or etheec onomyr eachesthepeak.
● Thisisthemos timpor tantt ypeofi ndicatorinhelpi
ngeconomiststopredi
ct
whattheec onomywi l
lbel ikeinthef uture.
● Whent hesei ndic
ator sshowpr osperity,t
hel evelofec
onomicactivi
ti
eswil
l
al
sori
s einaf ewmont hs’time.
● E.g.numberofnewvehi cless ol
d,realex portsofgoods,etc
.

2. Coincidentec onomi cindicat

ors

● Theymoveatt hesamet i
meast heeconomy.
● I
ti ndic
atest hec urr
ents tateoftheeconomy.
● I
ft hebus i
nessc ycl
er eachesapeakandt henbegi
nstodecl
ine,t
heval
ueof
retails
aleswi l
lr eachapeakandt henbegintodec
li
neatthesameti
me.
● E.g.retailsal
es.

23|
Page
3. Laggingindicators
● Theyc hangedi rect
ionaftert
hebusinesscycl
ehaschangeditsdi
rec
tion.
● Theys ervetoc onfi
rmthebehaviourofcoinci
denti
ndic
ators
.
● I
ft hebus i
nessc yc
lereachesthepeakandbegi nst
odec l
i
ne,weareable
t
opr edic
tt hevalueofnewmac hinerysol
d.
● E.g.newmac hiner
ys ol
d.

4. Compos i
tei
ndi
cator
s
● I
tisagroupi
ngofvari
ousindi
cat
orsoft
hesametypeint
oas i
ngl
eval
ue.
● Thesi
nglefi
gur
eformsthenormforacount
ry’
seconomicper
for
mance.

5. Lengt h
● Thisi
sthetimethatittakesforabus i
nesscycl
etomovet hroughonecomplet
e
cycl
e.
● I
tismeas ur
edfrom peakt opeak/troughtotrough.
● I
tisusefult
oknowt hel engthbecausethelengthtendst
or emai
nrel
ati
vely
const
antovertime.
● I
fbus i
nesscyc
leshavel ongerl
ength,wec onsi
dertheeconomytobes t
rong.


6. Ampli
tude
● I
tisthediff
erencebetweenthetotaloutputbet
weenapeakandat rough.
● I
tmeas uresthedis
tanceoftheoscil
l
ati
onofavar i
ablefr
om thetr
endl i
ne.
● I
tmeas uresthei
ntensit
yofupswinganddowns wingintheeconomicac t
ivi
ty.

● Thelar
gert heamplit
udethemoreext r
emet hechangesthatmayoccur.

7. Tr endline
● Atrendlineshowsthegeneraldi
rec
tionoftheec onomy.
● I
tusuallyhasaposit
ivesl
opebecauset heproducti
onc apaci
tyoftheec
onomy
i
ncreasesoverti
me.
● I
tindic
at est
herateofinc
reaseordecreasei
nt helevelofoutput
.

8. Ext rapol
ati
on
● Thi
sisthetechni
queofusi
ngpastdatatomakepr
edi
cti
onsaboutt
hef
utur
e.

● e.
g.predi
cti
onoffutur
esharepr
ice.

9. Movi ngaverages 
● I
tisastat
ist
icalanalyt
icalt
oolthatisus
edtoanalys
ethec
hangest
hatoc
curi
n
aser
iesofdataoverac ert
ainperi
odoftime.

24|
Page
 ● Movingaveragesareusedtos moot
houtanymi
norf
luc
tuat
ionsandr
eveal
t
rendsinthebus i
nesscycl
es.
(
Acceptanyotherrel
evantcorr
ectanswer
) (Max.
26)

Addi
ti
onalpar t
Howc anopenmar kettransact i
onsbeus edasat ooltosmoot houtbus i
nessc ycles?
● Reduc ingori ncreasingt hes upplyofmoneybybuyi ngors ell
inggover nment
sec uriti
esandt reasurybi l
lsi
nt heopenmar kett ocontrolmoneys upply.
● Buyi ngands el
li
nggover nmentbondst obanksandot herfinanciali
nstit
ut i
ons.

● Debi tingt hebank’ sac countwi ththevalueoft hesaleandt hebank’ sbal ance
wi tht heRes erveBankt or educ eit
sabil
it
ytoof fercredi
t.
● Cr editingt hebank’ sacc ountwi ththeamountoft hepur chaset husleavingt he
bankwi t
henoughmoneyt ol endborrowers.
● Us ingt hepol icyduringr eces si
onasas tr
ategyofs ti
mulatingt heeconomy.
(10)
(Ac ceptanyot herrelevantc orrectanswer)

Conc l
usi
on
Economistsneedtoforetel
lwhati
slikel
ytohappeni
ntheec
onomybys
tudyi
ngand
moni t
ori
ngavar i
etyofeconomicvari
ables
.
(Acceptanyotherrel
evantcorr
ectanswer)
(2)

ACTIVI
TY 8
Disc
ussindetai
lthenewec onomicparadi
gm i
nthesmoothi
ngofc
ycl
es.
(26)
Howc anexogenous(ext
ernal)f
actor
sinfl
uenc
etheeconomy?
(10)

I
NTRODUCTI ON
Thenewec onomi cparadigm discouragespolicymakersinusingmonetaryandf i
scal
poli
ciestofine-t
unet heec onomy,howevert heyareencouragedt ores
orttopolic
ies
rel
atedt odemandands upply.
(Acceptanyot hercorrectrel
evanti ntr
oducti
on) (2)
BODY:MAI NPART
Thedemand- si
depol i
cies
 Demands i
depol i
ciesrefertodec i
si
onst akenbythegover nmenttoinf
luencethe
aggregatedemandf orgoodsands ervicesint
hec ountry.
 Thegover nmentmayt rytoincreasecons umerspendingbys t
imulat
ing
aggregatedemand.

25|
Page
  Thi
scangrowtheec
onomybutcanl
eadtobott
lenec
kss
uchasi
nfl
ati
on,
unempl
oymentandbal
anc
eofpayment
sdefi
ci
t.

a.
)I nflati
on
 Whenaggr egatedemandi ncreasefasterthataggregates
upply,gener
alpri
ce
l
evel swi l
lals
oi nc
rease.
 I
fsuppl ydoesnotr eacttot hec hangesindemand,pr ic
eswil
li
nc r
easeleadi
ngto
i
nflation.
 Suppl y-si
demeas urescanbeus edtoc reateasit
uationwher
es upplyi
smor e
fl
exiblet oachievepr i
cestabil
ity

b.)Unempl oyment 
 Demand- sidepol i
c i
esc ans timul at eec onomi cgr owt h.
 Ec onomi cgr owt hi nc reas est hedemandf orlabourandt hisreduc es
unempl oyment .Asar es ult
,peopl ewi l
lbeempl oyedandunempl oymentwi l
l
dec reas e.
 Butasunempl oymentf all
s,inf l
at i
ons tartstorise.
 Ther elations hi pbet weenunempl oymentandi nfl
ationi ss hownus i
ngt hePhi lli
ps
curve.
(Max.13Mar ks )
Supply-sidepol ici
es
Thesear emeas uresunder t
akenbyaut hor i
tiest oinfl
uenc et hel evelofaggr egat e
supplyofgoodsands er vicesi nt hec ount ryt omeetc hangesi ndemand.
Reductionofc os ts
 Ther educ ti
onofc ostsofpr oduc ti
onmeanst hatagr eatout putcanbes upplied
atanygi venpr i
c el evel .
 Thegover nmentc anus emeas ur est hatc anreduc ec os tsofpr oductionf or
bus i
nes sesdi rectlyori ndi r
ec tly.
 Inf r
as truc tur als ervices :Thegover nmentc ant argett rans port,c
ommuni cati
on,
wat erandener gyasar easoff oc us .
 Admi nistrationc os ts:Thi sinc l
udesr emovi ngt hebur denpl acedbyi nspec ti
ons,
repor tsont heappl icationofvar iousl aws ,regulati
onsandby- l
aws ,taxr eturns
provi dings tat i
sticali nfor mat ion.
 Cas hi nc entives :Thes eincludes ubs i
di esandc ompens ati
onofexpor t
erswho
oper atei nnegl ec teds ec t
ors .
I
mpr ovingt heef fi
cienc yofi nput s
 Taxr at es :l owr at esofper s onali nc omet axandc orpor ateincomet axar ean
i
nc ent iveast heyr educ ec ostsandi nc reas eprofits.
 Capi talc ons umpt i
on:Repl ac ingc apit algoodsr egul arl
yc r
eatesoppor tuniti
es
forbus ines sest okeepupwi t ht ec hnol ogicaldevel opment .

26|
Page
  Humanr es our cesdevel opment :Impr ovings kil
lsandt rai
ningc animpr ovet he
qualityofhumanr es our cesandenhanc etheef fic
iencyofbus i
nes s
es.
 Fr eeadvi sorys er vi
c es:Thegover nmenti nvolvementi npr omot i
ng
oppor tuni t
iest oexpor tandes t
ablishi
ngnewbus inessvent uresinother
count ri
es .
I
mprovingt heef f
icienc yofmar kets
 Der egul at i
on:Thi sinc ludest heremovalofl aws ,regulati
onsandby- l
aws ,and
otherf orm ofgover nmentc ontrol
st hatinterf
er einmar ketsandmaket he
market sf ree.
 Compet i
t i
on:Thi sent ailsarrangingt hemar ketsins uchawayt hatal
lowsf or
newbus ines ses ,increas ec ompet i
tionandi nvitesFor ei
gnDi r
ectInvest
ment .
 Level li
ngt hepl ayingf ields :Gover nmentpol i
cys houldpr otecttheprivate
sectoraswel l.Publ i
cent er pri
sesar epr ot
ec t
edbyl egis
lati
onandt heys urviveon
gover nmentr esour ces .Thi sdisadvantagest hepr ivates ec
tor.

(Max.13marks)
(
Acceptanyotherr
elevantc
orr
ectans
wer
)
(26)
Additi
onalpar t
Howc anexogenous( exter nal )factorsi nf
luenc etheec onomy?
(10)
 Inclementweat her,damagest hemuc hneededi nfr
astructuret
herebylowering
thes t
andar dofl i
vingands lowingdownt radeandi nves t
ments.✔ ✔
 Dr ought ,fl
oods ,etc.r es ul
tst os hortagesofr awmat erialshencenegati
vely
aff
ec t
ingt herealGDPoft hec ount r
y.✔ ✔
 Compet i
ti
onc omi ngf rom c ount ri
ess ell
ingsimilarproduc tsmayc r
eate
balanceofpaymentpr oblemsf orthec ountr
y.✔ ✔
 Pol i
ticali
nfluenc ecanr es ulttounnec essaryc hangesi npol i
cywhichmaylower
businessc onfi
denc eandel i
citpes si
mi smf r
om i nvestors.✔ ✔
 Changesi nt echnologyc anr esulttos tructuralunempl oymentands hor
tageof
pri
or i
tyskill
s.✔ ✔
(Acceptanyot herr elevantandc or
rec trespons e)

Concl
usi
on
Thegovernmentshoul
ds t
ri
keabalancebetweensuppl
y-si
deanddemand-
side
pol
ici
essoastoavoidprovoki
nginf
lat
ionandunemployment.
(max2)
(Ac
ceptanyotherrel
evantandcorr
ectres
ponse)

TOPI
C3:BALANCEOFPAYMENTS

27|
Page
ACTIVI
TY1
1.
1 Var iousopt ionsar epr ovidedaspos sibl
eans wer stot hef oll
owi ngques t
ions.
Choos et hec or r
ec tans werandwr iteonlyt hel etter(A- D)nextt ot heques t
ion
number s( 1.1.1-1. 1.8)i nt heANSWERBOOK,f orexampl e1. 1.
8.D.
1.
1.1 Whent heval ueofexpor tsexceedst heval ueofi mpor tsisc all
eda…. .
A.tradebal anc e
B.tradedef ic i
t
C.trades urpl us
D.tradeac count
1.
1.2 Thes um ofdi rectinves tment ,por t
foli
oi nvestmentandot heri nves tmentis
knownas ……
A.cur rentac count
B.financ i
alac count 
C.capi talt rans ferac count
D.c urr entt rans ferac count
1.
1.3 Ani nt er nat i
onali ns t
itut i
ont hathel psc ount r
ieswi thongoi ngbal anceof
payment spr oblemsi sknownast he…. .
A.Wor ldBank
B.Uni tedNat i
ons
C.Wor ldTr adeOr gani sat i
on
D.Int er nat ionalMonet aryFund
1.
1.4 Goodsands er vicest hatar esoldt oot herc ount ri
esar ec all
ed…. .
A.expor ts 
B.impor ts
C.trade
D.mer chandi s e
1.
1.5 Money,goodsands er vicesexc hangedbet weenr esi
dent sandnon-r esi
dents
withoutr ender inganypr oduc t
ives erviceisref erredtoas ….
A.cur rentt rans fers
B.cur rentas sets
C.capi talt rans fer
D.c urr entac count
1.
1.6 Af i
nanc ialins trumentc reatedbyt heI nternationalMonet aryFundt omember
count r i
eswhenexper ienc i
ngbal anc eofpaymentdi f
ficulti
esi sc all
ed….
A.for eignexc hanger ate
B.spec ialdr awi ngr i
ght s 
C.bal anc eofpayment s
D.netf i
nanc i
alder i
vat ives
1.
1.7 Purc has eofl iquidas set swher et heinves torisonl yinteres tedi nt heexpected
fi
nanc ialr etur ni sref erredt oas ….
A.di rec ti nves tment
B.ot heri nves tment
C.financ i
ali nves tment
D.por tfol i
oi nves tment 
1.
1.8 Ani tem oft hec ur rentac countt hatc apturesi nfl
owofc apitalfrom s ervi
ces
render edbyaSout hAf ricaninot herc ount ri
esi sknown…. .

28|
Page
 A.i
ncomepayment s
B.i
ncomer ecei
pts
C.s
ervic
er ec
eipts

D.ser
vicepayments (
8x1)8

1.
2 Choos eadescr
ipti
onfr
om COLUMNBt hatmatchestheit
em inCOLUMNA.
Writ
eonlythe
l
ett
er(A-I
)nexttotheques
tionnumber
s(1.
2.1.
to1.
2.8.
)intheANSWER
BOOK.
COLUMNA COLUMNB

1.
2.1Mer
chandi
sei
mpor
ts A.t
heval
ueofexpor
tsmi
nusi
mpor
ts I


1.
2.2Bal
anc
eofpayment
s B.money,goodsors ervicest r
ans ferr
ed D
bet weenr es ident sandnon-r esidents
wi t
houtr ec eivi
nganyt hingt angi blein
return
1.
2.3Capi
talt
rans
ferac
count C.var iousf ormsoff oreignc ur r
enc y, F
depos itsands ec urit
iesus edt obal ance
i
nt ernationalt rans actions
1.
2.4Tr
adedef
ici
t D.as ys temat icr ecor dofac ount r
y’s G
transac tionswi tht her estoft hewor l
d
1.
2.5Di
rec
tinves
tment E.ac omponentoft hebal anc eof H
payment st hatc over sc l
aimsonor
l
iabilit
iest onon- resident sc oncer ni
ng
fi
nanc ialas sets
1.
2.6Fi
nanc
ialac
count F.t rans ac ti
onsandgr antsr elati
ngt othe E
owner shipofas setsbymi grants
1.
2.7Tr
adebal
anc
e G.whenc ount ryimpor tsagr eatervalue A
ofgoodsands ervicest hani texpor t
s

1.
2.8Res
erveas
set
s H.inves tmentsinforei
gnbus i
nes sesfor C
thepur poseofget t
ingameani ngful
percentages hareandc ont
rolofthe
busi
nes s
I
.t angi blegoodsboughtf rom other
countri
es
(8x1)8
1.
3 Gi veonet ermforEACHofthef ol
lowi ngdes c
ript
ions.Writ
eonl ythet er
m next
totheques ti
onnumbers(1.
3.1-1.3.6)intheANSWERBOOK.Abbr eviat
ions
,
acronymsandexampl esWILLNOTbeac c
epted.
1.
3.1 Thebal anceofpaymentsacc
ountt hatr ecor
dst r
ansacti
onsrelatedt oexports
andi mports
ofgoodsands er
vic
es.
currentaccount

29|
Page
1.3.
2 Ani tem int hebal anceofpayment sthatcatersforanyomi ss
ionsander
rors.
Unr ecordedt ransacti
ons
1.3.
3 Arec or dofal ltransacti
onsbet weenonec ount ryandther es
toftheworld.
balanc eofpayment s
1.3.
4 Afinanc ialc ont ractthatderivesi
tsvaluefrom anunder l
yingasset.
fi
nanc ialder i
vative
1.3.
5 Abal anc eofpayment swithimpor texpenditur
enothavingt hesamevalueas
i
tsexpor t
i
ncome.
dis
equi libr i
um
1.3.
6 Thedi ffer enc ebet weenvisibleexportsandvi s
iblei
mports.
tr
adebal anc e (
6x1)
(6)

ACTI VITY2
2.1.1 NameanyTWOexampl esofmer chandiseexpor ts.
(2)
mi neral
s,c lothing,veget ation,vehicle
(Ac ceptanyot herr elevantandc orrectresponse)
2.1.2 Whyar eliabiliti
esr eflectedasapos it
iveent ryi
nt hef inancialaccount?
(
2)
Liabili
ti
ess howani nfl
owoff undsasmoneyi scomi ngi ntothec ountr
ye.g.
l
oansf rom abr oad.
(Ac ceptanyot herr elevantandc orrectresponse)
2.2 St udyt heext ractbel owandans werques tionsthatf ollow
SA’ sCURRENTACCOUNTDEFI CI T
Sout hAf r
icapos tedac ur rent-accountdef i
c i
tforthefirstt i
mei nt hreeyearsi
n
2022asi mpor t
sinc reas edandpowers hortagesandr ailc ons t
rai
nt scurbed
expor ts,heighteni ngt henat ion’
svul nerabi
lit
yt oexternals hoc ks
.
Adapted
from News24

2.2.
1 I
dent if
yoner eas onleadingtoSout hAfri
cahavingacurrentaccountdefi
ci
tin
2022.(1)
i
ncreas eini mpor ts

powers hortages 
rai
lcons traint s
2.2.
2 Nameanot hers ub-ac countofthebalanceofpayment s
.
(1)
fi
nanc i
alac c ount 
capitaltrans ferac count
2.2.
3 Bri
eflydes c
r i
bet hetermc urr
entt r
ansfer
s.
(2)
Currentt rans fersrefertothemoney,goodsands ervi
cesexchangedbet ween
resi
dent sandnon-r esi
dentswi t
houtrenderinganyproducti
ves er
vic
es.
(acc
eptanyot herr el
evantcorrectres
pons e)

30|
Page
2.
2.4 Whati sthepurpos eofthebalanceofpayment s?
(2)
Thepur poseofthebal anceofpayment si
stor ecordallt
radetr
ansactions
betweenSout hAf r
icaandt herestoftheworld
(acceptanyotherr el
evantcorrec
tresponse)
2.
2.5 Howdoesc onti
nuousbal anceofpaymentss urplusnegati
vel
yaffectthe
country? (4)
 Mor emoneyf l
owsi nt heeconomyoft hecountrythroughexportearnings
thatwilll
eadtoinflati
on.
 Les sgoodsands ervic
eswillbeexportedtohighpr i
ces
 Inc r
eas ei
ninter
es tratesi
nanat tempttocurbt heinfl
ati
on
(acceptanyotherr el
evantcorrec
tresponse)

ACTIVITY3
3.
1.1 NameanyTWOi temsoft hecurr
entaccount.
(
2)
Mer chandis eexpor t
Mer chandis eimpor t

Netgol dexpor t
Currentt r
ans f
ers
Servicerec eipts
Paymentf ors ervi
c es
3.
1.2 Howc animpor tc ontrolbeusedtocorr
ectbalanceofpaymentsdi
sequi
l
ibr
ia?
(2)
I
mpor tcont rolcanbeus edbyputti
ngbanandembar gotores
tri
cti
mports
goodsand
Services.

(Acceptanyot herc orr
ectrel
evantr
esponse)
3.
2St udyt hegr aphbel owandans werquest
ionsthatfol
low

31|
Page
3.2.
1 Ident i
fyt hebal anc eofpayment s’sub- accountint heabovegr aph.
(1)
Financ ialaccount 
3.2.
2 NameanyONEi tem r ec ordedi npor tfolioi
nves tment .
(1)
Or dinarys hares
Debts ecuriti
es
(acceptanyot herr elevantr esponds )
3.2.
3 Br i
eflydes cri
bet het ermr es erveas sets.
(2)
Res erveas setsr efert ot hec urr
ency,c ommodi ti
esandot herfi
nancialc
apit
al
heldbySARBt of i
nanc et radei mbal anc e.
(Ac ceptanyot herc orrec tr elevantres pons e)
3.2.
4 Whati st heimpac tofani nc reaseini mpor tsonbal anc eofpayment s
(2)
Mor ei mpor tswi l
lc reateadef i
citonbal anceofpayment .
(acceptanyot herr elevantr esponse)
3.2.
5 Howdoesl oad- sheddi ngaf fectSout hAf ri
c a’
scur r
entac count?
(4)
Les sgoodsands ervicesar epr oducedwhi c hreduc esthequantityofgoods
exported. 
Al l
owt hef oreigns erviceswhi chincreas est heout f
lowofmoney
Goodar eimpor tedf r
om ot herc ountrieswhi c
hc reatedefici
tonc ur
rent
account .
(acceptanyot herr elevantr esponse)
ACTIVITY4
4.1.
1 NameanyTWOs ubac c ount soft hebal anceofpayment s.
(2)

32|
Page
 Currentac count
Financialaccount
CapitalTransferac c
ount 
4.
1.2 Whati mpac twi l
ladef ici
toncurrentaccounthaveonthebal
anc
eofpayment
s?
(2)
Adef ici
tont hec urr
entac countwillhavenegati
veimpactonthebal
anc
eof
payment s
(Acceptanyot herrelevantandcorrectrespons
e)

4.
2St
udyt
het
abl
ebel
owandans
wert
heques
tionst
hatf
oll
ow.

SOUTHAFRI CA’SBALANCEOFPAYMENTS–2022
I
tem Rands
Merchandiseexports 300000
NetGoldexpor ts 180000
Merchandiseimports 100000
Ser
vicesreceipt
s 50000
Ser
vicespayment s 28000
I
ncomer eceipts 15000
I
ncomepayment s 10000
- Nett r
ansfers 1200

4.2.
1 I
dent ifytheitem t hatc apturesdonat ionsf r
om onec ount
rytoanothercountry?
(
1)
Nett ransfers
4.2.
2 NameONEexampl eofmer c handiseexpor t
.
(1)
Mot orvehi cl
es /c l
othi
ng/ /furnit
ure/ /food/ mi
neral
s
(Acceptanyot herc orr
ec tres ponse)
4.2.
3 Brieflydesc r
ibet het erm por tfoli
oinves t
ment s
.
(
2)
Por t
foli
oi nves tment sreferst obuyingofs haresthatdonotgivec ontr
oll
ing
i
nter estin
thatc ompany.
(Acceptanyot herc orr
ec tres ponse)
4.2.
4 Whyi snetgol dexpor trec ordedasas epar ateit
em ont hecur
rentaccount ?
(2)
Netgol dexpor ti
sr ecordeds eparat
el ybec auseofthehighamountofmoney
thatit
earnsasani ndividualpr oduc tandSAr eli
esheavilyonitanearnerofincome.

(Acceptanyot herc orr
ec tres ponse)
4.2.
5 Calculatet hebal anc eoft r
adef rom thet ableabove.
(4)

33|
Page
 Mer
chandi
seexpor
ts+NetGoldExpor
ts–Merchandi
sei
mpor
ts
=R300000+R180000- R100000
= R380000

ACTI
VITY5
5.
1 St udyt
hei
nfor
mat
ionbel
owandans
werques
tionst
hatf
oll
ow.

Years 2021 2022

Quar t
ers Q1–4 Q1 Q2 Q3 Q4
Currentac count Rbn Rbn Rbn Rbn Rbn
i
tems
Exportedgoods 1176 1193 1233 1258 1260
Netgol dexpor ts 72 56 50 70 93
Servic
er eceipts 210 208 213 215 215
I
ncomer eceipts 97 123 106 117 121
Currenttrans f
ers -35 -36 -35 -36 -36
I
mpor tedgoods 1223 1207 1314 1284 1250
Servic
epayment s 218 221 229 226 230
I
ncomepayment s 251 266 230 303 241
[
Adapt edf rom SARBQB,Dec ember
2022]
5.1.
1 I
dent i
fyt hec urrentac countitem thatcapt uresdonat i
ons?
(
1)
Cur r
entt ransfers
5.1.
2 Givet heec onomi cc oncepti l
lus
tratedinthet abl eabove.
(1)
Balanc eofpayment s/BOP
5.1.
3 Briefl
ydes c
r i
bet heter mtradebal ance.
(2)
Tradebal ancei sthedi f
ferencebet weenmer c handiseexpor
tsplusnetgol
d
export
andt hemer chandisei mpor ts
.
(Acceptanyot herrelevantandc orrectrespons e.)
5.1.
4 Whyar enetgol dexpor tfigurespos i
ti
veinSout hAfrica?
(2)
Thisi sbec ause Sout h Afric
ai st he wor ld’sl argestexport
erofgold,and
thereforea

34|
Page
 netexporter.
(Acceptanyot herrelevantandcorrectresponse.
)
5.
1.5 Calcul
atethebal anceont hecurrentaccountforthesecondquar
terof2022.
ShowALLc alcul
ations.
(4)
Currentaccountbal ance=(inf
lows)–( out
flows)+(curr
enttr
ansf
ers)
=(R1233+R50+R213+R106)–-( R1314+R229+R230)+( -35)
=1602–1773–35
=-206

ACTI
VITY6
6.
1 St udyt
hegr
aphbel
owandans
wert
heques
tionst
hatf
oll
ow.

EXTRACTOF SOUTHAFRI
CA'
SBALANCEOFPAYMENTS

[
Sour
ce:SARB,Quar
ter
lyBul
l
eti
n,J
une2021]

6.1.
1 I
dentif
yanyyeari nwhi c
hSout hAf ri
c aexperi
enc edatradesurpl
usinallf
our
quart
ers. ( 1)
2017/2020
6.1.
2 Namet hebalanc eofpayment ssub- accountrepresentedbythegraphabove.
(1)
Curr
entac c
ount 
6.1.
3 Bri
efl
ydes cr
ibet hetermc urrenttrans f
ers.
(2)
Curr
enttransfersrecordt het ransactionsofmoneys uchasdonati
ons,gif
ts
andpensiont ransf
erredbet weenr esidentsandnon- resi
dents
.
(Acc
eptanyot hercorrectr el
evantr esponse)
6.1.
4 Expl
aintheef f
ec tofther anddepr eciati
onont hetradebalance.
(2)
I
mpor t
swi l
lbec omeexpens i
vewhi leexportbec omec heaperr
esult
ingintrade
35|
Page
 balanc e
surplusasi nfl
owoff undswi l
lbegr eaterthantheout
fl
ow.
(Acceptanyot hercor rectrelevantr espons e)
6.
1.5 Howc anani nc r
easei ninter estratesimpr ovethebal
anceofpayments?
(4)
 Borr owi ng may be expens i
ve f or hous ehol
ds which wi l
l di
scour
age
expendi tureoni mpor ts,
reduc i
ngdef ici
tont hec urrentac count .
 Higherr eturnsonf inanc i
ali nvestment stoforei
gni
nvestor
smayc r
eatenet
capit ali
nf low,
i
nc reas i
ngt hebal anc eonf inanc i
alac count.
 Higheri nterestr atesenc our age localhous ehol
dstos ave and di
scour
age
expendi tureon
i
mpor t
s,i ncreasingt hetradebal anc e.
(Acc eptanyot hercor rectrelevantr espons e)

ACTIVI
TY7
7.1 Howc anSout hAf r
icar educ eimpor tsinordert ocorrec tthebal anceof
paymentdef ici
t?
(8)
Sout hAf ricacanr educ ei mpor tsinor dertoc or r
ecttheBal anc eofPayment
(BOP)deficitby:
 increas ing i nterestr atet o dis courage domes ti
c expendi turei ncl
uding
impor tedgoodsands ervices.
 increas ing i ndi r
ectt axes s uch as per s
onal i ncome t ax t o r educe
hous ehol d’s dispos ablei nc ome and di scourage t heirexpendi ture on
impor ts .
 impos i
ngi mpor ttarif
fsanddut iest omakei mportedgoodsands ervi
ces
mor eexpens i
veandr educ edomes ticexpendi t
ureont hem.
 reduc ing t he avai l
abili
ty off or ei
gn exc hange t o di scour age domes ti
c
expendi tur eoni mpor ts.
 impl ement ing s t
ri
c tc ustoms pr ocedures t o del ay t he pr ocess of
purc has ingi mpor ts.
 enc our agi ng domes ti
cpr oduc tion ofi mpor tss ucht hatc ons umerswi l
l
purc has et hem onl ocalmar kets.
 increas ingaggr egat es uppl yofgoodsands ervi
cestoavoi ds hor t
ageson
localmar ket s.
 deval uingt her andt omakei mpor t
sr el
ati
velymor eexpens i
ve.
(Acc eptanyot herc orrec tandr elevantr espons e.
)

FOREI
GNEXCHANGEACTI VI
TIES
ACTI
VITY1
1.
1Vari
ousopt
ionsar
epr
ovidedaspos
sibl
eans
wer
stot
hef
oll
owi
ngques
tions
.

36|
Page
 Chooset hec orr
ec tans werandwr i
teonl ytheletter(A- D)nexttot heques t
ion
number( 1.1.1-1.1. 3)i ntheANSWERBOOK
1.
1.1 Deliber ateac tionbyt hegover nmentt olowert heval ueofthec urr
encyis
knownas…
A depr ec i
ation
B apr ec iati
on
C deval uation
D reval uat i
on
1.
1.2 Ther at i
ooft hei ndexexpor tpr ic
esandi mportpr i
c esisknownas…
A ter msoft rade
B exc hanger ate
C bal anc eoft r
ade
D cur rentac count
1.
1.3 Adec reas eint heval ueoft hec urrencybec auseofmar ketforcesisknown
as…..
A over valued
B depr ec i
ated
C under valued
D appr ec i
ated
(3x2)(6)
ACTIVITY2
2.
1 Ans wert hefol l
owi ngques tions:
2.
1.1 NameanyTWOt ypesofexc hanger at
es ystems .
(2)
Freef loat i
ngexc hanger ate
Managed/Cont rol l
edexc hanger ate
Fixedexc hanger ate
2.
1.2 Whati mpac twi llthedepr ec iat
ionofac urr
enc yhaveont hebal anceof
paymentac count ?( 2)
Itwillhaveapos itiveimpac tbec aus eexportswi l
lincrease,andi mport
swi l
l
dec r
eas e.This
willcaus eani nf l
owoff oreignexc hange
(Acceptanyot herc orrectandr elevantrespons e.
)

2.
2 St
udyt
hegr
aphbel
owandans
wert
heques
tionst
hatf
oll
ow.

37|
Page
2.
2.1 I
dent i
fytheor i
ginaldemandc urveintheabovegr aph?
(
1)
DD
2.
2.2 Whathashappenedt otheval ueoft her andwhenpr icesc hangefrom R17to
R18? (1)
Randdepr eci
ates
2.
2.3 Bri
ef lydes cr
ibetheter m exchanger at
e.
(2)
Thepr i
ceofonec urr
enc yexpr es sedintermsofanot her
(Acc eptanyot hercor rectrel
evantr espons e)
2.
2.4 Explaint heef f
ectofdeval uati
onofac urrenc yonexpor ts
.
(
2)
Deval uationofac urrenc ywil
lmakel ocalpr oduc tstobec heaperleadingtoan
i
nc reasei n
expor ts.
(Acceptanyot hercor r
ec tandr elevantres pons e.)
2.
2.5 Howwi l
lthedepr eci
at i
oni ntheval ueofac urr
enc yaffectbus i
nesses?
(
4)
Depr eciationofac urrencyaffec tsbusiness esby:
 Maki ngi mpor t
sexpens i
veleadi ngtoani nc reaseinpr i
c esofgoodsand
services.
 Reduc i
ngaggr egatedemandofl ocalproduc t
sr esul
ti
ngt oadec r
eas ein
profits
 Reduc i
ngexpor tpriceswhi chr esult
stoani nflowoff oreignc urr
enc y.

38|
Page
 (
Acc
eptanyot
herc
orr
ectandr
elevantr
espons
e.)

ACTIVITY3
3.1 St udyt heinformat ionbel owandans wert heques ti
onsthatfoll
ow.
SOUTHAFRI CA:TERMSOFTRADE2022
Mont h I
ndexofi mpor t Indexofexpor t TermsofTr ade
prices pr i
ces
January 108.2 102.9 95.
1
February 107.9 105.4 97.
6
March 107.7 109.7 A
Sour c
e:Stati
sti
csSouthAfrica
3.1.
1 Ident i
fyamont hwi t hthel owes ti
ndexofexpor ts
.
(1)
Januar y
3.1.
2 Whati st hetrendi nt heindexofi mpor tpr ices?
(1)
Thet r
endi sdec reas i
ng
3.1.
3 Br ieflydes cri
bet het ermt ermsoft r
ade.
(2)
Termsoft r
ader efer stot her at
iooft heindexofexpor tpr
icesandindexof
i
mpor tpr i
c es.
(Acc eptanyot herc orrectandr elevantr espons e.
)
3.1.
4 Whati st heimpac tofani nc r
easeint hel evelofincomeont radebet ween
countri
es? ( 2)
I
nc reasei nthel evelofi ncomewi l
lleadt oani ncr
easeinimportsand
expor ts.
(Acc eptanyot herc orrectandr elevantr espons e.
)
3.1.
5 Cal culat ethet er msoft radef orMar ch(A) .ShowALLc al
cul
ations.
(4)
I
ndexofex por tprices×100
I
ndexofi mpor tprices

105,
4 ×100
107,
7
97,
86

ACTI
VITY4
4.
1 St udyt
het
abl
ebel
owandans
wert
heques
tionst
hatf
oll
ow.

RANDAGAINSTTHEDOLLAR
Year 2021 2022
Quart
er Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

39|
Page
 Exc
hange
14,
96 14,
13 14,
64 14,
70 14,
55 14,
75 15,
00 14,
80
rat
e
Adapt
edf
rom googl
e

4.1.
1 Ident ifyt heec onomi cconc epti ll
ust ratedabove.
(1)
For eignExc hangeRat e/Exc hangeRat e
4.1.
2 Dur ingwhi chexac tper ioddi dt her andenj oyt hemos tf avourabl ef l
uctuation
agai ns t
theUSdol l
ar ?
(1)
2ndquar t
erof2022
4.1.
3 Br ief l
ydes cr i
bet het erm deval uation.
(2)
Deval uationi sthedel i
ber ateac ti
onbyaut hori
ties(SARB)t odec r easethe
val ueofa
count ry’sc ur r
enc y.
(Ac c eptanyot herc or r
ec tandr el
evantr es ponse.)
4.1.
4 Whymos tec onomi esint hewor l
dus ef ree- fl
oatingexc hanger ates ?
(2)
Fr ee- f l
oat i
ngexc hanger ates howsar ealper formanc eofc ountry’ s
mar ket s .

(Ac c eptanyot herc or r
ec tandr el
evantr es ponse.)
4.1.
5 Whatwast her easonsf ort her andt ohi tanext r
emel owagai ns tt heUSDol l
ar
i
nt er m1
of2021? (4)
 Sout hAf ricawass ti
llfres hfrom aper iodofec onomi cinac ti
vit
yt hatsawt he
count ry
elevat edt ol evel5ofl oc kdown.
 Pr oduc tivitybyf i
rmswass olowt oanext entthatver ylittl
ewasexpor tedt o
ot herc ount ri
es ,
andt hec urrentac countoft hebal anc eofpaymentwasnegat ivel yaffected.

 Thet er msoft r
adet hatr elyonexpor tpr i
cesandi mpor tpricesdet eri
oratedas
wel l,and
ther ebyc aus ingunf avour ablefluct uat ionsi ntheexc hanger ate.
 Manybus i
nes seshadt os hutdownandi nternationaltr
adewasnegat i
vely
aff ec ted.
(Ac c eptanyot herc or r
ec trelevantr es pons e.)

ACTI
VITY5
5.
1Studyt
hegr
aphbel
owandans
wert
heques
tionst
hatf
oll
ow.

40|
Page
 Sour
ce:googl
eimage

5.1.
1 Ident ifythedat eonwhi chtheRandwast heweakes tagains ttheDol l
ar?
(1)
May2023
5.1.
2 Whi c ht ypeofexc hanger atei sdepictedinthegr aph?
(
1)
FreeFl oatingExc hangeRat e
5.1.
3 Brieflydes cr
ibet hec onceptexc hanger ate.
(2)
Iti
st heval ueofac ur r
enc yofonec ount r
yint ermsoft hecur r
enc yofanother
countr
y.
(Acc eptanyot herc orrec
t,relevantans wer.
)
5.1.
4 Whyi sitimpor tantf orac ountrytohaveas tableexc hanger ate?
(
2)
 Toat tractmor ef oreigninves tments.
 Toat tractmor ei nternati
onalt ouri
sts.
(Acc eptanyot herc orrec
t,relevantans wer.
)
5.1.
5 Howwi l
lanappr eciati
onoft her andagai ns
tot herc urrenci
esaf fect
consumers? (
4)
 Itdec reas esthef oreignpr iceofgoodsands er vic
es-c onsumer swi l
li
mpor t
mor e.
 Lowerl ocalpricesr educelivi
ngc ostsandi mpr ovess tandardofl ivi
ng.
 Peopl ewi l
lratherwor kinSout hAf r
icathanemi grat
eandempl oymentwi ll
increas e
 Cons umer swi l
linves tmor e,becauset heycanaf f
ords hares.

41|
Page
  Consumerswil
lfi
nditmor eaff
ordabletogoovers
eas.
 E.gThegaspri
cewi l
ldecreas
ebec auseiti
sdet
erminedbyt
hepr
iceofoi
l
,
ther
efor
e
consumersc
anaf f
ordmor egas.
(Acc
eptanyothercorrec
t,rel
evantanswer.
)

ACTIVITY6
6.1Dis
c ussfac t
orsaf fectingt hedemandf orf oreignc urrency.
(8)
 Impor t
inggoodsi ncreas esdemandf oraf orei gnc urrenc y.
 Paymentf ors ervicesfrom f oreignc ount riesr equir esaf orei
gnc urrency.
 Buyi ngs haresi nanot herc ount ryincreas esdemandofaf oreigncurrency.
 Tour istsspendi ngmoneyover seasneedt oexc hanget heirmoneyt ot hatof
thec ountryt heyar evi siti
ng.
 Repaymentofdebtbor rowedf rom foreignc ount ries
(
Ac ceptanyot herc orrect ,rel
evantans wer .)
6.2 Howdoesas trongc urrenc yi nfluencet r
adebet weenc ountries?
(8)
Whenac urrenc y’sexc hanger ateincreas esr el ati
vet oanot herc ountry’
s
curr
enc y:
 Thepr iceofi tsgoodsands ervicesinc reas es.
 Expor t
sbec omeexpens ive,t husdec reas i
ngt hequant ityofexpor ts.
 Impor t
sbec omec heaper ,thusi nc r
eas ei mpor ts.
 Thet ermsoft radewi l
lbepos iti
ve.
 Impor t
erswi llbeabl etopur chas ewitht hes amenomi nalamount .
 Expor t
erswi llenjoyaddedr ealval uet ot heirnomi nalvalue
(
Ac ceptanyot herc orrectr elevantr es pons e)

TOPI
C8:PROTECTI ONI SI
M ANDFREETRADE
ACTI
VITY1
1.
1 Var i
ousopti
onsar eprovi
dedasposs
ibl
eanswer
stothef ol
lowi
ngquesti
ons
.
Choosetheans werandwrit
eonl
ythelet
ter(
A-D)nexttotheques
tion
numbers(1.
1.1.to1.1.
6)i
ntheANSWERBOOKe. g.1.
1.7.
A

1.
1.1. Producti
onofgoodsl ocall
ybec auseofsanct
ionsi
sreferr
edtoas…
A.vol untaryi
mpor tsubs t
ituti
on
B.enf orcedimportsubs ti
tution
C.enf orcesexportsubs ti
tuti
on
D.vol untaryexportsubs t
ituti
on
1.
1.2.Af orei
gnc ompanys elli
ngt heirbus
inessi
nter
estinanotherc
ountr
yis
regardedas…. .
A.s ancti
ons
B.boyc ot t
s

42|
Page
 C.di sinves tment s
D.i nves tment s

1.
1.3.Paymentmadebygover nmentt oloc alpr oduc ersf ort hem t obec ompet i
ti
ve
is.
..
..
..
..
...
...
.
A.s ubs idi es
B.t ariffs
C.quot as
D.i ncent i
ves
1.
1.4.Impor tdut iesar el eviedasapar t
icul aramountperuni tar e…………. .
A.adval or em
B.s pec ific
C.s inglet ariff
D.mul t
iplet ari
ff
1.
1.5.Adel iber at edec reaseintheval ueofc urrenc ybyaut horitiesisknownas
………….
A.depr eciat i
on
B.appr eciat i
on
C.deval uat i
on
D.r eval uat ion
1.
1.6.Thepr ac ti
s eofs ell
inggoodsi naf or eignc ount r
yatal owerpr ic
et hani na
count ryofor igi
ni sknownas. ….
A.expor tat i
on
B.dumpi ng
C.i mpor tat i
on
D.i mpor ts ubs tituti
on
2X6=12
1.
2. Mat cht hedes criptionincol
umnBwi tht hec onc epti nc olumnA.Onl ywrit
e
t
hec orrec tl etternextt othec orres pondi ngnumber .Exampl e:1.2.9.K
COLUMNA COLUMNB
1.
2.1. Dumpi ng A.Cas hpaymentt oexpor ters
D
1.
2.2. I
nc entives B.Iswhenac ount r
yhasl owerc ostsin F
thepr oduc t i
onofac er tai
ngood
thant heot herc ount ry.
1.
2.3. Spec i
fict ariffs C.Thes ear elawspas sedt or es tri
ctor H
abol isht radewi thc ertainc ount ri
es.
1.
2.4. Diversifi
c ation D.Sel linggoodsi naf orei gnmar ketat E
pricest hatar ebel owt heirc os tof
produc t ion.
1.
2.5. Compar at i
ve E.Expans i
onofmanuf ac turingmakes B
advant age economi esl es sdependenton
foreignc ount ri
es
1.
2.6. Quot a F.Fi nanc i
alas s istancegi vent o G
expor ter stoenc our aget hem t o
expor tmor egoodsands er vices.
1.
2.7. Directs ubs i
dies G.Isaf i
xedl i
mi t,us uallybyquant i
tyof A

43|
Page
 goodt hatmaybei mpor t
ed.
1.
2.8. Sanc
tions H.Anamountperuni t
,mas sorsiz
e,e.
g. C
food,animalsandplants
I
. Oc curswhenforei
gnc ompanies
withdrawinvestmentfrom South
Afri
c a

(8X1)8
1.
3 Providet hec orrec tt erm orc onceptf oreac hoft hefoll
owi ngdes cr
ipti
ons.
Wr iteonl yt het erm/ conceptnextt ot heques t
ionnumber .Noabbr eviat
ions
willbeac cept ed.
1.
3.1 Thenewl yes t
abl ishedi ndustrywhi chc annotbeabl etocompet ewithexist
ing
foreignpr oduc ers .
I
nfanti ndus try
1.
3.2 Dut i
est hatar el evi edasac ertai
nper cent ageoft hevalueofi mportedgoods .
Advar olem
1.
3.3 Ther educ ti
oni nc os tsperuni tasout puti ncr
eases .
Economi esofs cal e
1.
3.4 Thepr oces sbywhi c hmanydevel opi ngc ountri
esenc ouraget heus eoflocal
goodsands ervic est hani mpor ti
ngt hem.
I
mpor ts ubs titution
1.
3.5 Thepol i
c yt hatI nvol vesremovi ngbar ri
er stointernati
onalt rade.
Tradel iber alisation
1.
3.6 Thei nter nationalgl obalor ganisati
ont hatdeal swi t
hther ulesoftrade
bet weenc ount ries .
Wor l
dTr adeOr gani s at
ion
(6X1)6

ACTI
VITY2
2.
1. Studyt
hec
art
oonbel
owandans
wert
heques
tionst
hatf
oll
ow.

44|
Page
 Sour
ce:www.
googl
e.c
om

2.
1.1.Identifyonepr oblem t hati ss hownbyt hec art
oon?
(1)
Tradewar/s anc ti
ons /pandemi c
2.
1.2.Namet hei nstit
ut i
ont hatr egul atesfreet r
adebet weenc ountries
.
(
1)
Wor ldTr adeOr ganisation
2.
1.3.Briefl
ydes cri
bet heter m pr otectionism.
(
2)
Thei mpl ement ationoft r
adepol ici
esai medatr est
ric
tingt heimporti
ngof
certaingoods .
(Acceptanyr elevantr es pons e)
2.
1.4. Explaint hepur poseofexpor tpr omot i
on.
(2)
Thepur pos eofexpor tpr omot ionistoi ncreasedproductionofgoodsand
servicest hat
canbes ol dtoot herc ount r i
es
(Acceptanyr elevantr es pons e)
2.
1.5.Howdoesi mpos i
ngoft ar i
ffsaf fecttheec onomy?
(
4)
 Gover nmentwi llhaveani nc r
eas edr evenuewheni mportsent erdomes t
ic
mar ket.
 Domes ti
ci ndust r
iesals obenef i
tfrom reduc ti
onincompet iti
onbec ausethe
pricesofi mpor tedgoodsar ear t
ifi
ci
allyinfl
ated.
 Cons umer ssufferbec aus ehi gheri mpor t pr i
cesmeanhi gherpr i
cesforgoods
.

(Acceptanyr elevantr es pons e)

45|
Page
ACTIVI
TY3
3.
1.1 Nameanyt wot ypesoft r
adepr ot
oc ol
s.
(2)
Freetradear ea✓
Custom uni on✓
Commonmar kets✓
Economi cuni on✓
Howdoesdumpi ngnegat i
velyaff
ectjoboppor tunit
ies.
(2)
Cheaperi mpor tslead t
ol owerdemand f orlocall
ymanuf ac
tur
ed pr
oduc
ts.
Thiscanr esultinincreas
edj obloss
esf orlocalworkers
.✓✓
(Acceptot herc orr
ectrel
evantrespons es)
3.
2 St udytheext ractbelowandans wert heques ti
onsthatfol
l
ow.

United States-
Sout hern Afri
can Cus toms Union ( SACU) Fr ee Tr ade
AgreementNegot iati
ons:
Negotiat
ionstolaunc haFreetradeagreement(FTA)betweent heUSandt he
fi
vemember soft heSACU ( Botswana,Lesot
ho,Nami bia,SouthAfric
aand
Swaz i
l
and)beganonJ une3,2003.Apot ent
ialFTAwoul del i
minat
et arif
fs,
el
iminatenontariffsbarr
ier
s,l
iberal
i
zetradeandpr ovi
det echni
calassi
stance
tohelpSACUnat ionsachievethegoalsoftheagreement.

[
Sour
ce:
www.
bea.
gov/
int
ernat
ional
]

3.2.
1 Ident i
fyONEt radeagr eementt hatSout hAf r
icaispar tofwi t
hot herAfri
can
countr
ies . ( 1)
SACU✓
3.2.
2 Namet hefor m ofec onomi ci ntegrationt hats ati
sfi
est her equir
ementof
custom uni on. (1)
Commonmar ket.✓
3.2.
3 Br ieflydes cr
ibet het ermf reet radear ea.
(2)
Freet radear eai st her emovaloft rader estri
ctionsbet weenc ountri
es
thems elvesbutar efreet oappl ywhat evert rader est
ricti
onswhent hey
wishonnon- member s
.✓✓
(Acc eptanyot herc orr
ec trelevantr espons e.)
3.2.
4 Expl ai
n t he i mpac t of f ree t rade on t he pr ic
es of good.
(2)
As mor e goods ar e expor ted,t he c ostofpr oduction willdecrease
bec aus eofec onomi esofs cale.✓✓
Freet r adereduc est hegl obalpr i
cesofgoodsasi mpor tedgoodsc anbe
cheapert husi ncreasi
ngt hebuyi ngpowerofc onsumer s.✓✓
(Acc eptanyot herc orr
ec trelevantr espons e.)
3.2.
5 Howwoul dimpos i
ngtariffsoni mportedgoodsbenef itSout hAfri
ca?
(4)

46|
Page
  Tari
ffsont radeareof tenus edasameanst orestr
icti
mportsbyi ncreasi
ng
thepr i
ceofgoodsands ervicespurchasedf r
om othercountr
ies.✓✓
 I
tpr otec
ts newly est abli
s hed inf
anti ndustr
ies agai
nstwel l-es
tabli
shed
for
eignc ompet i
ti
on.✓✓
 I
mpos i
ngt ari
ffwil
lcreat emor erevenuef orthegover nment,thatrevenue
wil
lbenef i
tSouthAf r
ica.✓✓
 I
tpr eventsc ountri
esf r
om dumpi ng theirproductsint he South Afri
can
market.✓✓
(Acceptanyot hercorrectr elevantr
esponse.)

ACTI
VITY4
4.
1 St udyt
hec
art
oonbel
owandans
wert
heques
tionst
hatf
oll
ow.

4.
1.1I
dent i
fyt hei nt ernationalor gani zati
ont hatenc ouragesf reetrade? (
1)
Wor ldt radeor ganization✓
4.
1.2 Namet het er mt hatr elatest ot hewor ldwidei ntegrati
on oft heec onomy
throught r
ade.
(1)
Global isation✓
4.
1.3 Brieflydes cribet het er m expor tpromot i
on. (
2)
Expor tpr omot ionr efer st omeas urest akenbygover nmentt oi ncr
easethe
produc tionofgoodsands er vi
cesthatc anbeexpor ted✓✓
(Acceptanyot herc orrectr elevantrespons e.
)
4.
1.4 Explaint hei mpor tanceoff reet r
adei ndevelopi ngc ountri
es? (
2)
 Fr eet radei nc reasesc ompet i
ti
onandt hisenc ouragesinnovat i
oni ngoodsand
proc ess es.✓✓
 I mpr ovesgl obalef fi
cienc y:Underf reet rade,r esourcesar eal l
ocat
ed more
effi
cient lyasmar ketsexpand,bec auseeac hc ount r
ys pec i
ali
zesinitsmost
effectivepr oduc t
ion.✓✓

47|
Page
  Fr eetradel eadst ogr eaterwor ldpr oduc tionoft radedgoods ,leadingt oan
i
nc r
easeinec onomi cwelfare.✓✓
(Acceptanyot hercorrectrelevantr espons e.)
4.
1.5 Whydoesgover nmentpr otectkeys t
rategicindus tr
iesagainstindus t
rialtake-
overs? (
4)
 Infantindus tri
ess houl
dbegi venpr otectioni ntheirearl
yyear s,theymaygr ow
and takeadvant ageofec onomi esofs cale,l owertheiraver agec os tsand
becomec ompet it
ive.✓✓
 Toi ncreas edempl oymenti nl ocalindustriest husimprovingstandar dofl ivi
ng.
✓✓
 To i ncreas e gross domes tic produc tand make domes tic ec onomy mor e
compet i
ti
ve✓✓
(Acceptanyot hercorrectrelevantr espons e.)

ACTIVITY5
5.1 How s uc ces s
f ular et hemet hodsi mpl ement edbySout hAf ricat opr omot e
expor tsofgoodsands ervices ?
(8)
The gover nmenthas been s ucces sfuli nt he i mpl ement ati
on ofexpor t
promot i
onby:
 Impl ement i
ngi ncent ivest of oreignmar ketexpor ter s.✓✓
 Es tabl ishingr es earchc ent r
esf ornewmar ket stodevel op.✓✓
 Pr ovidi ngc onc essionsont r
ans portc har gest oenc our agel ocal pr oduc er
s
toent ert heexpor tmar kets.✓✓
 Payi ngc as hs ubs idiest oexpor ters.✓✓
 Cas hr ef undsoni mpor ttariffstobus i
nes sesof feringgener altaxr ebat es✓✓
 Of fer i
ngc onc es si
onsonpr of i
tsear nedf rom expor tsoronc apitalinves tedt o
produc eexpor tgoods .✓✓
 Of fer i
ngempl oyments ubs i
di esandas sistanc einf inanc i
ngexpor ts.✓✓
(Acceptanyot herc or rectrelevantr es pons e)
5.2 Eval uat et hes uc cessesofgover nmenti npr omot ingSout hAf r
icanpr oduc tsto
forei
gn
mar ket s ? (8)
Gover nmentpr omot eSout hAf ricanpr oduc t
st of or ei
gnmar ketsthr ough:
 Suppl yi ngt hei nf
or mat i
ononexpor tmar ketsi nor dert os ti
mul ateexpor ts
andt oi nc reas et heamountoft heirpr oduc tion.✓✓
 Ot herexampl esar er esearc h on new mar kets/c onc essionson t r anspor t
charges /expor tc redit .✓✓
 Expor ts ubs i
di esar et hef inanc i
ali nc ent i
vest hatt hegover nmentgi ves
busines sest ohel pt hem pr oduc epr oduc t sforexpor tmor ec heapl y.Di r
ec t
subs idiesar es ubs i
diest hatar eof f
er edt ot hepr oduc ere.g.c ashpayment s
toexpor ters ✓✓
 Indir ec ts ubs idi esar er efundsoni mpor tt ariff
sr elat edt oexpor tac ti
vities
andgener alt axr ebat est opr ovider elief.✓✓

48|
Page
  Subs idi esequali nsizetoi mpor tdut i
es ;ar epai d.✓✓
(Acc eptanyot herrelevantc or r
ec tres pons e)
5.3 Howc ant hegover nmentpr otec tlocali nfants ’indus tri
es ?
(8)
Thegover nmentc anpr otectl ocalinfant s ’i
ndus tr
iesby:
 Tariffs:Cus tomsdut iesorimpor tdut i
esar et axesoni mpor tedgoods .They
canbeadval orem (basedont heval ue)ors pec i
fi
ct oc ertaingoods .Pri
ces
ofimpor tedgoodsi ncreasef ordomes t
icc ons umer s,andt heyt endt oshif
t
demandf rom i mpor tstodomes ticproduc ts(goods ).✓✓
 Quot as :Li mitsar eputon t hes uppl yofgoodsand s ervices.Suppl yis
reduc ed and pr i
cesr i
se.For eignent er pris
esbenef i
ti fdemand f ort hei
r
produc tsremai nshi gh.✓✓
 Subs idi es:They enabl er elat i
vely hi gh c ost domes ti
c ent erprises to
under c utmor eeffici
entforeignent erprisesint hedomes ti
cmar ket.✓✓
 Exc hangec ontrol:Gover nmentr educ esi mpor tsbyl i
mi ti
ngt heamountof
foreignexc hangemadeavai l
abl et ot hos ewhowi sht oimpor t
.✓✓
 Phys ic alc ontrol:Ac ompletebanorembar goi simpos edont hei mpor tof
certaingoodsf rom apar ticularc ount ry. ✓✓
 Diver tingt rade:Monet arydepos i
ts,t i
me- cons umi ngc ustomspr oc edures
andhi gh- qual i
tys tandardsar ei mpos edt omaket hei mpor tingofgoods
mor edi f
fi
c ult
.✓✓
(Acc eptanyot herrelevantc or r
ec tres pons e)

ACTI
VITY6
6.
1 St udyt
hec
art
oonbel
owandans
wert
heques
tionst
hatf
oll
ow.

Sour
ce:www.
googl
e.c
om

6.
1.1 I
denti
fythetr
adeblocdepi
ctedi
ntheabovepi
ctur
e.
(
1)
BRI
CS
6.
1.2 Li
stonecountryt
hatrec
entl
yjoi
nedthi
str
adebloc
k.
(1)

49|
Page
 SaudiAr abia/Et hiopia/Ar gent ina/Egypt /Uni tedArabEmi rat
es
6.1.
3 Des cri
bet hec onc eptt radepr ot ocols
(2)
Thes eareagr eement sthats etouthowt r
adebet weent woormor ecountr
ies
willbec onduc ted. 
(Acceptanyr el evantr espons e)
6.1.
4 Whyc ustom dut i
esar eleviedoni mpor t
s ?
(2)
Tomakei mpor tsexpens ivesot hati mpor tsar ediscouraged.

Cus t
om dut i
ess erveasi ncomet ot hegover nment .
Theai m oflevyi ngc ustom dut iesi stopr otec tlocali
ndus t
ri
esfrom f
orei
gn
competit
ion.
(Acceptanyr el evantr espons e)
6.1.
5 Hows uccessfuli sSACUasSout hAf r
ica'stradepr otocol.
(4)
SACU
Jointl
ynegot iatedf reet radear easwi thot herc ountri
es.
SACUmadepr ovi sionf orauni formt ariffont radewi thnon-memberc ount
ries
.
I
twasai mingt opr ot ectlocalindus tr
ies.
(Ac ceptanyr elevantr es ponse)

ACTIVI
TY6
ESSAY
6.
1 Di sc
ussindetai
lexpor
tpromotion.
(26)Eval
uateimportsubs
tit
uti
onasSout
hAf
ri
ca'
str
adepol
i
cy.
(10)

I
ntroducti
on:
Exportpromoti
oninvolvesprovi
dingi
ncent
ivest
oenc
our
agel
ocalbus
ines
ses
toproducegoodsforexpor t
s
max2
(Acceptanyrel
evantresponse)

Reas onsf orpr omot i

ngexpor t
 Thec ount ryac hievessi
gnifi
cantexport-
ledec onomi cgr owth.
 Ex portpr omot i
onenl ar
gest heproducti
onc apacit
yoft hecountrybecause
sur
pluspr oduc tionwi l
l
beex por ted.
 Ex portmar ketsar emuc hbiggerthanlocalmar kets
.
 Mor ewor kerswi llbeemployedi nordertoi ncr
easepr oducti
on.
 Priceswi llber educ edbecaus eofeconomiesofs cale
Appr oac hes /
Met hods
Incentives :
 Thegover nments uppli
esi
nf ormati
ononexpor tmar kets,r
esearchonnew
mar kets,c onc essionsontransportchar
ges ,exportcr edi
t,etc.i
norderto
sti
mul ateexpor t
s .

50|
Page
  Thes
einc
ent
ivesenc
our
agemanuf
act
urer
stoexpor
tani
ncr
eas
ingamountof
thei
rpr oduc tion
Subs idies :
Thes ei nc l
udedi rec tandi ndirec ts ubs idi
es :
 Di rec tsubs idies :Cas hpayment st oexpor t
er senc ouragingt hem topr oduc e
forexpor ts.
 Indi rects ubs idies :Ref undsoni mpor tt arif
fsandgener altaxr ebat es.
Thec hallengef orgover nment si stodes igni ncent i
vesands ubs i
diesins ucha
mannert hatt hepr icesofexpor tgoodsc annotbevi ewedasdumpi ng.
I
fnot ,thec ount ri
esr eceivingt hei mpor tsar eallowedt or et al
iatewi tht arif
fs.

Dumpi ngmeanss elli
nggoodsi naf or ei
gnmar ketatpr i
cest hatar ebel ow
theirc os tofpr oduc tion.
Tradeneut r ality:
 Subs idiesequali ns izet oimpor tdut iesar epai d.
 Si ncet hepr ot ec t
ionofdomes ti
ci ndus tr
iesr ai
s esthec ostofi nputsf or
potent i
alexpor tpr oduc er s,
thel atterc anonl ybec omei nter national l
yc ompet i
tiveandexper iencegr owth
i
nexpor tsi ft hec os t-raisingef f ectsofpr ot ecti
onar eneutr ali
sedbydi r
ec tand
i
ndi rects ubs idies.
 Neut ralityc anbeac hievedt hrought radel i
ber ali
sation.
 Apopul aral ter nat i
vemet hodofobt ainingneut rali
tyinadevel opingc ount ry
thathasi mpl ement edpr otec t
ionmeas uresi sthees t
ablis
hmentofexpor t
proc ess i
ngz ones( EPZs )AnEPZi saf reet radeenc lavewi thinapr otec t
ed
economy.
 Iti sfenc edandc ont rolledi ndus trialpar kt hatf all
sout si
det hedomes ti
c
cus t
omsar eaandi sus uallyloc atednearahar bourorai rpor t

Advant agesofexpor tpr omot i

on
 Ther ear enol imitationst osizeofs cal es incethemar ketisverylar
ge.
 Pr oduc tioni sbas edonc ostandef fi
c ienc y.
 Ther eisi nc r
eas eddomes ti
cpr oduc tion.
 Ex changer ateswoul dber eali
sticandt hereisnoneedf orexchangec ont
rol
andquant itative
res tri
c t
ions .
 Val uec anbeaddedt onaturalresour c esoft hec ountr
y.
 Cr eat esempl oymentoppor t
uni t
ies.
 Ani nc r
eas etoexpor tshasapos i
ti
veef fectont hebalanceofpayment s.
 I nc r
eas ei npr oduc tionleadst olowerdomes t
icpr i
ces
,whichbenef i
tlocal
cons umer s.
Disadvant agesofexpor tpromot i
on
 Ther ealc ostofpr oduc ti
onisr educ edbys ubsidiesandincenti
ves.
 Thel ackofc ompet i
tionbec auseofi nc ent i
vesands ubsidi
esforces
compet itorsoutoft hemar ket.
 Ex por tpr omot i
onr es ul
tsinincreasedt ari
ffsandquot asbypower fulover
seas
compet itors.

51|
Page
  Expor
tpr
omot
ionr
esul
tsi
nthepr
otec
tionofl
abour
-int
ens
ivei
ndus
tri
esby
developedc ountri
es.
 Wi thdrawalofi nc
entivesof t
enleadst
oclos
ureofaffec
tedcompanies
,whi
ch
l
eadst oan
increaseinunempl oyment .
 Inc enti
vesoftenleadt oineffi
ci
enci
esint
heproducti
onproc
ess,si
nce
compani esdon’thavet o
dot hei
rbestt ocompet e,itcanbeseenasdumping
(Acceptanyrelevantr esponse)

Addi
tionalpar
t
Eval
uateimports
ubs
tit
uti
onasSout
hAf
ri
ca'
str
adepol
i
cy.
(
10)
I
mpor ts ubs t
ituti
onasat radepol icyhasbenef it
edt hec ount ryint hef oll
owing
ways:
 Inc reas edempl oyments ti
mul at est heec onomyandGDPi nc reas es
 Bi ggervar ietyofpr oduc tspr oduc ed/ Diversi
fi
c ati
on/ Broaderi ndus tri
albas e

 Dec reas eini mpor tswi llhaveapos iti
veef fectonBOP 
 Indus tri
aldevel opmentenc our agedwhi chc ont r
ibutesr evenuet ot hetreasury

 Eas yt oimpl ementt hrought hei mpos iti
onoft ariff
sandquot as/ Met hodof
rest
rictingi mpor ts
 Mor ec hoi cebec aus egoodsar el ocallypr oduced.Thef or ei
gnexc hanget hat
becomesavai lable
canbeus edf orot heri mpor t
s ,ther ebyi nc r
easingt hec hoi cesmadeavai l
able
tocons umer s
I
mpor ts ubs t
ituti
onhasal sodi sadvant agedt hec ount rybec aus e:
 Capi talandent repr eneur i
altal entar edr awnawayf rom t hear easof
compar ati
veadvant age
 Tec hnol ogyi softenbor rowedf rom abr oadwher ec apitalisr elatively
abundant
 Itl ower st hec ompet itivenes sofs ec torswher eac ompar ati
veadvant age
exi
sts
 Itof tenl eadst odemandsf orpr ot ectiont oindus tr
iest hatpr ovidei nputs
 Pol icyof tenc aus esexc hanger atest obeover valued–di sc
our ageexpor t
s
 Doesnotnec essarilyl eadt oanover allreduc ti
oni nimpor ts–SAi mports
capitalandi ntermedi at e
goods
 Loc alpr oduc ti
onc anbei nefficient
 Domes ticc onsumer sar efor cedt obuygoodsatpr i
c esthatar ehi ghert han
pri
cesofgoodson
i
nt ernat i
onalmar ket
(Ac ceptanyot herr elevantc or r
ec tr espons e)

CONCLUSI
ON

52|
Page
 SouthAfr
ica’
sinter
nationalt
radepoli
ciesf
aci
l
itat
egl
obal
i
sat
iont
her
eby
i
mpac t
ingpositi
vel
yont hebalanceofpayments.
(Acc
eptanyot herr
elevantcorr
ectres
ponse)

6.2 Di s
cussindetai
lthear
gumentsi
nfavourofpr
otec
t i
onis
m.
(26marks)
How succes
sfuli
sSouthAfr
icai
npr ot
ecti
ngthelocaltext
il
eindus
tryagai
nst
f
oreign
competi
ti
on?
(10)

INTRODUCTI ON
Protect
ioni
smr ef
erst oadel i
beratepol i
cyont hepar
tofthegovernmentto
erecttradebarri
ers,suchast ari
ffsandquot as
,inordert
oprotectdomest
ic
industr
iesagai
nstinternat
ionalcompet i
ti
on.✓✓
(Acceptanyotherrelevantcorrectres
pons e)
max2

Rai
singr evenuefort hegover nment
 I
mpor ttarif
fsrais
er evenuef orthegovernment.✓✓
 I
ns mal l
erc ountr
iest he tax basei sof t
en smal
ldue tol ow inc
omesof
i
ndividualsandbus inesses
.✓✓
 Low incomesdonotpr ovi
demuc hint heform ofi
ncometaxesandt her
efor
e
cus
tom dut iesonimpor tsi
sas i
gnif
icantsourc
eofincomeorrevenue✓✓

Protec tingthewhol eindustr

ialbas e
 Maint ainingdomes t
icemployment ✓✓
 I
ti st houghtt hatus ing prot ecti
onism t he count r
y'sc i
tiz
ens willwoul d
purchas emor edomes ti
cproduc tsandr ais
edomes ti
cempl oyment ✓✓
 Count rieswi thhi ghunempl oymentar econtinuouslypr essur
edt os t
imulate
empl oymentc reati
on and t her ef
or er esortto pr otec
t i
onism in ordert o
sti
mul at eindustri
ali
sat
ion.✓✓
 Thesemeas uresondomes t
icempl oymentc reati
onatt heexpens eofot her
count ries,l
edt os uc
hmeas uresas' beggar -my- nei
ghbour 'poli
cies
✓✓
 Applyi ng impor tpolici
esisl ikelyt or educe otherc ount r
iesabili
tyt o buy
count ry'sexportsandmaypr ovoker etal
iati
on✓✓

Protecti
ngwor kers
 I
ti sar gued t hati mportsf r
om ot herc ountr
ieswithr el
ativel
ylow wages
representunfai rcompet i
tionandt hreatenthes t
andardoflivingofthemor e
highlypaidwor kersofthel ocali
ndus tr
ies✓✓
 Locali ndust
rieswoul dther efor
e,beunabl etoc ompet ebec auseofhigher
wagespus hi
ngupt hepri
cel evel
sofgoods ✓✓
 Protectionist husnec essar ytopr eventlocalwagel evel
sfrom fall
i
ng✓✓ or
even t o preventl ocalbus i
nesses from closi
ng down due t o bec
omi ng

53|
Page
 unprof i
table✓✓
 Compet i
ti
onf rom low- wagec ount r
iesmayal sor efl
ectt hefac tthatthose
countries have a c ompar ati
ve advant age i nl ow- ski
ll
ed labour -i
ntensi
ve
i
ndus tri
es✓✓
Diversif
yingt heindustr i
albase
 Over t
ime c ount i
esneed t o develop diversifi
ed indus t
ri
est o pr eventover
speciali
sation✓✓
 Ac ount ryr elyingtooheavi lyont heex por tofoneoraf ew produc t
sisvery
vulnerable✓✓
 Ifadevel opi ngc ountry'semploymentandi nc omei sdependentononl yoneor
twoi ndus tri
es ,thereist heriskthatwor ldf l
uctuationsinpr i
cesanddemand
ands uppl y- sideprobl emsc ouldresultins ignif
icantf l
uctuati
onsi ndomes ti
c
economi cac ti
vity✓✓
 Impor trestrictionsmaybei mpos edonar angeofpr oductsinor dertoensure
thatanumberordomes tici
ndustri
esdevel op✓✓

Develops t
rategici ndustri
es
 Somei ndustriess uchast hei r
on-oreandsteel
,agr
icul
ture,(basi
cfoodst
uff
s,
suchasmai ze) ,energy( fuel
s )andelectr
oni
cs(communicati
on)amongot her
s,
areregardedass trategicindus t
ri
es✓✓
 Developi
ngc ount ri
es,mayf eelthattheyneedtodevelopt heseindus
tri
esi
n
ordertobec omes elf-s
uffici
ent✓✓

Protec ti
ngs pecif
icindus tri
es
Dumpi ng
 Foreign i ndus tr
iesmayengagei n dumpi ng bec aus egover nments ubsi
dies
permi tt hem t osellatver ylowpr i
ces ✓✓ orbec aus etheyar eseeki ngtor ai
se
profitsthr oughpr i
cedi scri
mi nat
ion✓✓
 The r eas on f ors ell
ing pr oducts atl owerpr ices may be t o di spose of
accumul ates tocksoft hegoods ✓✓ andasar esultc onsumeri nthei mpor ti
ng
count rys t
andt obenef i
t✓✓ however ,theirlongt er
m obj ecti
vemaybet o
dri
ve out domes ti
c pr oduc ers and gai nc ontroloft he mar ket✓✓ and
cons umer sar elikelyt ol oseouti nt her educ ti
oni nchoice✓✓ and hi gher
pri
c est hatt heexpor terswi llbeablet oc harge✓✓
I
nfanti ndus tr
ies
 Usual l
ynewl yes t
ablishedandf indi tdiffi
culttos urviveduet othei raverage
costs bei ng hi gher t han t hat of t heir wel l
-es t
abli
shed f oreign
compet itors✓✓however ,iftheyar egi venpr otectionint heirearl
yyear sthey
maybeabl et ogr ow and t herebyt akeadvant age✓✓ l owert hei raverage
costs and bec ome c ompet i
ti
ve and att his pointpr otection can be
removed✓✓
Dec li
ningi ndus t
ries/suns etindustri
es
Structur alc hangesi nt hedemandands upplyofagoodmays ever el
yhitan
i
ndus t
ry ✓✓ s uchi ndus tr
iess hould be per mi t
ted t o go outofbus i
ness

54|
Page
 gradual l
y✓✓ dec lini
ng i ndustr
iesarelikelyto bei ndustri
est hatno l
onger
haveac ompar ativeadvant age✓✓ andhowever ,iftheygooutofbus i
ness
quickl ytheremaybeas uddenandl argeincreaseinunempl oyment✓✓
 Protec ti
onmayenabl eani ndustr
yt odec l
i
negr aduall
yt herebyall
owingtime
forr esourcesi
nc ludingl abourtomovet oot herindustr
ies✓✓
 Protec ti
ng domes ti
c s tandards✓✓ domes t
ic r egulati
ons of f ood
safet y✓✓humanr ightsandenvi r
onment alstandardshavebeeni ncr
easi
ngly
actingast r
ader estri
c t
ions✓✓
(Max.26)
(Acc eptanyot herr elevantfac t
)

Additi
onalPar
t
How successf
uli
sSout
hAf
ri
cai
npr
otec
tingt
hel
ocalt
ext
il
eindus
tryagai
nst
for
eign
competit
ion?
(
10)
Notsuc cessful
:
 Manydomes ti
ct ext i
lemanuf acturer
sc loseddownduet ounfairint
ernati
onal
compet i
tion✓✓
 Many whol esalers make us e of s uppli
ers f r
om abr oad✓✓ e. g.
Woolwor ths/Walmar t✓
 Dumping s t
il
loc c urs ✓✓ – Eur opean manuf acturerssti
lldump c lot
hing i
n
Afr
icaoutofs easonatpr i
cesbelowc ost.✓
 Joblossesduet oal ac kofprot
ec t
ionint hisi
ndus t
ry.✓✓
(Acc
eptanyot herr elevantfact
)
CONCLUSI ON
 Mostc ount r
iesagr eet hatprotect
ionismi sharmfultotheec onomyi fnotwell
managed.Myopi nioni sthatprotecti
onis minc ert
ainareasofi mportanceis
neededes peci
all
ywher eyoungindus t
ri
esc omei ntoexi
stence✓✓
(Acceptanyot herr elevanthigheror derc oncl
usi
on)

ECONOMI CGROWTHANDDEVELOPMENT
ACTIVITY1
1.
1 Var i
ousopt i
onsarepr ovi
dedaspos s
ibleans wer st
ot hefoll
owingques t
ions.
Chooset he answerand wr i
te onlyt he let t
er( A–D)nextt ot he questi
on
number .
1.
1.1 Thes trategyt hatf
ail
edinitsobject
ivet ohal vepovertyandunempl oymentby
2014isc all
ed…….
A.NewGr owthPath
B.Ac celeratedandSharesGr owthIniti
ativef orSouthAfri
ca✓✓
C.Rec ons tr
ucti
onandDevel opmentPr ogramme
D.Nat ionalDevelopmentPlan
1.
1.2 Thepol i
cyus ebyt hegovernmentt oinfluenc et heeconomyt hr
ought axati
on
i
scalled…...
A.monet ary

55|
Page
 B.trade
C.gr owt h
D.fisc al
1.1.
3 Ani nt
er es tr atet hatc ommer cialbanksof fertot hei
rmos tvaluedc l
i
entsis
call
ed…..
A.pr imer ate
B.repor at e
C.fixedr at e
D.pr ef erenc er ate
1.1.
4 Thegr owt handdevel opmentpol i
cyt hataimst oeli
minatepover tyandreduc
e
inequalityby2030i sc all
ed….
A.Nat ionalDevel opmentPl an
B.NewGr owt hPat h
C.J ointI ni t
iat i
vef orPr i
orit
ySki l
lsAc quis
iti
on
D.Rec ons truc ti
onandDevel opmentPr ogramme
1.1.
5 Buyi ngands elli
ngofgover nments ec uri
ti
esbySARBar ec al
led…….
A.openmar kett r
ans acti
on
B.c as hr es er verequi rement
C.int er estr at e
D.mor als uas i
on
1.1.
6 At axs ys tem wher ehi ghi ncome- earnerspayhi gherrateoft axi
s
call
ed…
A.r egr es si
ve
B.c api talf or mation
C.pr opor t
ional
D.pr ogr ess i
ve (
6x2)=12

1.
2 Choos eadescri
ptionfrom c ol
umnBt hatmat chest heitem inColumnA.Wr i
te
onlythelet
ternextt otheques tionnumber .(1.2.1-H)
COLUMNA COLUMNB Answer
1.2.
1Mor alsuasi
on A.Nat i
onwi degover nmenti ntervention 1.
2.1B
to c r
eat e empl oyment us i
ng l abour
i
ntensivemet hods .
1.2.
2.JI
PSA B.SARBc onsultati
onwi thbankst oac t 1.
2.2F
i
n a des irable manner ac cording t o
prevai
lingec onomi cc onditi
on
1.2.
3Ec onomicgrowth C.Themi nimum amountofmoneyt hat 1.
2.3E
theSARBr equiresbankst omai ntai
ni n
order t o mani pulat e money c reation
acti
vit
ies.
1.2.
4 Expanded publ i
c D.t he pr oces st hat f ocuses on t he 1.
2.4A
workspr ogramme i
mpr ovementofpeopl e’ss tandar d of
l
ivi
ng.
1.2.
5. Cash reserve E.I ncreasei nt hec ountry’spr oduction 1.
2.5C
requi
rement capacity
1.2.
6.RepoRat e F.Focusont hes kil
lsac quis
iti
on 1.
2.6G

56|
Page
 G.rat
eatwhichSARBchar
ges
commerci
albankswhenl
endi
ng.

(6x1)( 6)
1.
3. Gi veonet ermf oreac hoft hef ol
lowingdes cription.Wr it
eonl ythet erm next
totheques t
ionnumber s.
1.
3.1 Ret ur nofl andt ot hosewhohavel ostitduetodi s c
riminatoryl
awsoft hepas t
.
Landr esti
tution
1.
3.2 Thepr ocesst hatfoc usesont heimprovementofpeopl e’
ss t
andardofl ivi
ng.
Economi cdevel opment 
1.
3.3 Taxl eviedongai nsear nedont hes al
eofc api talgoods ,suchaspr operti
es
ands hares.
Weal tht axes
1.
3.4 Ani ncreas einc apac i
tyofac ountrytopr oducegoodsands ervi
ces
Economi cGr owt h
1.
3.5 Apl ant hatai mst oi ncreaset henumberofpr eviouslydisadvantagedgr oup
whomanageandownbus ines s
es.
BroadBas edBl ackEc onomi cEmpower ment 
1.
3.6 Dut iespai dt ot hees tateoft hedec eased.
Estatedut i
es
1.
3.7 Al abour -i
ntens ivegover nmentpr ogrammet oc reateempl oyment.
ExpandedPubl icWor ksProgr amme
1.
3.8 Ar edr esspol icythatf ocusesonl andf orresident ialandpr oductionf ar
mf or
previous l
ydi sadvant agedgr oups
Landr edistri
but i
on. (8X1)8

ACTIVI
TY2
2.
1.1 NameanyTWOmonet arypoli
cyinst
ruments.
(2)
I
nter estr at e
Mor als uas ion
Openmar kettrans ac t
ion
Cas hres erverequir ement 
2.
2.1 Howc ant hei nteres tratebeus edbySouthAfri
canRes er
veBankt os
timul
ate
produc t
ion
ofgoodsands ervi
c es.
(2)
Low i nt eres trater educest he costofborrowing and inc
reas
es
i
nves tmentl eading t o an increasein pr
oducti
on ofgoodsand
services .
(Acceptanyr elevantans wer)

ACTI
VITY3
3.
1 St udyt
hec
art
onbel
owandans
wert
heques
tionst
hatf
oll
ow.

THEDEVELOPMENTGAP

57|
Page
 Sour
ce:googl
e.c
om

3.1.
1 Ident ifytheec onomi cc onc eptillustratedi ntheabovec artoon.
(
1)
Nor thSout hdivide
Devel opmentgap
3.1.
2 Li stONEc ount r
yt hati si nt hegl obalnor t
h.
(1)
Canada/ USA/ Franc e/Ger many/ Japan.
(Ac ceptanyot herc ount ryingl obalnor th)
3.1.
3 Br iefl
yexpl ainthet er m gl obalisation
(2)
Gl obal i
sationi sthewor ldwi deint erac t
ionofec onomi eswit htradeas
ani mpor tantel ement .
(Ac ceptanyot herc or rec trelevantr es ponse)
3.1.
4 Expl aint hes t
andar dofl ivingofc ount ri
esint henor thernhemi sphere.
(
2)
RealGDPperc apitai shi ghi nthenor th./Li f
eexpec tancyis75
year sandhi gherindevel opedc ount r
ies./Educ at i
onandl i
teracy
leveli shighi nthenor th.
(Ac ceptanyot herc or rec trelevantr es ponse)
3.1.
5 Whydoc ount r
iesint hes outhernhemi sphereexper iencepoorec onomic
condit
ions ?( 4)
Peopl edon' thaveac ces st oheal thc arewhi chr esul
tt olowl i
fe
expec tanc y.
lowl evelofeduc ationandt rai
ningl eadt olowl evelsofpr oduc ti
vit
y.

Lac kofnec essaryinf rast ructurei sal s
oamai nr easonf orthes e
c ondi ti
ons .( Acc eptanyot herc orrectrelevantres pons e)

ACTI
VITY4
4.
1Studyt
hec
art
oonbel
owandans
wert
heques
tionst
hatf
oll
ow

58|
Page
 Source:
google.com
4.
1.1 I
dent i
fyt hec omponentr elat edt ot hes tandardofl i
ving
(1)
Lif
eexpec tanc y
4.
1.2 Nameanyc ount ryt hatisref erredt oasadevel opingc ountr
y.
(1)
I
ndi a/Sout hAf r i
c a/Bot swana
(acceptanyr elevantans wer )
4.
1.3 Brieflydes cribet het erm perc apitaincome.
(2)
Perc apitai nc omei sameas ureoft heamountofi ncomeperper soni
na
nation.
(acceptanyr elevantans wer )
4.
1.4 Explaint hec hallengeofgl obal izati
onbet weent heNor thandSout h.
(2)
 I
thashel pedr aiset hes t
andar dofl i
vingf ormanypeopl eworldwide,
butal sodr ivenot herpeopl edeeperi ntopover t
y.
 Smal lbus i
nes s esi nt he Sout h are notc apable ofupdat i
ng their
technol ogy asof ten ast hei rc ount erpartsint he Nor th wit
hout
foreigni nves tmentf rom theNor th
 Theyof tendonotgr owt ot heirfullpot ential

 I
ft heydoac hievegr owthwi t
hf oreigni nvestment ,theylos
eal otof
theirpr ofit
st ot heiri nvestorsi nt heNor th 
(Acc eptanyot herc or r
ectr elevantr es ponse)
4.
1.5 Howc ouldc ount riesi ntheSout hover comet heinc omegap.
(4)
 Obt ainingf oreigndi rectinves tmentf rom theNor t
h. 
 I
nves t
ingi nc api talt oincreas epr oduc ti
vec apaci
ty.
59|
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  Processingraw materi
al sbeforeexpor t
ingt hem asi
nter
mediat
eorfini
shed
goods ..

 Makingt heeducat
ions ys t
em mor eef
fective.

 I
nc r
eas i
ng soc
ialservi
c ess ot hateveryonehasequi t
ablefood,wat
erand
shelt
er .

(Acceptanyothercorrec trel
evantrespons e)

ACTIVITY5
5.
1.1 NameanyTWO f i
s calpol icyinstrument st hatt hegover nmentc an useto
sti
mulat egr owt handdevel opment .
(2)
Progressiveper sonali ncomet ax
Weal t
ht axes 
Cashbenef i
t
Benefitsinki nd
5.
1.2 How Nor ther nc ount riesc ontri
butet ot hedes tructi
onoft heenvi ronment
?
(2)
Count r
iesint heNor thc ontri
butet othedes t
ruc t
ionoft heenvironmentby:
Causingpol l
ut i
ont hr oughmas sproduc t
ionofgoodsands ervices.

Causingc li
mat ec hangebybei nginvol vedinhi ghlevelsofindus t
rial
ac
tivi
ti
es.
Exhaus t
ingnat uralr esour c
esduet ooveri ndus tr
iali
sat
ion.
Deforestationduet ooveri ndustr
iali
sat i
on.
(Acceptanyot herc orrec trel
evantr espons e)

5.
2St udyt heext ractbelowandans wertheques ti
onst hatfol l
ow.
BreakingDownt heKeyEc onomi cDevelopmentSt ages
Thes tructuraltransformat ionr eferstoac hangeint hec ompositi
onof
GDP.I niti
all
y,economi cac tiviti
esandj obsarebas edi nt heagric
ultural
sector.Thes hareofagr icultur ei nGDPdec r
easesasec onomi cactivi
ti
es
shif
tt owar dsthei ndus tri
als ect or.
Source:google.com
5.
2.1 Ident i
fyt heec onomi cs ec tort hatc ontr
ibuteslesst ot heGDPi ntheabove
extrac t. (
1)
Agr i
c ult
uralsec t
or
5.
2.2Namet hedevelopmentpol i
c yt hatai ms to eli
mi nate pover ty and reduce
i
nequalit
yby2030 (1)
Nat i
onaldevel opmentPl an
5.
2.3 Brieflydes cri
bet het erm ec onomi cdevelopment .
(
2)Ec onomi cdevel opmenti st hepr oces sthatf ocusesont he
impr ovementofpeopl e’ss t
andar d
ofliving.
(Acc eptanyot herc orrectr elevantr esponse)

60|
Page
5.
2.4 Expl ai
nt heus eofhumanr esourc edevelopmenti nall
eviati
ngpover t
y.
(
2)
 Bypr oviding s kil
lsand t raining,j ob oppor tuni
ti
esc an be att
ained,henc
e
reduc ingpover ty.
 Byac quiri
ngeduc at i
onandt rai
ning,c i
ti
zenshaveabet terchancetobecome
activepar ti
ci
pant si nthej obi ndus t
rywhi chear nthem i
ncome.
(Ac ceptanyot herc orr
ec trelevantr espons e)
5.
2.5 Howc antheNDPi nc reaset heempl oymentr at ei
nSouthAf r
ica?
(4)
NDPc ani ncr
eas et heempl oymentr ateby:
 expandi ngec onomi coppor t
uni t
ies.
 inves t
ingininf rastruc t
ure.
 pr ivateinvest menti nt heec onomy.
 c reat i
ngent repr eneur shipoppor tunit
ies.
(Ac ceptanyot herc orr
ec trelevantr espons e)

ACTIVI
TY6
6.1.
1 NameTWOdemands ideapproachmeas ures.
(2)
Fiscalpol i
cy
Monet arypoli
c y
6.1.
2 How c an t he costofdoi ng busi
nes si nfl
uencet he s
upply ofgoodsand
services ? (
2)
High i nputorpr oduc ti
on costwi lllead tof ewergoodsbe pr oduced by
bus i
nes ses/Low i nputorpr oduc t
ion c ostwi l
llead to more goods be
produc edbybus inesses.

(Acceptanyot herc orrectr
elevantrespons e)
6.2 Studyt hecartoonbel owandans wertheques t
ionsthatf
oll
ow.

RealGDP

Unempl
oyment

RealGDPperCapi
ta

Sour
ce:gool
e.c
om
6.
2.1I
dent
if
yONEexampl
ethatmeas
urest
heec
onomi
cgr
owt
h.

61|
Page
 (1)
RealGDP
6.2.
2Namet hegr owthpolicyt hatf ail
edt omeeti tobjecti
vein2014.
(1)
Acc eleratedandShar edGr owt hinit
iat
iveforSout hAfric
a( ASIGSA)
6.2.
3Br ieflydes cri
bet heterm gl obalisati
on
(2)
Global i
s ati
on ist he wor l
dwi de i nter
acti
on ofec onomi eswi t
ht rade asan
i
mpor tantel ement .
(Acc eptanyot hercorrectr el
evantr esponse)
6.2.4 Expl aint heimpac tofani ncreasei nconsumers pendingont hepr oductionof
goodsand
services (2)
Demand ofgoodsand s erviceswi l
lincrease,enc ouraging busi
nessest o
produc emor e ( Ac ceptanyot hercorr
ec tr
elevantres ponse)

6.
2.5 How s uccessfulist heSout hAf ricangover nmenti nimprovi
ngthequalityof
l
abour ? (4)
Posit
ive
 impr ovings ki
ll
sdevel opmentt hr oughSETA’ s
 impr oving phys i
caland s ociali nfr
as tr
uctur
ef orexampl emoreeduc ati
onal
i
ns t
ituti
onswer ees tabli
shedi nmos tareasafter1994maki ngbursari
esand
studyloansac c essi
bleever yyear .
Negat i
ve
 Notal lchi
ldrenar eattendings chools–s omear eexc l
udedduetot heirpoor
famil
ybac kgroundorl ackofi nf ormat i
ons omepeopl esti
l
lcan’
taff
ordf urt
her
educat i
onlikeuni versi
ti
es.
 muc hneeded upgr ading ofi nfrastructur
el i
ker oadsand bri
dgeshavenot
beendonewhi chc ouldhavec reatedt housandsofmuc hneededjobs
(Acceptanyot herc orr
ectrelevantr es ponse)

ACTI
VITY7
7.
1 St udyt
hec
art
oonbel
owandans
wert
heques
tionst
hatf
oll
ow.

62|
Page
7.
1.1 I
dent i
fyt het radepol i
cyappl iedbyt hegover nmenti nthec art oonabove.
(1)
Prot ectionism✓
7.
1.2 Namet hemet hodt hatisus edt olimi tthes upplyofgoodsands er
vices.
(1)
I
mpor tquot as✓
7.
1.3 Brief l
ydes cribet het ermf reet radear ea.
(
2)
Af reet radear eai swher eres trict
ionss uc hast arif
fsandquot ashavebeen
removed.✓✓
(Acc eptanyot herc orrectrelevantr es pons e)
7.
1.4 Expl aint hebenef itofi mpor tt arif
fsont heSout hAfricanec onomy?
(2)
Ani nc reas ei ni mpor ttar
iffswi llreduc eimpor tstherebys avingonf oreign
exc hange.✓✓
Leadt oani nc r eas eindomes ti
cpr oduc tion✓✓
I
nc reas er evenuet ogover nmentt hroughdi rectandi ndir
ec ttaxat i
on.✓✓
(Acc eptanyot herc orrectrelevantr es pons e)
7.
1.5 Howdoespr ot ectionpos iti
vel yaf f
ec tt heval ueoft her and.
(
4)
Ther and( c urr enc y)wi l
lappr ec iatewhent heexc hanger atei mpr ovesduet oa
negat i
vet radebal anc e.✓✓
Prot ectionism meas uresc orrec tthedef icitont heBal anceofPayment s
ther eforei nc reas et heval ueofr and.✓✓
(Acc eptanyot herc orrectrelevantr es pons e)

ACTI
VITY8

63|
Page
8.1 Brieflydi sc us spover tyandt radeasc hallengesofgl obal isati
on.
(8) Pover t
y
 Ther ei sagr owi nggapbet weent her i
c handpoor ,par ti
cularl
yi n
Afr
ica. 
 Dev elopedc ount ri
eshavel ow pover t
yl evel sandc ount ri
esi nt he
Southdi vide
(devel opi ng)havehi ghl evel sofpover ty.
 Thei nequal i
tiesi npover tyl evelss til
lc ont inue. 
Trade
 Ri chc ount r i
esc ont inuet os ubs i
diespr oduc ti
onoft hei ragric
ultur al
goods .
 Thes ec ount ri
esmakei thar df ordevel opi ngc ount riest ocompet e
whileins istingt hat devel opi ng c ount riesel iminatet heirtariff
son
manuf ac tur edgoods .
(Acc eptanyot herc or r
ec tr elevantr espons e)
8.
2 Di fferent i
atebet weenec onomi cgr owt handeconomi cdevelopment .
(8)
Economi cgr owt h
 Itist hei nc reas eint her ealGDPoveraper iodoft i
me
 Itf oc usont hepr oduc ti
onofgoodsands er vices
 Inc reas et hepr oduc ti
onc apac it
yoft heec onomy
Economi cdevel opment
 Itist hei nc reas eint her ealperc api taGDP
 Itf oc usont hei nc reas einl ivi ngs tandar ds 
(Acc eptanyot herr elevantf ac t)
8.
3 How c ant heExpandedPubl i
cWor kPr ogr ammesbeus edt or educ et he
unempl oyment
rate? (8)
EPWPc anbeus edby:
 Inves ti
ng onl abour -intens ivei nfrastruc tur aldevel opmentwhi lec reating
j
oboppor tuni ties.
 Pr ovi si
onofs kil
lst hatc anhel pt hec ommuni t
iest obec omeempl oyabl e.

 Gi ving or dinar yc iti
z enst heoppor tuni tyt oes tabli
s ht hei
rownbus ines s
usings kill
sac qui redf rom t hepr ogramme.
 Pr ovi dingwor ker swi thac ombi nat i
onofwor kexper ienceandt rai
ni ng.
 Impr ovi ng t he l ives of Sout h Af ri
c ans by bui lding and mai ntaining
communi tyas s etsandpr ovi di ngs ervicest oc ommuni ti
es.
(Acc eptanyot herc or r
ec tr elevantr espons e.)

ACTIVI
TY9
ESSAYS
9.
1 Di s
cussindetailt
heSouthAf
ric
angr owthanddevelopmentpol
ic
ies
(26)
Analys
et he chal
lengesofthe South Af
ri
can governmentinreduc
ing t
he
64|
Page
 unempl oyment
ratei nt heec onomy.
(10)
I
NTRODUCTI ON
 Ec onomi cgr owt hi st hei nc reas ei nt hepr oduc tivec apac i
tyoft hec ount ry.
 Ec onomi cdevel opmenti st hei mpr ovementi nt hes tandar dofl ivingoft he
peopl e
(Acc eptanyot herc orr ectr elevantr es pons e) max
(2)
Rec ons truc tionandDevel opmentPr ogr amme( RDP)
 The pol icy was i nt roduc ed i n 1994 as a devel opments trategy f ort he
gover nment .
 Themai nai mswer et o al l
evi atepover tyand addr esst hei nequal i
tiesand
shor tf allsins ocials ervi ces.
 I tf oc us edonj obc reat iont hroughpubl i
cwor ks ,pr ovisionofhous ing,wat er
ands ani tat i
onandel ec tri
fi
c at i
on. 
I tal s oai medatc reat i
ngac c ount abl eandt rans parentpr oc essesf oral llevels
ofgover nment .
Growt h,Empl oymentandRedi s tri
but ion( GEAR)
 The mai ns trat egywast os trengt hen ec onomi cdevel opment ,r edistri
but e
i
nc omeandc reat es oc i
o- ec onomi coppor t
uni tiesf ort hepoor .
Keyel ement soft hepol icywer e:
 Tohaveanexc hanger at epol i
c yt hatc anr es ulti ns tabili
tyt ot hec ur r
enc y-A
cons is tentmonet arypol i
cyt opr eventanunc ont roll
abl einf lation.
 Ar educ ti
oni nt ar iffst or educ et hec os t
sofi nput sandf acilit
at ei ndus tr
ial
refor ms .
 Taxi nc ent ivest os timul atenewi nves tment si nl abouri ntens ivei ndus tri
es
Ac celer at edandShar edGr owt hI niti
at ivef orSout hAf rica( ASGI SA)
I t sobj ec ti
vewast oc o-or dinat egover nmenti niti
at i
vet oc reat eec onomi c
devel opment .
Thekeyel ement swer e:
 Hal veunempl oymentandpover tyby2014.
 Ac cel er ateec onomi cgr owt ht oanaver ageof6%bet ween2010and2014.
 The gov ernment had pl anned t oi ncreas e publ ics ec tor i nves tment i n
i
nf rastr uc tur einor der
 Toel imi nat et hes ec ondec onomy( i
nf ormals ec tor)bydevel opi ngi tt othe
statusoft he
formalec onomy.
JointI ni tiativeonPr ior i
tySki l
lsAc qui sitions( JIPSA)
I ti st hes kil
lsdevel opmentar m ofASGI SA.
 Foc usi sons kill
sdevel opment ,es pec i
allythr ought heSETAS.
ExpandedPubl icWor ksPr ogr amme( EPWP)
I ti sanat ionwi degover nmenti nt ervent i
ont oc reat eempl oymentus i
ngl abour
i
nt ens ivemet hods ,andt ogi vepeopl es kil
lstheyc anus et of indj obswhent heir
wor ki nt heEPWPi sdone.

65|
Page
 TheNewGr owt hPath( NGP)
I tsaim wast oenhanc egrowt h,cr
eateempl oymentandc reategreaterequi
ty.

I tsfoc uswast ocreate5ml l
ionjobsby2020r educ i
ngunempl oymentf r
om 25%
to15
NationalDevel opmentPl an(NDP)
I tsaimi st oeliminatepovert yandinequalitybyt heyear2030.
 Set s out t o expand ec onomi c oppor t
uni ti
es t hr
ough i nvestment in
i
nfras t
ruc t
ure,mor e
innovat ioninvestmentandent r
epreneurship.
Smal lbus i
nes sDevelopmentPr omotionProgr amme( SBDPP)
I twasdes ignedt odel i
vers upportands ervicest osmall,medi um andmi cr
o
enterpr i
ses.
 Depar tmentofTr adeandI ndustr
y( DTI
),I ndus tri
alDevelopmentCor por
ati
on
(I
DC)andt he
Nat ionalSmal lBus i
nessAc toffert
hes eservices .
 Lawsar er evisedtohel pchangepoweri mbal anc e.

Blac kEc onomi cEmpower mentPr ogr ammes( BEE)

 TheBBBEEwasdes i
gnedt oc r
eat eec onomi coppor tuniti
esf ort hepr eviousl
y
disadvant agedgr oups .
 Thi smeanst hegover nmenti sc reat ingc ondi ti
onsf orincreas einbus i
nes s
es
thatar eownedandmanagedbybl ackpeopl e. 
Nat ionalSki l
lsDevel opmentSt rategy( NSDS)
 I tist hemai ns trategi cgui def ors kill
sdevel opmentandpr ovidesdi recti
ont o
sec t
ors kil
lsplanni ngandi mpl ement at i
onint heSETAs .
I tisint endedt or adi callyt ransform educ at i
onandt raini
ngi nSout hAf ri
c aby
impr ovingbot hthe
qualityandquant ityoft rai ning.Thi sc ans uppor tincreasedc ompet i
ti
venes sof
indus tryandi mpr oved
qualityofl i
feforal lSout hAf ri
cans.
 TheNat i
onalSki l
lsDevel opmentSt rategy( NSDS)i sthet oolus ed byt he
Depar tmentofLabourt o
drivet hepr ocessofdevel opi ngt hes kil
lsoft heSout hAf ri
canl abourf orce.
 Si xc onc eptualpi llars:I nc lus i
on,Rel evanc e,Sus tai
nabili
ty,Cr eativi
ty,Qual it
y
andQuant ityinf
or mi t s
keyai msandobj ec tives
(Ac c
eptanyot herc orrec tr elevantr es ponse) MAX
26
ADDI TIONALPART
Anal ys et hec hallengesoft heSout hAf r
icangover nmenti nr educ i
ngt he
unempl oymentr at ei nt heec onomy.
 TheSout hAfricangover nmentf ac est hef ollowi ngc hall
engesi nr educ i
ng
unempl oyment 
 Cor r
upt i
on among s tate- own ent erpr i
sesc reatesa negat ive s entiment
amongpot entialinves tors .
66|
Page
  Lackofs kil
lsamongt heSout hAf ri
canyout hreduc est heempl oyabi lit
yof
manypeopl e.
 Lackofi nfor mat ion among s omeoft heyout hr educ esac ces si
bili
tyof
employmentoppor tuniti
es.
 Covid-19 r ec ession r esult
ed int hous andsofwor kersl osing theirj obs,
sharpl
yi ncreas ingt heunempl oymentr at
e.
 Negatives ent i
mentt owardst heec onomyr esul
t edinl essf oreigndi rect
i
nves t
ment s.
 Lack ofs tart-up c apit
alamong t he youthr esultin many pot enti
al
entr
epr eneur i
alideasnoti nvestedin.
 Poori nfrast ructurei ns ome r egi
onsoft he count r
yr educesi ndus tri
al
acti
vit
iesi ns uchar eas.
 Unreli
ableel ectri
c i
tys upplyfurthercripplesanypr ospectsofi ncreasingjob
opportuni t
iesi nSout hAf r
ica (max10)
(Acceptanyot herc or r
ectrelevantrespons e)

CONCLUSION
(Ac
ceptanyot
herr
elevantc
onc
lus
ion)

9.
2 Di scussin det ailthe demand- side approac hin pr
omot i
ng gr owth and
development
i
nSout hAfri
ca. (26mar ks)
Evaluatebroad- basedbl ackec onomicempower ment(BBBEE)i npr omoti
ng
economic
developmentinSout hAfric
a. (10
marks)
I
NTRODUCTI ON
SouthAf ri
ca’
sgr owt handdevel opmentpol i
ciesaredesi
gnedt of ulfi
lmany
soci
alandec onomi cobj ec
tivest oens urethatmos tSout
hAfri
cansc anac hieve
a r easonabl
e s tandar d of l i
ving. A demand- s
ide approach i ncludes
discr
eti
onarychangesi nmonet aryandf is
c alpoli
ci
eswitht
heai m ofc hanging
thelevelofaggregat edemand. Max( 2)
(Acceptanyotherr elevantintroduc ti
on)

BODY
MAINPART
TheSouthAf
ricanapproac
husesbothmonetaryandf
isc
almeas
urest
o
i
nfl
uenc
eaggregatedemandint
heeconomy.

MONETARYPOLI CY
TheSouthAf ric
anRes erveBank(SARB)ast hec
entralbanki
nSouthAfri
ca
for
mulat
est hemonet arypoli
cy.
Theyusethef ol
lowingi nst
ruments
:
I
nterestratec hanges
Itisused t oi nf
luencec r
editcreat
ionbymaking c
redi
tmoreexpens
iveor

67|
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 cheaper .
Theexc hanger at ei ss tabili
sedbyenc ouragi ngi nfl
oworout fl
ows .
Openmar kett rans actions
 Tor es tr
ic tc redi tt heSARBs ellss ecurities.
 Whenbank sbuyt hes es ec urit
iesmoneyf lowsf r om bankst ot heSARB.
 Thebank shavel es smoneyt ol endandc annotext endasmuc hc r
edi tas
befor e. 
 Toenc our agec redi tc reat i
ont heSARBbuyss ec uri
t i
es .
 Moneyf lowsi ntot hebanki ngs ystem.
Mor als uas ion
 TheSARBc ons ul tswi thbankst oac tinar es pons iblemannerbas edont he
pr evai l
ingec onomi cc ondi tions .
Cas hRes er veRequi r ement s
 Banksar er equi r ed t ohol d ac ertainmi nimum c as hr eser
vei nt hecent r al
bank. 
 Bankshaveal imi t edamountt ogi veoutasc redit.
FISCALPOLI CY
 Sout h Af ri
c a’ sf iscalpol i
c yi sputi nt o pr act i
cet hrough t he budget ary
pr oc es s.
 Themai npur pos eoff i
scalpol icyist os t
imul atemac roec onomi cgrowthand
empl oyment ,andens urer edi s
t ri
but i
onofweal th.
Thef ollowi ngi ns trument sar eus ed:
Progr es siveper s onali nc omet ax
 Hi gheri nc omeear ner sar et axedathi ghert axr ates .
 Thes et axesar eus edt of i
nanc es oc i
aldevel opment .
 Thepoorbenef itmor et hant hos ewi t
hhi gheri nc omes .
Weal tht axes 
 Pr oper tiesar elevi ed( taxed)ac cordingt ot heirmar ketval ues.
 Tr ans f erdut i
esar epai dwhenpr oper tiesar ebought .
 Sec ur i
t i
es( shar esandbonds )ar et axedwhent raded.
 Capi talgai nst axi sl eviedongai nsont hes aleofc api talgoods( e.g.pr
oper ties,
shar es ).
 Es tat edut i
esar epai dont hees t
atesoft hedec eas ed.
 Thes et axesar eus edt of i
nanc edevel opmentexpendi tureswhi c
hbenef itt he
poormor eof ten.
Cashbenef i
ts 
 Ol d age pens ions ,di s abi l
i
ty gr ants ,c hil
d s uppor t and unempl oyment
ins uranc ear ec as h
gr ant s .
 Thes ear eal s oknownass oc i
als ecur i
typayment s.
Benef itsi nki nd( nat ur abenef its)
 Thes ei nc l
udet hepr ovisionofheal t
hc are,educ ation,s choolmeal s,pr
otec ti
on
etc .
 Whenus erf eesar ec harged,poororl ow i ncomeear ner spayl essornot hing.
Li mi tedquant iti
esoff reeel ectrici
tyandwat erar epr ovided.

68|
Page
 Publicwor kspr ogr ammes 
 E. g.t heSt rat egicIntegratedPr oj
ects(SIP)pr ovidesempl oyments ubsi
diesand
ot herc ash and f inancialbenef itss uch ast rai ni
ng,f inanci
ng and expor t
inc enti
ves .
Landr est
itutionandl andr edis
t r
ibuti
on
 Land r es t
itut i
on ist he r eturn ofl and t ot hos et hathave l os titdue to
dis cri
minat or ylawsi nthepas t.
 Land r edistribut i
on foc useson l and f orr esident i
al( t
own)and pr oducti
on
(far m)forpr eviouslydisadvant agedgr oups .
 Themoneyf ort hesepr ogrammesi spr ovidedi nt hemai nbudget .
Subs i
diesonpr oper t
ies
 I thel pspeopl et oac quireowner s
hipoff i
xedr esidentialpr oper
ti
es .
 E. g.gover nment ’
shous ing subs i
dys chemepr ovidesf unding t o al
lpeople
ear ningl esst han R3500permont h.
(Ac ceptanyot herc orrectrelevantres pons e) (
Max
26)

ADDI TIONALPART:
Broad- basedBl ackEc onomi cEmpower ment( BBBEE)managedt o:
 empowerpr eviousdi s
advant agedgr oupst hr ought hes ystem bybei ng
appoi ntedi ntos eni
orpos it
ionsbot hi nthepubl icandpr i
vates ector
s
 i nvolvemanypr evious l
ydi sadvant agedpeopl eac tivelyint heec onomyoft he
count ry
 c reat eoppor tuniti
esf orupc omi ngyoungent repr eneur stoent ert hebus i
ness
wor ld
 of ferac ces si
bilit
yofopenbus i
nes soppor tuni tiesi nt hedi f
ferents ectorsofthe
ec onomy
 i ncreaset henumberofbl ackpeopl ei nt hes har ehol dingofl argec ompani es

Broad- basedBl ackEc onomi cEmpower ment( BBBEE)i snots uccessfulbec ause:
 f ewpeopl ear ebenef i
tingf rom BBBEEduet oc or rupt i
onbyt opgover nment
offici
als
 f rontingi sleadi ngt owr ongpeopl ebenef i
tingf rom BBBEEpr ogr ams
 manybl ac kpeopl edonothavet hes kil
lsandexper iencet ooc cupys enior
managementpos i
ti
onses pec iall
yinbi gc ompani es
 bl ackpeopl edonothavec api taltoes tabl i
s hbus i
nes sesorbuys haresi nbig
compani es
(Ac ceptanyot herc orrec trelevantr es pons e) (
Max
10)
CONCLUSI ON
Toac hieveec onomi cdevel opment ,ec onomi cgr owt hr ates houldexc eedpopul at
ion
growt hrate.
(Acceptanyot herc orrectr el
evantr espons e) (
Max
2)

69|
Page
PAPER2
EFFECTSOFCOSTSANDREVENUE
ACTIVI
TY1
1.
1 St udyt
hegr
aphbel
owandans
wert
heques
tionst
hatf
oll
ow.

1.
1.1 I
dent ifythes hut downpoi ntint heabovegr aph?
(1)
F
1.
1.2 Givet hef ormul arforcal cul
atingTotalCos t
s.
(1)
FC+VC=TC
1.
1.3 Briefl
ydes cr
ibet het erm mar ginalcost.
(
2)
Mar ginalc ostisanaddi ti
onalc ostsi
nc ur
redforproduci
ngoneaddi ti
onaluni
t

(Acceptanyot herc orr
ec trelevantresponse)
1.
1.4 Whyi sAVCal waysbel owATC?
(2)
ATCi nc l
udesaver agef ixedc ostandaver agevari
ablecost
.
(Acceptanyot herc orr
ec trelevantresponse)
1.
1.5 Explaint hes hapesofATC,AVCandMC.
(4)
 TheATC,AVCandMCar eUs haped.
 Ast henumberofuni tsinc r
eas efr
om z er
o,theystar
tathighvaluesand
dec l
ineatdec reasingr ate.
 Theyr eac hmi nimum poi ntsandt henincreaseatinc
reasi
ngrates.

70|
Page
 (
Acc
eptanyot
herc
orr
ectr
elevantr
espons
e)

ACTI
VITY2
2.
1Studyt
het
abl
ebel
owandans
wert
heques
tionst
hatf
oll
ow.

Out
put FC VC TC AVC MC
0 20 0 20 0 -
1 20 5 25 5 5
2 20 8 28 4 A
3 20 10 30 3.
3 2
4 20 16 36 4 6

2.1.
1 Ident ifythec os tt
hatdoesnotc hangef r
om thet ableabove.
(1)
FixedCos ts
2.
1.2 Whati sthet otalcos tofpr oduc i
ngt he4unitsofout put?
(
1)
36
2.
1.3Briefl
ydes c r
ibet het er m averagevar iablecost
s .
(2)
Aver agevar iablecos t
sar ethatc hangeaspr oduc t
ionchanges.
(Acceptanyot herc orrectrelevantr esponse)
2.1.
4 Expl ai
nt hei mpac tofpr oducingt het hi
rdunitofout putonaveragevar
iabl
e
cost. (2)
Variablec ostdec reas est oitsl
owes t.
Thei mpac tisnegat ive,thereisadec l
i
neinaver agevar i
abl
ecost.
(Acceptanyot herc orrectrelevantr esponse)
2.1.
5 Cal c ul
atet hevalueofA.ShowALLyourc al
culations.
(4)

ACTI
VITY3
3.
1 St udyt
het
ablebel
owandanswert
heques
tionst
hatf
oll
ow.
Pri
ce Quanti
ty TR TC Pr
ofi
t
10 0 0 25 -25

71|
Page
 10 5 A 30 20
10 10 100 35 65
10 15 150 40 B
10 20 200 45 155

3.1.
1Identi
fythequantit
ieswherethebus i
nessmaxi
misethehighes
tpr
ofi
t.
(1)
200quantiti
es
3.1.
2 Whati srepresentedbythe–25i nt hepr
ofi
tcolumn?
(1)
AlossofR25.
3.1.
3Brief
lydescr
ibethet mt
er otalrevenue.
(2)
Iti
sthetotali
ncomer ec
eivedbyt hebusi
nessfr
om sel
li
nggoodsandser
vic
es.

(Acceptanyot hercorr
ectrelevantresponse)
3.
1.4Whyisthereaval uefortotalcostwhenpr oduc t
ion(quant
it
y)is0(z
ero)?
(
2)
Therewillalwaysbef i
xedc ostevenifnopr oducti
ontakesplac
e.
Fir
mss ti
llhavetopayt hesefixedc os
tsastheyar enotrel
atedtoproduct
ion
l
evel.
(Acceptanyot hercorr
ectrelevantresponse)
3.
1.5 Calcul
atetheval uesofAandB.ShowALLc alcul
ati
ons.
(4)
A=PxQ B=TR-TC
R10x5 R150-R40
R50 R110

PERFECTMARKETS
ACTIVITY1
1.1Var i
ousopt i
onsareprovi
dedaspos sibl
eans wer stothefol
l
owingquestions.
Chooset hec or rectanswerandwrit
eonl ytheletter(A-D)nexttothequest
ion
number( 1.1.1- 1.1.
4)intheANSWERBOOK,f orexampl e1.1.
5.D
1.1.
1Themar ketwher efir
msarepricetakersiscall
edt he…
A perfec t.
Bimper fec t.
C oli
gopol y.
D monopol y.
1.1.
2 Thepoi ntwher ecompeti
ti
vefirm’saverager evenueequalsaver
agevariabl
e
costis
….
A equilibrium

72|
Page
 B maxi mis ation
Cs hut down
D br eakeven
1.
1.3Aper iodofpr oductionwher eallinput sar evar iablei sknownas ……. .
A var iabl ec os t
Bs hor tr un
Cl ongr un
Df ixedc os t
.
1.
1.4Thepar toft hemar ginalc os
tc urvet hati sabovet heaver agevar i
abl ecost
curvei nt heper fectmar ketr epres ent st he…….c ur ve.
Aaver ager evenue
Bsuppl y
C demand
D mar gi nalr evenue
(2x4)(8)
1.2Matc ht hec onc eptsinc olumnAt odes c ri
pt ioni nc olumnB.Wr i
t eonl ythe
correc tlet ternextt ot heques ti
onnumber. e.g( 1.2.9J ).
No. COLUMNA COLUMNB Res
pons
es
1.
2.1 Nor malpr of i
t A Inves t i
gat esi llegalbus ines spr ac t
ices F
andmakesr ec ommendat i
onson
largemer ger sandt akeover s
1.
2.2 Explicitc os ts B Aper i
odofpr oduc ti
onwher eonl y C
var iabl einput sc anc hange
1.
2.3 Sunkc os t C Ac tualexpendi t
ur eonhi redi nput s I
thatabus ines si ncur sint he
pr oduc tionpr oc ess,e. g.,wagesand
inter es t
1.
2.4 Compet iti
on D Iswher emar ginalc os ti sequalt ot he A
Commi ssion mar ginalr evenuer ecei vedbyt he
fir
m
1.
2.5 Economi cpr of it E Per iodofpr oduc t
ionwher eoneof H
thepr oduc tionf actor si sfixed
1.
2.6 I
mpl icitc os t F Themi nimum ear ningr equi redt o G
pr eventanent repr eneurf r
om l eaving
themar ket .
1.
2.7 Lossmi nimi zi
ngpoi nt G Theval ueofi nputus edi nt he D
pr oduc tionpr oc esst hatar eowned
byanent repr eneur
1.
2.8 Shor tr un H Apos itivedi fferenc ebet weent he E
tot alr evenueandt ot alc os t
I Thec api talt hatwasi nves tedi na
bus i
nes sandc annotber ec over edi f

73|
Page
 t
hebus
ines
scl
oses
(
1x8)( 8)
1.
3 Gi veONEt ermf oreac hoft hefoll
owi ngdes cr
ipti
ons.Wr i
teonlythet erm next
totheques t
ionnumber s(1.3.
1t o1.3.6)int heANSWERBOOK.Abbr evi
ations,
acronyms ,andexampl eswi l
lNOTbeac cept ed
1.
3.1 As ituati
onwher eaver agec ostrisesaspr oducti
onincrease.
Disec onomiesofs cal
e
1.
3.2Agroupofbus inessesproduc ingas imilarkindofpr oducts.
Indus tr
y
1.
3.3 As it
uat i
onwher eaf irmc annotc overi t
saver agevari
ablec osts.
Shutdown
1.
3.4 Al egalbodyt hatac ceptsorpr ohibi
tsl argemer gersandt akeovers.
Compet iti
onTr i
bunal
1.
3.5 Theaddi ti
onalr evenueear nedwhens alesincreasebyonemor euni t
.
Mar ginalRevenue
1.
3.6Costsperuni tthatchangewi ththevol umeofout putproduc edbyaf i
rm.
Aver agevar i
ablecosts (
1x6)( 6)

ACTI
VITY2
2.
1 St udyt
hegr
aphbel
owandans
wert
heques
tionst
hatf
oll
ow.

2.1.
1 I
denti
fytheprofi
tmaxi
misati
onpointf
rom t
heabovegr
aph.
(1)
a
2.1.
2 Whichcurverepr
esent
sthesuppl
y?
(1)
MC
2.1.
3 Bri
efl
ydescri
bethet ms
er unkcos
t.
(2)
74|
Page
 Thec apitalthatwasi nves t
edi nabus inessandc annotber ecoveredifthe
businessc loses
(Acceptanyot herc orrectrelevantr es ponse)
2.
1.4 Explainthei mpac tont hemar keti fmanyf ir
msent erthi
sindustry?
(2)
Thes upplyorpr oduc ti
onwi l
li
nc reasel eadingtoadec r
easeint hemarket
pri
ce.
(Acceptanyot herc orrectrelevantr es ponse.)
2.
1.5 Whyi sitdi f
fi
c ultforaper fectcompet itortomakeapr ofi
tinthelongr un?
(4)
 I
nal ongr un,aper fectc ompet itorcanonl ymakenor malpr of
itduet oeasy
accesstot he
market .
 Theec onomi cpr ofi
twi llserveasas ignalf orotherst oenterthemar ket.
 Whennewf i
rmsent ert hemar ket,suppl ywi l
lshif
tt otheright/incr
easeand
mor equant i
ty
ofgoodswi l
lbepr oduc ed.
 Thenewequi li
br i
um wi l
lber eac hedandt hepr icewi l
ldecreaseandt he
i
ndividualc ompet it
or
wil
lbef orc edt or educ et hepr i
ceast heyar epr i
cet akers.
 Theper fec tcompet it
orwi l
lnowear nnor malprofitinthelongr un.
(Acceptanyot herc orrectrelevantr es ponse.)

ACTI
VITY2
3.
1 St udyt
heext
rac
tbel
owandans
wert
heques
tionst
hatf
oll
ow.

PERFECTCOMPETI TI
ON
I
fabus i
nessismakingaprof
iti
ntheshortrun,ithasanincent
ivetoexpand
exi
sti
ngfactori
esortobui
ldnewones.Newf ir
msmays tar
tproducti
on,aswel
l
.
Whennewf i
rmscomeintoanindus
tryi
nr esponsetohighprofi
ts,i
tis
cal
l
edent r
y.

Sour
ces
:ht
tps
://
cour
ses
.l
umenl
ear
ning.
com

3.1.
1 Whi chmar kets tr
uct
ureisdepict
edbyt heabovecartoon?
(1)
Perfectmar ket
3.1.
2 I
dent i
fytheec onomicchar
acteri
sti
cshowni nthecartoonabove.
(1)
Freeent r
yandexi t
3.1.
3 Briefl
ydesc ri
bet het mi
er mpli
ci
tcos t
.
(2)
Theval ueofi nputusedintheproduc t
ionprocessthatareownedbyan
entrepreneur

75|
Page
 (Acceptanyot herc orr ec
tr el
evantres ponse)
3.1.
4 Explai
nt heeffectofadec reasei
nt henumberofpar ti
ci
pantsont hemarket
price. (
2)
Themar ketpr i
cewi llincreasebec auset hesuppl ywilldecreas
e.
(Acceptanyot herc orr ec
tr el
evantres ponse)
3.1.
5 Howc anaper fectl
yc ompet i
ti
vef i
rmi ncreaseitsprofits?
(4)
 I
tc anincreasethequant i
tyiti
ss ell
i
ngatapr evail
i
ngpr i
cetoincr
eas e
revenue.
 Thef i
rm maximi z
espr ofi
tsbys upplyingt helevelofout putwherei t
smarginal
revenueequal s
i
tsmar ginalcost.
 I
tc anadver t
iseitspr oduc ttowinc ustomer sfrom itscompet i
tor
s.
(Acceptanyot herc orr ec
tr el
evantres ponse)

ACTI
VITY4
4.
1St
udythegr
aphbel
owandans
wert
heques
tionst
hatf
oll
ow

4.1.
1Identif
yt hec urvemar kedXint hediagram above.
(1)
Mar ginalcos tcurve
4.1.
2 Whati srepresent edbyt heshadedar ea?
(1)
Economi cl oss
4.1.
3 Br iefl
ydes c r
ibet heterm dis
economi esofs cale.
(2)
As it
uat i
onwher eaver agecostris
esaspr oduc t
ioni
ncr
eas e.
(Acceptanyot herc orrectr
elevantrespons e)
4.1.
4 Expl ainther eas onfort hefi
rm nottopr oduc ebelowpointC.

76|
Page
 (
2)
Thepr i
cewil
lbelessthantheaveragevar
iabl
ec ost
st her
efor
ethef
ir
mcannot
produceanyquantitybel
owpoi ntC.
(Acceptanyothercorr
ectrel
evantres
ponse)
4.1.
5 Calcul
atetheshadedarea.ShowALLc al
culat
ions.
(4)
TR-TC OR (
AR-AC)XQ
(R12X250) -( R15X250) (R12-R15) X250
R3000-R3750 -R3X250
-R750 -R750

ACTI
VITY5
5.
1Studyt
hegr
aphsbel
owandans
wert
heques
tionst
hatf
oll
ow.
MARKETA MARKETB
Pri
ce/ D Pr
ice/
AC
AC LAC
S mc1
S1 ac1 AR
p p e
MR
a b mc 1
ac2
p1 p1
S
S1 D
0 Q Q1 QUANTI
TY 0 Q Q1 QUANTI
TY

5.1.
1Identif
yamar kett hatr epresentafirm above.
(1)
MarketB
5.1.
2Whi chc urveindi catesnewent r
antsinmar ketA?
(1)
S1S1
5.1.
3Br i
efl
ydes c
ribet het erm mar ket.
(2)
Marketisamec hanis mt hatbringstogetherbuyersandsel
l
ersofa
good/servicet oinfluenc et he
pri
ceandquant it
y.
(Ac
ceptanyot herc orrec trelevantresponse.)
5.1.
3Explaint heroleoft heCompet i
ti
onCommi ssi
on.
(2)
Compet i
tionCommi s s
ioni nvesti
gatesrestr
ict
ivebusi
nes
spract
ices
,abus
eof
dominantpos i
tions

77|
Page
 andmer gerstoac hieveequi tyandef f i
ciencyintheSout hAf r
icaneconomy.
(Acceptanyot hercor r
ec tr el
evantr espons e.
)
5.
1.5Whydof i
rmsi ntheper fec tmar ketmakenor malprof i
tinthelongrun?
(
4)
 Thes hapeoft heLACc urvei ll
ustrat
eshowaver agec ost
sinit
ial
lydecrease
duet oeconomi esof
scalewhi l
et hefirm exper i
enc esincreas i
ngreturnst oscal
e.
 I tthenexhi bitsconstantr eturnsast hef i
rm operatesati t
sopt i
mallevel
.
 I fthef i
rmt ri
estoexpandmor et hanitsopt i
malpoi ntduet odisec
onomi esof
scale,itexperiences
dec reasi
ngr eturnstos c aleandACi ncreases.
(Acceptanyot herc orrec trelevantres ponse.)

ACTI
VITY6
6.
1Wi tht
heai
dofagr
aphexpl
ainpr
ofi
tmaxi
mis
ati
onus
ingMRvsMCr
ule.(
8)

MC
PRI
CE

P1 B MR/
AR/
DD

QUANTI
T
Q1
Label
li
ngofandonaxis=1
MCc ur
ve=1
MRc ur
ve=1
Label
li
ngofprof
itmaxi
misat
ionpoi
nt=1

 WhenMRi sgr
eatert
hanMCthef
ir
mc ancont
inuetoproduc
emor eaddit
ional
uni
tsbec
ausethebenef
it
sar
emorethant
hecos t
si.
e.,t
heprof
iti
sinc
reasi
ng.

 WhenMRisl
essthanMCt hef
irm mus treduceaddi
ngaddi
tionaluni
ts
bec
aus
ethebenefi
tsar
elesst
hant hec osts.
 WhenMRisequalt
oMCt hefi
rm willproducemorebecaus
et hat’
swherei
t

78|
Page
 maxi
misespr
ofit
s.
(
Acceptanyotherc
orr
ectr
elevantr
espons
e)

6.
2 Br i
ef lydi sc ussmar keti nfor mat ionandpr ic ec ont rolasc har ac t
er i
sticsof
per
fectmar ket . ( 8)
Mar keti nf or mat ion
 Mar keti nf ormat ionmeanst hatal lpart i
cipant si naper fec tmar kethaveac ces
s
toc ompl et eandac cur at ei nfor mat ionaboutpr oduc tpr ices ,qual it
ies,and
avai labi li
t y.
 Thi st rans par enc yens ur est hatbuyer sc anmakei nfor meddec isi
ons ,leading
toef fi
c ientr es our ceal loc ation.
 Mar keti nf ormat ionf ac i
litatespr i
cedi scover y,aspr i
c esadj us tqui cklyto
changesi ns uppl yanddemand.Thi sens ur est hatgoodsands ervicesar e
tradedatt hei requi librium pr i
ces ,mi nimi zings urpl usesors hor tages .
 Mar keti nf ormat ional soenabl esc ompet itiont owor kef fec ti
vel y,asf irmsc an
cons tant lyeval uatet hei rper for manc er el at i
vet oot her sands t
r i
vef or
impr ovedef fi
c i
enc yandqual ity,ul ti
mat elybenef it
ingc ons umer sinaper fect
mar kets et ting.
Cont r
oloverpr i
ce
 Per fec tc ompet iti
onens ur est hatnos inglebuyerors ellerhast hepowert o
influenc epr i
ces .Manybuyer sands ell
er sexi stint hemar ket ,andnoneof
them c ans i
gni ficant lyi mpac ttheover alls uppl yordemand.
 Pr i
c esnat ur al
lyadj us ttoequi li
br ium level s ,wher es uppl yequal sdemand.Any
at t
emptt oc ont rolpr i
ces ,s uc haspr i
cec eilings( maxi mum pr i
ces )orpr ice
floor s( mi ni mum pr ic es),woul ddi s r
uptt hisequi l
ibrium,l eadi ngt oei t
her
sur plus esors hor tages .
 Pr i
c ec ont rolmeas ur es,likepr ic ec eil
ings ,c anc reat ei nef fi
c i
enc iesby
di s
c our agi ngpr oduc ersf r om s uppl yi
nggoodsandr educ ingt hei nc entivefor
cons umer st oc ons umet hem,l eadi ngt omar ketdi s t
or tions .
(Acceptanyot herc orr ec trel evantr es pons e)
6.
3Di scus st heai msofSout hAf r i
ca'sant i-monopol i
sticpol i
c y.
(8)
 Topr omot eec onomi ct rans format i
onoft heec onomybymaki ngs ur et hat
ther ei snor estr i
c t
iononent ryinanyi ndus try.
 Toc ur bt heec onomi cpowerofbi gbus ines sesi nSout hAf r
icat oac hievea
mor eequi t abledi stribut ionofi nc omeandweal th.
 Tohel pSout hAf ri
c anbus ines s est obec omemor ec ompet i
tive/l owerpr ices.

 Toens
uret
hatSout
hAf
ri
canc
ompet
it
ionl
awi
sinl
i
newi
thi
nter
nat
ional

79|
Page
 st
andar ds.
 Topreventmonopol i
esandot herpower fulbusinessesfrom abus i
ngthei
r
power .
 Toregulatetheformati
onofmer gersandac quisi
ti
onswhowi s
ht oexerc
ise
marketpower .
 Tostopf i
rmsfrom usi
ngrestri
cti
vepracticesli
kef i
xi
ngpr i
ces,divi
ding
markets.
 Regulatestr
ansferofownershi
pi nkeepingwi thpubl i
cinterest.
 Al
lSout hAfri
cansgetsequalopportunit
yt opar ti
ci
pat efai
rlyinneteconomy.

 Pr ovidesmarketsi
nwhi chc onsumershaveac cesstofreel
ys el
ectquantit
yand
vari
ety.
 Pr ovidesenvi
ronmentt ocompet eeffecti
velyini
nternalmarkets.
(Acceptanyothercorrectrelevantr
es ponse)
6.
3Wi ththeai dofagraph,explainprofi
tmaxi mizat
ioninaper f
ectmar ketus
ingTR
andTC
approac h. (8)

 Thef irm wil

lmakeprofit
sbetweenpoi nt
sAandB( TRandTC)wherethet
otal
r
evenueexc eedsthetotalcost
.
 Prof i
tismaximizedwhent hegapbet weenTRandTCisthegreat
est
.
 Thi soccursat4unitsofproducti
onatac os
tofR40.
 Br eakevenpointswil
loccuratpointsAandB.
(
Acc
eptanyot hercorr
ectrel
evantresponse)

80|
Page
6.
5Wi t
ht heaidofawel
l-
label
ledgr
aph( cos
tandr
evenuec
urves
),expl
aint
hes
hut
-
downpointfor
t
heindivi
dualfi
rmi
naper f
ectmarket
,
(
8)

Cor
rec
tposit
ioni
ngofAC=1
Cor
rec
tposit
ioni
ngofMC=1
Cor
rec
tindi
cati
onofshutdownpoi
nt=1
Cor
rec
tlabel
li
ngofandonaxis
=1

 I
tisimport
antthatafirm'srevenuecoversi
taver
agevar
iabl
ecostsorvar
iabl
e
cost
stostayin
busi
ness
 Thelowestl
evelofproduc t
ioniswhereAR=AVC/MC=AVC( shutdown
poi
nt/C)
 Thefir
m wil
lnotproducebel owpointC/whereMC=AVC
(Ac
ceptanyotherc or
rectrelevantr
esponse)

ACTI
VITY7
 Wi ththeaidgraphs,di
scus
sindet ai
ltheequi
l
ibr
ium pos
iti
onsi
naperf
ect
market. (26)
 Hows ucces
sfuli
sthecompetiti
onpolicyi
npromoti
ngamor ec
ompet
it
ive
ec
onomy (
10)

I
NTRODUCTI
ON
Aper
fec
tcompet
it
ioni
samar
kets
truc
tur
ewi
thal
argenumberofbuyer
sands
ell
ers

(
Acc
eptanyot
herc
orr
ectr
elevantr
espons
e)
max2
MAI
NPART

81|
Page
  Theminimum poi ntoft
hes hort
-ter
m aver
agec ostcurve(AC)islowerthan
themarketprice
 Thebus i
nessisinequil
i
br ium (i
tismaxi
misi
ngpr ofi
ts)atpointewhereMR=
MCandt hebus i
nesswillproduceatquanti
tyq1andmar ketpri
ceP1
 Totalr
evenuei sequalt
o0q1x0P1( 50x10)andt otalcostisequalto0q1x0c
(40x10)
 Theeconomi cprofi
tisrepr es
entedbytheareac P1eb(R100)

 Theminimum pointoftheshort
- t
erm aver
agecostcur
ve(AC)ishi
gherthan
themarketpri
ce.
 Thebusines
sisinequili
bri
um (i
tismaximisi
ngprof
it
s)atpoi
ntewher e
MR=MCandt hebusinesswil
lproduceatquanti
tyQandmar ketpr
iceP.

82|
Page
  Tot
alrevenueisequalt
o0q1x0P1(
40x10)andtot
alcosti
sequalt
o0cX
0q1(50x10)
Theeconomiclossi
srepres
ent
edbyt
hear
eaP1cbe(100)

 AtpointewhereMR=MCt hebusi
nesswil
lproduc
eatquant it
yq1and
marketpri
ceP1.
 Thelowestpoi
ntofACist
angenttotheAR/ MRcurves.
 Thi
simpli
esthatAC=ARandtotalc
ostisequalt
ototalrevenue(0P1eq1/
500)
.

 Normalprof
iti
sminimum ear
ningsr
equi
redt
opr
eventt
heent
repr
eneurf
rom
l
eavi
ngt hemarket
.

ADDITIONALPART
Thecompetit
ionpol icyissuccessf
ulby:
 makingpr ovi
sionforinsti
tuti
onsli
ketheCompet iti
onCommi s
s i
on,
Competiti
onTr ibunalandAppealCour ttoinves
tigateanyunfairc
ompeti
tion
i
nthec ount r
y
 Functi
oni ngasani nvest
igatorandevaluat
orofrestri
cti
vebusinesspr
act
ices
.

 Makingr ec ommendat i
onsaboutpenal ti
esforbusinessesfoundguilt
yof
abuse.
 I
mpl ement ingtheCompet i
ti
onTr i
bunalwhoac ceptsorreject
st he
i
nves ti
gationandr ecommendat ionoftheCompet iti
onCommi ssi
onand
confir
mspenal tyi
mpos ed.
 Makingi tpos si
bleforbusiness
est oappealforapenaltyimpos edbyt he
Compet iti
onAppealCour t.
 Curbingt heec onomicpowerofbi gc ongl
omer at
est oarri
veatamor e
equitabledi s
tri
buti
onofi ncomeandweal t
h.

83|
Page
  Regul ati
ngmer gersandt akeover st oregul atemar ketpowerofmer ger
s.
 (Ac ceptpr acti
calexampl eswher eCompet itionpol i
cyhass ucc
eeded)
(Ac ceptanyot hercor rectr elevantr esponse)
Thec ompet iti
onpol i
cyisnots uc c ess
fulbec auseof :
 Fr equenc yofinvestigat i
onsi nt ocollusi
vebehavi oure.g.cement/st
eel/
br ead/banki ndustries.
 Fineswer etoolenientandnotac ceptablet os omepar ti
es.
 Toomanyc ompetit
or ss til
lpr eventingaf f
ir
mat i
veac ti
on/youngblac
k
i
ndus tri
ali
stsenteri
ngi ntot hemar ket(BEE)
(Ac ceptanyot herc or r
ec trelevantr espons e)
MAX10

CONCLUSI ON
Busi
nessesunderper
fectc
ompet
it
ioncanonl
yreal
i
senormalpr
ofi
tsi
nthel
ong–r
un
duetothenumberof
busi
nes
s esenter
ingi
nthemar
kettoshar
einthepr
ofi
tsbei
ngmadeinthes
hortr
un.

(
Acc
eptanyot
herc
orr
ectr
elevantr
espons
e)
MAX2

MONOPOLY
ACTIVI
TY1
1.
1Variousoptionsareprovi
dedaspossi
bleanswerstot
hef ol
l
owi
ngquest
ions.
Choosethecorrectanswerandwrit
eonl
yt hel
etter(
A-D)nexttot
heques
tion
number(1.1.
1-1.1.
5)intheANSWERBOOK,f orexample1.1.
6.D
1.
1.1 Productsthataresol
dinthemonopolyar
e………

A.di
ff
erenti
ated
B.homogenous
C.unique
D.same
1.
1.2 Thedemandc urveoft
hemonopol
i
sts
lopes
…….

A.hori
zont al
ly
B.negatively
C.posit
ively
D.incr
eas i
ngl y
1.
1.3 Amar kets tructur
ewher
eonepr
oduc
erexi
sti
nthemar
keti
scal
l
ed……

A.Duopol
y
B.Ol
igopol
y

84|
Page
 C.Per
fectCompeti
tor
D.Monopoly
1.
1.4Monopoli
eswil
lachi
evea/
an…… pr
ofi
tint
hel
ongr
un

A.economic
B.normal
C.zero
D.equal
1.
1.5 Monopolyisal
soknownasa/
an_
___
___
A.i
ndustry
B.market
C.fi
rm
D.monopolis
tic
(
5x2)10
1.2Choos
eades
cri
pti
onf
rom COLUMNBt hatmat
chesani
tem i
nCOLUMNA.
Answers COLUMNB
COLUMNA

1.
2.1 Pr
ices
ett
er D A.Asinglefi
rm orenti
tythathol
dsexcl
usi
ve
cont
rolovertheproductionordi
str
ibut
ionof
1.
2.2 Long-
run B aparti
cularproductorservi
cewi
thi
nan
i
ndustry
1.
2.3 Monopol
y A
B.Aperi
odwher eal
li
nput
sint
hepr
oduc
tion
1.
2.4 Pat
ent E proc
essarevar
iabl
e

1.
2.5 Nat
ural C C.Wherebar
rierst
oent
ryar
eofan
Monopol
y economi
cnature.

D.Whenafi
rm haspowert
odet
ermi
net
he
pri
cef
ori
tsproduct
.

E.Theexc
lus
iver
ightt
omanuf
act
urea
produc
t.

F.Si
tuat
ionwherethebus
ines
sdoesnot
makeapr of
itoral
oss

(
1x5)
5
1.
3 Gi veONEtermforeac
hoft
hefol
l
owingdescri
pti
ons
.
1.
3.1Theprof
itt
hatt
hemonopol
yfi
rm makesbot
hinlongrunands
hor
trun.

85|
Page
 EconomicProfit
1.
3.2Thelegalri
ghtwher ebytheholderobt
ainstheexc
lusi
veri
ghttomanufac
turea
product.
Patent
1.
3.3Amonopol ythatexistsbecauseofl
awspos edbytheStat
e.
Arti
fi
ci
alMonopol y
1.
3.4Amar ketst
ructurewher eentr
yandexitarecompl
etelybl
ocked.
Monopoly
1.
3.5Apointwher eMCequal sMRyett hebusinessi
smakinganeconomi
closs.
LossMinimizi
ngPoint (
1x5)
5

ACTI
VITY2
2.
1 St udyt
hegr
aphbel
owandans
wert
heques
tionst
hatf
oll
ow.

2.
1.1Ident i
fythepricewher efi
rmsmaximisepr
ofi
t?
(
1)
R125
2.
1.2 GiveONEexampl eofanat ur
almonopoly.
(1)
Eskom,Telkom,Tr ansnet
2.
1.3 Briefl
ydescri
bet heterm margi
nalr
evenue.
(2)
Mar gi
nalrevenueistheadditi
onalr
evenuerecei
vedf
rom s
ell
i
nganaddi
ti
onal
unit.√√
(Acceptanyot hercorrec
trel
evantres
ponse)

86|
Page
2.
1.4 Whyamonopol is
twillcontinuetomakeec onomi cprof
itinthelongr un?
(
2)
Monopol i
stwil
lmakeec onomi cprofi
tinthelongr unbecausethemar keti
s
completel
yblocked.
(Acceptanyotherrel
evantr esponse)
2.
1.5 Calcul
atewhetherthef i
rm aboveismaki ngec onomicpr
ofitorloss.ShowALL
calc
ulati
ons.
(4)
Profi
torLoss =AR–ACxQ
=R125–R65x112
=R60x112
=R6720
Therefor
e,thefi
rmismaki ngec onomicprofitofR6720.

ACTI
VITY3
3.
1 St udyt
hepi
ctur
ebel
owandans
wert
heques
tionst
hatf
oll
ow.

Source:Googlei
mages
3.
1.1 I
dentif
ythemar ketst
ructuredepict
edi ntheabovepictur
e.
(1)
Monopoly
3.
1.2 Whatisthenat ureofthepr oductoffer
edbymonopol ies?
(1)
Uni
que
3.
1.3 Brief
lydescri
bet heterm patent.
(2)
Iti
sanexc lus
ive( l
egal)ri
ghttomanuf act
ureapr oduct
(Acceptanyot hercorrectrel
evantresponse)
3.
1.4 Howdoest hes lopeoft hemonopol i
st'
sdemandc urvediff
erfr
om thatofa
monopolist
ic
competit
or? (
2)

87|
Page
  Thedemandc ur veofamonopol ys l
opesdownwar dduet oi tsmar ketpower ,
repres ent ing
thes oles uppl i
er 'sabi l
it
ytos etpr i
c esabovemar ginalc ost.✓✓
 I ncont r ast,thedemandc urveofmonopol isti
cc ompet itional soslopes
downwar dbuti s
mor eel as tic
,r eflectingt hepr esenc eofmul tiplefir
msof fer i
ngdi f
fer entiated
produc ts,
leadingt oawi derr angeofs ubs ti
tutesandal essc onc ent ratedmar ketpower .
✓✓
 Thi sdi st i
nc t
ionhi ghlightshowmonopol isti
cc ompet it
ional l
owsf orgr eater
consumer
choiceandc ompet itivepress uresc ompar edt othemor ec onc entratedc ont
rol
ofamonopol y.
(Acceptanyot herc or r
ectrelevantr espons e)
3.
1.5 Whydos tate- ownedmonopol iesinSout hAf ricafi
ndi tdi ffic
ulttomakean
economi cpr ofit?( 4)
 Somes tate- ownedmonopol i
esi nSout hAf ri
c ahaveahi storyofc or ruption
andi nc ompet enc e
whichc ompr omi sest heabi l
i
tyt omakepr ofi
ts
 Duet ot hehugemai ntenanc ec osts,revenuei snots ufficientt ocoveral l
expens es
 Non- paymentofdebtofmuni ci
paliti
es,reduc esther evenueofSt ate-Owned
Enterpr ises
 Regul at i
onbodi ess uc hasNERSAl imithighpr i
ceinc r
eas est hatr educ es
revenue
 Over - rel i
anc eonbai loutsleadst oinef f
ici
enc i
esi nmanagementdec isi
on-
makingpr oc ess es Somes tate-ownedent erprisespr ovi dees sent i
algoods
ands er vicess uc haswat er,whi chmakesi tdiffi
culttos etver yhighpr ic
est o
coverc ost s
(Acceptanyot herc or r
ectrelevantr espons e)
ACTIVI
TY4
4.
1 St udyt hepi c turebel owandans wert heques ti
onst hatf ollow.

88|
Page
 Sourc e:Googleimages
4.1.
1 Ident if
yONEbar ri
ert oent r
yinmar ketfrom theabovec ar toon.
(1)
Regul ation,fixedc osts,li
cenci
ng
4.1.
2 Namet het ypeofmonopol ythatisc harac t
eri
sedbyhi ghs tart-
upc osts.
(1)
Nat uralmonopol y
4.1.
3 Brieflydes cribet het erm economi esofs cale.
(2)
Economi esofs caleoc c
urwhenout puti
nc reasesbymor et hant heper c
entage
i
nc reas eininput s/
whent hec os tperuni tdec r
easeswhenout putexpands
(Acc eptanyot herr el
evantandc orrectans wer)
4.1.
4 Howwoul dbar ri
erstoent ryinfl
uenc epr ofi
tsint hemar ket ?
(2)
Newbus i
nes sesar er estr
ict
edt oent erthemar ketandexi s t
ingbus i
nesseswill
enjoyec onomi c
prof i
tinbot hs hortandl ongrun
(Acc eptanyot herr el
evantandc orrectans wer)
4.1.
5 Whywoul damonopol is
tnotc hargeexc es si
velyhighpr ices?
(4)
 Monopol yislimi t
edbyt hemar ketdemandandc onsumer smays t
opbuyi ngif
pricesar et oo
high.
 Cons umer shavel i
mi tedbudget st heref
or emonopol iesc annotc harge
exc essivepr i
c es.
 Monopol i
st'
spr oduc tstil
lmustc ompet ef orcons umers'favourwi thallother
produc tsinthe
economy.

89|
Page
  Pri
ceinc
reas
esaresomet i
mesregul
atedbythegover
nmentt
opr
otec
tthe
consumer
(
Ac c
eptanyotherr
elevantandcorr
ectans
wer)

ACTI
VITY5
5.
1 Studythef
oll
owi
ngi
nfor
mat
ionandans
wert
hef
oll
owi
ngi
nfor
mat
ion.

5.1.
1Ident i
fytheunitc ostint heabovef i
r m
(1)
R15
5.1.
2Gi vet helossmi ni
mi singquant i
ty.
(1)
120
5.1.
3Br ieflydescri
bet het erm nat uralmonopol y.
(2)
Nat uralmonopol yi sat ypeofmonopol ywher et
her
earehighstar
t-upcost
s
thatpr eventotherf ir
ms
from ent eri
ngt hemar ket .
(Acc eptanyot herc orrectr el
evantr esponse)
5.1.
4Whydoesmar ginalr evenuec urve(MR)wi l
lal
waysl
iebelowtheaverage
revenuec urve(AR)(
2)
Thenegat i
ves l
opi ngdemandc ur
vemeanst hatmoregoodsaresol
datlow
prices;henceaddi t i
onalr evenuewi lldecreaseasmoregoodsaresol
d.
(Acc eptanyot herc orrectr el
evantr esponse)

90|
Page
5.
1.5Cal
cul
atet
hepr
ofi
torl
ossofthi
smar
ket
.ShowALLc
alc
ulat
ions
.
(
4)

ACTIVI
TY6
6.1Howdoestheinef
fi
ci
encyoccuri
namonopoly?
(8)
 Thef
ir
m wil
lsetaspec
ifi
cpri
ceforagoodthati
savai
l
abl
etoal
lcons
umer
s.

 Thequant ityoft hegoodwi llbeles sandthepr icewil

lbehigher(thisiswhat
makest hegood
ac ommodi ty).
 Themonopol ypr i
ci
ngc reatesadeadwei ghtlossbecaus et
hef i
rmf orgoes
transacti
onswi t hthe
c onsumer s
.
 Thedeadwei ghtl ossi
st hepot entialgai
nst hatdidnotgot othepr oduceror
thec onsumer .
 Asar es
ultoft hedeadwei ghtloss,thecombi neds ur
plus(wealt
h)oft he
monopol yandt hec onsumer s
i
sl es
st hant hatobt ai
nedbyc onsumer sinac ompeti
tivemarket.
 Amonopol yi slesseff
ici
enti ntotalgainsfrom tradethanac ompet i
tivemarket
.

 Monopol i
escanbec omei neff
ici
entandles
sinnovati
veovert
imebecausethey
donothavet ocompet e
withot herproduc ersinamar ketplace.
(Acceptanyot herrelevantexpl anati
on)
6.
2Dist
inguishbet weenar tif
icialandnat ur
almonopoly
(8)
ARTIFI
CIALMONOPOLY
 Her ethebar ri
erstoent ryar enotec onomi
cinnature.
 Anexampl eofabar ri
erisapat ent.
 Apat entisal egalandexc l
usi
ver i
ghttomanufact
ureaproduct
,e.
g.,Denel
LandSys t
emsmanuf acturingCas per
’s.

91|
Page
  Li cens i
ngi sanot herwayi nwhic hanar ti
ficialmonopol yisappli
ed.
 InSout hAfricali
c ens esar erequiredf orr adios ,TVbr oadc as
ter
s ,et
c.
 Li cens esprot ect
soper atorsagains tent r
yofc ompet itors
NATURALMONOPOLY
 Hi ghdevel opmentc os tspreventot her sfrom ent eri
ngt hemarketand
therefor ethegover nment
suppl i
est hepr oduc t.
 E. g.Elec tr
icit
yinSout hAf ri
caispr ovidedbyt hegover nmentent er
pri
se,
Eskom.
 Itc os tsbill
i
onsofr andst obui l
dandmai nt ainpowers tati
onsandt heref
ore
therear enoot her
suppl i
er s.
 As inglebus i
ness( Es kom)c ans ervet hewhol emar ketatal owerpr i
cethan
twoormor ebus i
nes s es
toget her.
 Suc habus inessisf requent lyownedorr egul at edbyt hegover nment.
(Acc eptanyot herr elevantexpl anat i
on)
6.
3Witht heai dofawel llabel l
edgr aphexpl ainthel ong- runequi l
ibr
ium ofa
monopoly (8)

92|
Page
  I
nt helongtermt hemonopol istmakesec onomicprofi
t
 TheLMCc urveintersect
stheLACc urveati t
smi ni
mum point
 Profi
tmaximizingpoi nti
satpoi ntE(LMC=MR)wher epr oducti
oni sQ0ata
pri
ceofP1peruni t/Themonopol i
stwillproduc
eatQ1( 100)(profi
t
maximizati
onpoi ntE)atapr i
ceofP1( 10)
 Atthisproductionleveltheaveragerevenuei sR10andaver agec ostisR7
 Therefor
e,themonopol i
stismakingapr ofi
tofR3peruni t(t
otaleconomic
profi
tofR300).Thet otaleconomi cprofiti
srepresent
edbyt hes hadedarea

(
Acc
eptanyotherr
elevantexpl
anat
ion)
(
Max4marks)

ACTI
VITY7
 Disc
ussi
ndet
ailt
hec
har
act
eri
sti
csofamonopol
y.

93|
Page
 (26)
 Wi tht heai dofawel llabel ledgr aphexpl aint hel ong- runequi l
ibrium ofa
monopol y (10)
I
NTRODUCTI ON
Monopol yexi stwher ether ei sonl yones ellerofauni quepr oduc t,wher eproduc t
hasnoc los es ubs tit
ut es,andwher ebar r
ier sbloc kent ryintot hemar ket
compl etely. max2
(Ac
c eptanyot herr elevantexpl anation)
BODY
MAINPART( Amaxi mum ofei ghtmar ksf orheadi ngsandexampl es )
Numberoff i
r ms
 Themonopol ycons is t
sofones i
ngl ef i
r m.
 Themonopol yalsor epr es ent sthet otali ndus try.e.gDeBeer s,Es kom et c.
Demandc ur ve
 Monopol i
s tisal soc onf ront edwi thademandc ur vef ortheirpr oduc tbut
bec aus et her ei stheonl ys uppl i
eroft hepr oduc t,theyc andec i
deatwhat
poi ntont hedemandc ur vet heywi sht obe.
 Themonopol i
stist heonl ys uppli
erofapr oduc tint hemar ket.
 Thedemandc urveofamonopol i
sti st hatofamar ketasawhol e.
 Thedemandc urves lopesdownwar dsf rom lef ttor ight.
Produc tionl evel
 Onc et hemonopol i
sthasdec i
dedont hepr ice,t hequant i
tys oldi sdet ermined
bydemand.
 Themonopol i
stsinf l
uenc et hepr oduc t-pr i
cec ombi nati
onoft hepr oduc tt
hey
sell.
 Cont roloverpr i
ce
 Amonopol is tisregar dedasapr i
c emaker .
 Abl et oi nf l
uenc epr ic et hr oughc hangi ngt hequant i
ty,buyl imitedbymar ket
demandandt hegoalofpr of i
tmaxi mi sat i
on.
 Monopol i
s tc hoos est hec ombi nationofpr iceandquant it
yt hats uitsitthe
bes t.
 r evenuec ur ve
 Bec aus et hedemandc ur vei sdownwar dss lopingpr i
cewi l
ldec reas ef oreach
addi tionaluni tpr oduc ed.
 Ther ef oret hemar ginalr evenuewi llbel es st hant hepr i
ce,t hust hedemand
cur veandmar ginalr evenuec urvei snott hes ame.
 Themar ginalr evenuec ur vel i
esbel owt hedemandc urve.
Cos tofpr oduc tion
 Thes hapeoft hec os tr evenuec urve( MCandAC)i sthes ameasanyot her

94|
Page
 produc er.
 TheMCi ncreas esasmor ei spr oduc ed.
 TheACdec lines ,reac hesami nimum andt heni nc reas es .
 Profitmaxi mi sationi swher eMC=MR
Profi
t
 Themonopol i
stc anear nec onomi cpr of i
tint hes hor trunandi nt helongr un.
 Bec aus enewent riesar ebl oc ked( noc ompet i
ti
on)ands hort
- runec onomi c
profitc annotber educ ed.
 Themonopol yc ant husc ont i
nuet oear nec onomi cpr of i
taslongast he
demandf oritspr oduc tr emai nsint ac t.
 Mar ketent ry
 Referst ohoweas yordi fficultf ort hebus ines sest oent erort oleavet he
mar ket .
 Isent i
rely/ compl etelybl oc ked.
 Anumberofbar rierst oent ryt hatmaygi ver iset omonopol yc anbe
economi esofs caleorl imi teds izeoft hemar ketorexc lusi
veowner s
hipofr aw
mat erialsorpat ent sorl icens ingors oler i
ght sori mpor trest
ricti
ons .(Ac c
ept
anyot herr elevantexpl anat i
on) (
max26)
AdditionalPar t
Evaluat et heef fec tsofnat uralmonopol iesonanec onomy. (10)
 Nat uralmonopol ywi lloc c uronl ybec auseofei thers pec if
icmar ketc ondit i
ons
orbec aus eofauni quepr oduc t
.Itgener allyoc c urswi thoutanyunf airplayor
bus i
nes sprac ticest hatmi ghts ti
fler i
val r
y.
Positi
vel y
 Ithelpst oavoi dwas tageast her ec annotbedupl i
cat i
onofpr oduc t
sor
services .
 Thef irm wi thanat uralmonopol yisi nagoods pac easi tearnss ubs t
ant i
al
amount sasr evenuesandpr ofits.
 Higherpr ofi
tmar ginshel pt hec ompanyt os etupr es ear c
handdevel opment
depar t
ment st hatwi l
lul timat ely
 proveadvant ageoust obot ht hef i
rm andt hec ons umer sintermsofbet ter
produc tsatl owerc osts.
 Anat uralmonopol yisas our c eofr evenuef oragover nmentast hef ir
msmus t
payt axt ot hem.
Negat ively
 Thehi ghs t
ar t-upc ostsofnat uralmonopol yf irm elimi nateot herc ompet itors
from ent eri
ngt hemar ket .
 Unr egul atednat uralmonopol i
espr oveabadbar gainf orthec ustomer sas
theyt endt obeexpens iveandof tenpr ovidepoors ervicesli
keac able

95|
Page
 company.
 Lackofri
val
rycanal
soleadtoout
datedandlow-
qual
i
tygoodsands
ervi
ces
.
CONCLUSION
(Ac
ceptanyotherr
elevanthi
ghor
derconcl
usi
on)
max2

MONOPOLI STI
CCOMPETI
TION
ACTI
VITY1
1.
1 St udythei
nfor
mat
ionbel
owandans
wert
heques
tionst
hatf
oll
ow.

1.1.
1 I
dent ifyONEwayi nwhi c
ht heabovehot el
sc andif f
erentiat
et hei
rproducts.
(1)
Offerc onfer enc erooms✓
Beaut ys alons✓
Gymnas i
ums✓
(Acceptanyot herrelevantresponse.)
1.1.
2 Whatki ndofpr ofi
tsar emadebyamonopol i
s t
iccompet i
torinthelongrun?
(1)
Nor malpr of it
s✓
1.1.
3 Des cribethec onc eptmonopol i
sti
cc ompetiti
on.
(2)
Monopol isticcompet it
ionreferstoamar kets tructurewi t
hmanybuyer sand
sell
er swher eent ry
i
sr elativel
yeas y,butt hepr oductisdiff
erenti
at ed.✓✓
(Acceptanyot herc orr
ectrelevantresponse.)
1.1.
4 Briefl
yexpl ainpr oduc tdif
ferenti
ati
onasac har act
er i
sti
cofamonopol i
stic
competit
ion.( 2)
 P̀roduc tdif f
erent i
at i
onreferstopr oductsthatar es i
milarbutnotc ompletel
y

96|
Page
 i
dent i
cal✓✓
 Theyar esi
mi l
arinthattheys ati
s f
ythes ameneedoft heconsumer✓✓
 Diff
erencesmays omet i
mesbec ompletelyimagi
nar
yasi ncaseofmedici
nes
whichmayhave
dif
ferentbrandnamesbutc ontainthesamebas ici
ngredi
ents✓✓
 Thepac kagingofthepr oduc tmaymakei tdif
fer
entfr
om otherproduc
ts,
thought heproductisthes ame,e. g.
,saltandsugar
(Acceptanyot herr
elevantexpl anati
on)

1.1.
5 Whymonopol isti
cc ompet i
ti
onunabl etomakeec onomi cprofi
tsinthelong
run? (4)
 I
nt hes hortrun,whent herearesti
llafewfirms,theymanaget omake
economi cpr of
it
.
 Theec onomi cprofit
sat tr
actotherbus i
nessestoent erthemar ketand
event uall
yl eadtoinc r
eas edcompet i
ti
onandal lec onomicpr ofi
tsarewiped
away.
 Firmss tartmar keti
ngandbr andingtheirproductdi f
fer
ent l
y,theydot hi
sto
tryandhol dont ot heirnormalprofit
stopreventt hems elvesfrom exi
ti
ngthe
mar ket.
(Acceptanyot herc orrectrel
evantresponse.)

ACTI
VITY2
2.
1Studythei
nfor
mat
ionbel
owandans
wert
heques
tionst
hatf
oll
ow.

97|
Page
2.
1.1 I
dent
ifyanon-pri
ces
trat
egyshownbytheabovei
nformat
ion.
(
1)
Door
-to-doordel
i
ver
y/onli
neorder
s/packagi
ng/brandi
ng/adver
ti
si
ng✓

2.
1.2 NameONEexampl eofamonopoli
sti
ccompet
it
ivei
ndus
try.
(1)
FastFoodout lets
Medi c
alDoc t
or s
Clot
hings hops
(Acceptanyot herrel
evantandc
orrectans
wer)

2.1.
3 Br ieflydes cribet het erm pat ent .
(2)
Al egalr i
ghtt hatal lowst hehol dert oex cl
us ivelypr oduc e/manuf acturea
produc tforac er tainper iod./Anexc l
us iver ightgr antedt oani nventort hat
prot ectintellec tualpr oper ty.✓✓
(Ac ceptanyot herc orrectr elevantr es pons e)
2.1.
4 Expl ai
nt hebenef itsofpr oduc tdi fferent i
at i
ont oproduc ersofgoodsand
servi
ces. (
2)
 Pr oduc erswi llbenef i
tbec aus et heirpr oduc tswi l
lbeeas i
lyrec ognisablefrom
similarpr oduc t
sofot herbus ines ses.✓✓
 Whenc ons umer sc ani dent ifythepr oduc t,br andloyal t
yi sdevel opedwhi ch
wi l
lbenef itt hepr oduc er.✓✓
 Pr oduc erswi llear nmor er evenue/ pr ofitf rom goodst hats howar elati
vely
i
nel as t
icdemand.✓✓
 Pr oduc ersc aneas i
l
ypenet ratet hemar ketandgai nmor emar ketshare
throughpr oduc tdifferent i
at i
on.✓✓
(Ac ceptanyot herr elevantandc orrec tr espons e)
2.1.
5 Whyi smonopol i
s t
icc ompet iti
onr egar dedasahybr ids tr
uc ture?
(
4)
 Monopol isticc ompet iti
oni sof t
enr egar dedasahybr idmar kets t
ructure
bec aus eits har esc har acter i
sticsofbot hmonopol yandper fectcompet iti
on,
twoext remef or msofmar kets truc tures . ✓✓
 Inmonopol isticc ompet i
tion,t her ear emanyf ir
msc ompet ingi nthemar ket,
buteac hf i
rm pr oduc esas l
ightlydi ffer ent iatedpr oduc t,maki ngi tdif
ferent
from t hes tandar dizedpr oduc tsi nper fec tc ompet iti
on.✓✓

ACTI
VITY3
3.
1Studythepi
ctur
ebel
owandans
wert
hef
oll
owi
ngques
tions
.

98|
Page
3.
1.1 I
denti
fyONEexampleofmonopol
i
sti
ccompet
it
ionf
rom t
hei
nfor
mat
ion.
(1)
Hai
rdres
ser/
Fast
-foodshops/
Lawfi
rms.✓

3.
1.2 NameONEnon- pr
icecompeti
ti
ons
trat
egyf
rom t
hei
nfor
mat
ionabove.
(1)
Adver
ti
s i
ng/
Pac
kaging/Ser
vic
e✓

3.1.
3 Br i
eflydescribet het erm monopol isticcompet i
tion.
(2)
 Monopol is
ticc ompet i
ti
oni samar kets truct
urewi thmanybuyer sands el
lers
wher eentryisr el
atively
eas y,butthepr oduc tisdi fferenti
at ed.
(Acc eptanyot herc orrec trelevantr es ponses)
3.1.
4 Br i
eflyexplainpr oduc tdi ff
er enti
at i
onasac haracter
ist
icofamonopol is
tic
competiti
on.( 2)
 Produc tdifferentiationr eferst opr oduc tsthatares i
milarbutnotc ompl
etely
i
dent i
cal.
 Theyar esimilarint hatt heys ati
sfyt hes ameneedoft hec onsumer .
 Differencesmays omet imesbec ompl etelyi
magi naryasinc aseofmedi ci
nes
whi chmayhave
differentbrandnamesbutc ontainexac tlythesamebas i
cingredients.
 Thepac kagingoft hepr oduc tmaymakei tdiff
erentfrom otherpr oduct
s,
thought hepr oduc tist he
s ame,e. g.saltands ugar .
(Acc eptanyot herc orrec trelevantr es ponses)
99|
Page
3.
1.5 Howdoesl oads heddingaf f
ec t
ss mallbus i
nesses?
(4)
 Smal lbusinessesarefac edwi t
hl ossofpr oducti
onandpr oduc ti
vit
y.
 Pr oduc ti
oni shalteddur i
ngloads heddingbec ausethemac hinesar er
unusi
ng
electri
ci
ty.
 Wor kersar eessential
l
ynotwor ki
ngdur ingper i
odsofloads hedding.
 Smal lbusinessesarefac edwi t
hl ossofpr ofi
tsbecauseinmos tcas est
hey
requireelectri
citytofunc t
ionandr untheirbusinesses
,
 Thef tandbur glaryincreaseaffectingthenor maloperati
onofbus i
nesses
.
(Acceptanyot hercorrectrelevantr es
pons es)

ACTI
VITY4
4.
1Studythei
nfor
mat
ionbel
owandans
wert
hef
oll
owi
ngques
tions
.

4.
1.1 Identi
fyONEexampleofamonopol
is
ticc
ompet
it
orfrom t
heabove
i
nformati
on. (
1)
Pi
zzahut / McDonalds /Bur
gerKing /KFC/Jol
l
ibee

4.
1.2 Namethelongrunequi
l
ibr
ium pos
iti
onofamonopol
i
sti
ccompet
it
or.
(1)
Nor
malprofi
t

4.
1.3 Brief
lydescr
ibet het m nor
er malpr
ofi
t.
(2)
I
tisapr of
itthatissuff
ici
enttoensuretheentrepreneurc
onti
nues
producti
on/minimum
earni
ngsrequiredtopr eventtheentr
epreneurfrom l
eavi
ngandusinghi
s/her

100|
Page
 product
ion
fact
orsels
ewhere.
(
Ac c
eptanyothercor
rec
trel
evantr
espons
e)

4.
1.4 Briefl
yexpl ai
nc ont roloverpr icesi nmonopol i
s ti
cc ompet iti
on.
(2)
Cont roloverpr ices
 Fi r
mshavel i
ttl
ec ont r
olovert hepr iceofapr oduc tduet othec ompet it
ive
natur eoft hemar ket .
 Theyar epr icemaker srathert hanpr i
cet aker s./ Pri
c emaker sfort heirbr andof
produc ts
,
 Eac hs ell
erc ans ellatitsownpr i
ces inceas ingl epr icec annotbedet er mined
fordifferent i
atedpr oduc t
s.
 Ar angeofpr i
c esc anbeappl i
edt odi f
fer entpr oduc tsdependi ngont hes i
ze
ofbus i
nes s.
 Bul kpur chasesbyabus i
nes sc anr esulti nlowerpr i
cesf orpr oduc ts.
(Acceptanyot herc orrectrelevantr espons e)
4.
1.5 Howi sbr andingus edi namonopol i
sti
cc ompet iti
ont oi ncreas emar kets hare?
(4)
 As trongbr andi dent i
tyhelpses tablishc us tomerl oyal tyandt rust,reduc ing
thepr ices ens i
tivity
ofc ons umer s.
 Thi senabl esc ompani est ochar gepr emi um pr ices,eveni nac ompet i
tive
environment ,enhanc i
ng
theirpr ofi
tability.
 Br andi ngc r
eat esabar riertoent ryforpot ent ialc ompet i
tors.Es tablished
brandshaveac ompet i
t i
veadvant age,maki ngi tdiffi
c ul
tf ornewent rant sto
gainmar kets har e.
 Br andi ngf oster sinnovat ionandpr oduc tdiffer entiation,dr i
vingf irmst o
cons tantlyimpr oveandevol vet heirof feringst omai ntainauni ques elli
ng
propos i
ti
on.
(Ac ceptanyot herc orrectrelevantr es pons e)

ACTI
VITY5
5.
1 St udyt
hegraphandans
wert
hequest
ions
.
REVENUECURVESOFAMONOPOLI STI
CCOMPETITI
VEFI
RM

101|
Page
5.
1.1 I
dent
if
yt hequant
it
yatwhicht
otalr
evenuei
smaxi
mis
ed.
(
1) Quant
it
y4✓

5.1.
2 Whi chr evenuec urverepr esent sademandc urveinamonopol i
sti
c
competit
ivef i
rm? ( 1)
AR/Aver ager evenue.✓
5.1.
3 Briefl
ydes cri
bet het erm mar ginalrevenue.
(2)
Mar ginalr evenueist heext rar evenuethesell
erearnswhenitproducesand
sell
sonemor eunit
ofpr oduc t.✓✓
(Acceptanyot herc orr
ec trelevantresponse.
)
5.1.
4 Explaint hes ignif
icanceofec onomi esofscal
e.
(
2)
 Whenmor euni t
sofagoodors ervi
cecanbepr oducedonalargersc
ale,yet
withf ewi nput scos t
sec onomi esofs cal
earesaidtobeac hi
eved.

 Asac ompanygr owsandpr oduc t

ionunitsincreaseac ompanywillhavea
betterchanc et odecreasec osts.
 Ifa
 f i
rmi salreadyenj oyi
ngec onomi esofs cal
e,itbecomesdi f
fi
cultf
oranot her
fi
rm wi t
hhi gheroper ati
ngc oststoc ompet ewithit.✓✓
(Acceptanyot hercorrectr elevantrespons e.
)
5.1.
5 Whywi lltheeconomi cpr ofitmadebyamonopol i
s t
iccompeti
tordisappearin
thelongr un?( 4)
Economi cprofi
twi l
ldisappeari nt helongr unbec ause:
 pr ofi
tsat trac
tnewbus ines seseas i
lyint
ot hemar ketmakingitmor e

102|
Page
 compet it
ive.✓✓
 i
nc reas edc ompet i
ti
onwilll
eadtoadec r
easeinpri
ceswhi
chwi l
lreduce
profits.✓✓
 therec anbeani ncr
easeinthenumberofsubsti
tut
eproductsproducedwhic
h
willreduc et hedemand.✓✓
 thi
swi l
levent uall
yleadtonormalprof
itbythemonopoli
sti
ccompet i
tori
nthe
l
ongr un.✓✓
(Acc eptanyot hercorr
ectrel
evantr
esponse.
)

ACTI
VITY6
6.
1. Whyar epr i
c esinamonopol ist
icall
ycompet i
ti
vemar ketlowert hant heprices
ofamonopol y?( 2)
 Monopol i
sticallyc ompet i
ti
vemar kethasgr eaterc ompet i
tionbec ausethere
aremanybus iness es.
 Monopol ymar kethashi gherpr icesbec auseitisas inglesupplierofapr oduc t
orser vice.✓✓
 Monopol ys ellsauni quepr oduc twithnoc l
oses ubs tit
utes .✓✓
(Acceptanyot herc orrectrel
evantr espons e)
6.
2Howdoesamonopol isti
cc ompet i
tordifferfrom aper fectcompet itorintermsof
market
i
nformat ion. (2)
 Amonopol isti
cc ompet itorhasi mperfec tmarketinf ormat i
onduet ot he
dif
ferent iatednat ur eoft heir
produc ts,maki ngdi rectpr i
cec ompar i
s onschall
engi ngforc onsumer s.✓✓
 Inc ont ras t,aper f ectc ompet it
orof f
ershomogeneouspr oductsandf ul
l
mar keti nfor mat i
on,al lowingc ons umer stoeas i
l
yc ompar epri
cesandmake
i
nfor medc hoic es.✓✓
 Thi sinf ormat i
ondi spar i
tyinmonopol i
st i
ccompet itionleadst omor evaried
pri
cings trategi esand
brandi ngef fortst oinfluencec ons umerper ceptions .✓✓
(Acceptanyot herc orrectrelevantrespons es)

6.
3 Whyi sthedemandc ur
veofamonopol i
sti
ccompeti
tormoreelasti
cthanthat
ofamonopol y?(2)
 Thedemandc urveofamonopolis
ticcompeti
tori
smor eel
ast
icduet oproduct
dif
ferentiat
ion,which
offer
sc onsumersar angeofsubst
itut
esandalter
nati
ves.
 Thisvarietyofoptionsmakesconsumersmoreresponsi
vetopric
ec hangesas
theyc aneas i
l
ys witc
h

103|
Page
 betweens i
mi l
arproduct
s.
 I
nc ontrast
,amonopol yfaceslessel
asti
cdemandsincei
tlac
kscl
ose
substi
tutes,gi
vingthemonopol i
st
morec ontroloverpri
cewit
houtani mmediatet
hreatofc
onsumerdefec
tion.
✓✓
(Acceptanyot hercor
rectr
elevantrespons
e)

ACTI
VITY7
7.
1Studythegr
aphbel
owandans
wert
heques
tions
.

7.1.
1 I
denti
fythepri
cec
har
gedbythemonopol
is
tonthegraph.
(
1)
R70✓
7.1.
2 NameanyONEexampleofabusi
nes
sthatoper
ateundermonopol
i
sti
c
competi
ti
on.(
1)
KFC/Nando’s
/Hungr
y/Li
on✓

7.1.
3 Des cr
ibetheterm mar ginalrevenue.
(2)
Mar gi
nalrevenueist heextrar evenuegainedbys el
li
ngonemor euni
tofa
produc tor
servic
e;itcanvarywi thmar kets t
ructur
e,inf
luenc
ingprofi
t-maxi
mizi
ng
dec i
si
onsby
equat i
ngitwithmar ginalcost.✓✓
(Acceptanyot hercor r
ectrelevantresponse.
)
7.1.
4 Howdoest hemar ginalrevenuec ur
veofmonopol is
ticc
ompetit
iondi
fferf
rom

104|
Page
 thatofaper fect
compet iti
on? (2)
 Firmsi nt hemonopol isticmar kethaves omec ontrolovert heirpr i
ces ,theymus t
l
owerpr ices
tos elladdi tionaluni t
s,c ausingmar gi nalr evenuet of allfast
ert hanaver age
revenue.✓✓
 I
nper fec tc ompet i
tion,wher epr oduc tsar ehomogeneousandf irmsar epr i
ce
taker s,themar ginalrevenuec urvec oinc i
deswi t
ht hehor i
zontalaver age
revenuec urve.✓✓
(Acc eptanyot herc orrectrelevantr es pons e.)
7.
1.5 Whyper fec tmar ketismor eef fici
entc ompar edt omonopol ist
icmar ket?
(4)
 Aper fectmar keti sknownf ori tshigheref f
ici
enc yasi tchargesl owpr icesand
offerabundantquant i
ties
duet othepr esenc eofnumer ousbuyer sands el
lers .✓✓
 I
nc ont r
as t,monopol i
sticc ompet i
ti
onof tenof fersli
mi tedquant iti
esathi gher
pricesduet opr oduc t
diff
er entiationandf irms 'mar ketpower .✓✓
 Theper fec tmar ket'scompet itivefor cesdr i
vepr icesdownt ot heirmar ginalcos
ts,
maxi mi zi
ngc ons umer
wel faret hroughgr eateraf fordabi l
ityandavai l
abi l
ity.✓✓
 I
nmonopol i
sticc ompet i
tion,t hetrade- of fbetweenpr oduc tdifferent i
ationand
higherpr icesc anr es ultinles sef f
ici
entr es ourceal l
oc at i
onandr educ ed
cons umerbenef its
.✓✓
(Acc eptanyot herc orrectrelevantr es pons e.)

ACTI
VITY8
8.
1Compar eandc ont
ras
tindet
ail
,wi
thoutgr
aphs
,monopol
i
sti
ccompet
it
ion,and
monopolymarket
s
tructur
es.
(8)

105|
Page
(Acceptanyot herc orrectrelevantr espons e.)
8.
2 Compar ethemar kets t
ruc t
ureofamonopol i
sti
cc ompet i
tortothatofaper f
ec t
market. (8)
 I ntheper f
ec tcompet it
ionmar ket,eac hf i
rms el
lsahomogenouspr oduct(or
perfects ubstitute),wher eas,inmonopol ist
iccompet i
ti
on,eachfirm wil
lhavea
sli
ght l
ydi f
ferentout putfrom t heot her .✓✓
 S incepr oduc tsar es l
ightl
ydi f
f erentf rom eachot herinthemonopol i
sti
cmar ket
,
non–pr icec ompet i
ti
on,l i
keadver tis
ingandpr omot ion,exis
tsinthemonopol ist
ic
mar kettoi nform buyer saboutt hequal i
tyofthepr oduc t
.✓✓
 S incet hepr oduc tsar esli
ght l
ydi fferenti nthemonopol i
sti
cmar ket,pr
ici
ngpower
existsquicklyunt i
lnewpl ayersent ert hemar kett oexploitthepric
ingpower .✓✓
 I naper f
ectmar ket,mar ginalrevenueal i
gnswi thprice,demand,andaver age
revenue,al lofwhi chare

106|
Page
 equalduet otheabs enceofmarketpower .However,i
nmonopol i
sti
cc ompetit
ion,
marginalrevenueistypic
all
ylowerthanprice,demand,andaverager evenuedue
tothedownwar d-
slopingdemandc urveresult
ingf
rom produc
tdifferenti
ati
on.It
canbei l
lustr
atedgraphical
l
yasfoll
ows .✓✓

 I
nmonopol ist
icc ompet i
ti
on,anyf i
rmc anhavepr ici
ngpowerf orverylitt
letime
asanys ignalofs upernormal
profitwoul dat tractotherf irmstoent erthemar ket.✓✓
 Therefor e,ifaf ir
mi nthemonopol i
sticmar ketwant stos el
lmoreofi t
spr oduct,
thatf i
rm wi llhavet odec rease
thepr ice.Henc e,theaver ager evenuewi l
ldecreasewi t
ht hequanti
tys old.✓✓
 Also,asweal lknow,t hedemandc ur veisdownwar dslopingfr
om lefttor i
ght,s
o
thefirm wi llhavet o
 dec r
eas et hepr oduc t’
spr icetos el
lanaddi t
ional.Thatiswhymar ginalrevenueis
divergingwi derandl ower
 thant hemonopol i
sti
cmar ket’
saver ager evenue.
(Acceptanyot herc orrectr el
evantres ponse.)

OLI
GOPOLY
ACTI
VITY1
1.
1.1 Opt
ionsar
epr
ovi
dedaspos
sibl
eans
wer
stot
hef
oll
owi
ngques
tions
.Choos
e
t
heans
werandwr
it
eonl
ythel
ett
er(
A–D)nextt
otheques
tionnumber
.
1.
1.1 Thedemandc
urveofanol
i
gopol
yis…
A hor
izont
al.
B ver
ti
cal
.
C ki
nked .
D upwar
dsl
opi
ng.
1.
1.2 Amonopol
i
stwi
l
lget… i
nthel
ongt
erm.
A.nor
mall
oss
B.ec
onomi
clos
s
C.nor
malpr
ofi
t

107|
Page
 D.ec
onomi
cpr
ofi
t
1.
1.3 Pr
oduc
tdi
ff
erent
iat
ionand.
.
.pl
ayani
mpor
tantr
olei
nnon-
pri
cec
ompet
it
ion
A.pr
ice
B.adver
ti
si
ng
C.gover
nmentpol
i
cy
D.mut
uali
nter
dependenc
y
1.
1.4 Ani
ndus
trywi
thonl
ytwopr
oduc
ersc
ont
rol
l
ingt
hemar
keti
sknownasa/
an
…
A duopol
y
B monopol
y.
C ol
i
gopol
y.
D pur
eol
i
gopol
y.
1.
1.5 Fi
rmsunderol
i
gopol
ycanus
emet
hodss
uchas… t
oinc
reas
ethei
rmar
ket
s
har
e
Ai
ncr
eas
ethepr
ice
B dec
reas
ethepr
ice
C di
scount
s
D non-
pri
cec
ompet
it
ion
1.
1.6 Thi
sisanexampl
eofanol
i
gopol
ymar
keti
nSout
hAf
ri
ca…….
A. Es
kom
B. J
ohannes
bur
gSec
uri
ti
esExc
hange
C. Cel
lphonei
ndus
try
D. Fl
owermar
ket
1.
1.7 Thenat
ureoft
hepr
oduc
ttr
adedi
napur
eol
i
gopol
yis……
A. di
ff
erent
iat
ed.
B. homogenous
.
C. het
erogeneous
D. Uni
que (
7X2)
14

108|
Page
1.
2 Choos
eades
cri
pti
onf
rom COLUMNBt
hatmat
chest
hei
tem i
nCOLUMNA.
Wr
it
eonl
ythel
ett
er(
A-I
)nextt
otheques
tionnumber(
1.2.
1–1.
2.8)i
nthe
ANSWERBOOK.
COLUMNA COLUMNB
1.
2.1Pr
ice A Pr
oduc
tst
hatdi
ff
er,i
.
e.,nots
imi
l
ar B
l
eader
shi
p B Anexampl
eoft
aci
tcol
l
usi
oni
nanol
i
gopol
y F
1.
2.2Car
tel mar
ketaboutpr
ici
ng E
1.
2.3Expl
i
citc
ost
s C Theaddi
ti
onalc
ostwhenpr
oduc
inganext
rauni
t A
1.
2.4 D Dur
ati
onwher
eatl
eas
tonef
act
orofpr
oduc
tioni
s G
Het
erogeneous f
ixed C
1.
2.5Col
l
usi
on E Ac
tualexpendi
tur
eofabus
ines
s,f
orexampl
e D
1.
2.6Mar
ginal wagesandI
nter
est I
c
ost
s F Anor
gani
sat
ionofbus
ines
sesi
nanol
i
gopol
ythat
1.
2.7Shor
trun oper
atesl
i
keamonopol
y
1.
2.8Duopol
y G Anar
rangementbet
weenbus
ines
seswi
tht
heai
m
ofl
i
mit
ingc
ompet
it
ionamongs
tthem
H Dur
ati
onwher
eal
lfac
tor
sofpr
oduc
tionc
an
c
hange
IOc
cur
swhent
hemar
keti
sdomi
nat
edbyt
wof
ir
ms
(
8x1)8

1.
3. Pr
ovi
det
heec
onomi
cter
m/c
onc
eptf
oreac
hoft
hef
oll
owi
ngdes
cri
pti
ons
.
Wr
it
eonl
ythe
t
erm/
conc
eptnextt
otheques
tionnumber
.Noabbr
evi
ati
ons
,ac
ronymsand
exampl
eswi
l
lbeac
cept
ed.
1.
3.1 Ani
ndus
tryt
hati
sdomi
nat
edorc
ont
rol
l
edbyt
wopr
oduc
ers
Duopol
y
1.
3.2 Pr
oductst
hatar
enott
hes
amei
nappear
anc
e,s
ize,andqual
i
ty
Dif
fer
ent
iated
1.
3.3 Theaddi
tionalr
evenueear
nedwhens
alesi
ncr
eas
ebyonemor
euni
t
Mar
ginalr
evenue

109|
Page
1.
3.4 Amar
kets
truc
tur
ethati
sdomi
nat
edbyf
ewl
argef
ir
ms
Ol
i
gopol
y
1.
3.5 As
ituat
ionwher
eonef
ir
mfi
xesapr
iceandot
herf
ir
msac
cepti
tast
hemar
ket
pr
ice
Pr
icel
eader
shi
p
1.
3.6 Theper
iodoft
imewher
eal
lfac
tor
sofpr
oduc
tionar
evar
iabl
e
Long-
run (
6x1)6

ACTI
VITY2
2.
1 Ans
wert
hef
oll
owi
ngques
tions
.
2.
1.1Namet
woexampl
esofol
i
gopol
yindus
tri
es
(
2)
Pur
eol
i
gopol
y
Di
ff
erent
iat
edol
i
gopol
y
2.
1.2 Whyt
her
ear
efewbus
ines
sesi
nol
i
gopol
yindus
try?
(
2)
Ther
ear
efewol
i
gopol
ybus
ines
sesbec
aus
eofbar
ri
ersofent
ryl
i
ke
pat
ent
sthatgi
vean
exc
lus
iver
ightt
ofewpr
oduc
ers
(
Acc
eptanyot
herc
orr
ectr
elevantr
espons
e.)
2.
2.St
udyt
hepi
ctur
ebel
owandans
wert
hatques
tionst
hatf
oll
ow

110|
Page
 Sour
ce:
googl
epi
ctur
es

2.
2.1I
dent
if
ythemar
kets
truc
tur
eabove.
(
1)
Ol
i
gopol
y
2.
2.2 Whatt
ypeofc
oll
usi
oni
srepr
esent
edbyt
hepi
ctur
eabove?
(
1)
Car
tel
2.
2.3Br
ief
lydes
cri
bet
het
ermc
art
el.
(
2)
Car
telr
efert
oagr
oupofs
imi
l
arc
ompani
eswhoagr
eeonpr
icesbet
ween
t
hem i
nor
dert
oinc
reas
epr
ofi
tsandl
i
mitc
ompet
it
ion
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
2.
2.4Whyol
i
gopol
i
esc
oll
ude?
(
2)
Ol
i
gopol
i
esc
oll
udei
nor
dert
oli
mitc
ompl
eti
onamongs
tthems
elves
Ol
i
gopol
i
esc
oll
udei
nor
dert
oinc
reas
ethei
rpr
ofi
ts
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)

111|
Page
 2.
2.5Howc
anc
ompet
it
ionc
ommi
ssi
onf
ightc
oll
usi
on?
(
4)
 Compet
it
ionc
ommi
ssi
onc
anf
ightc
oll
usi
vebehavi
ourbymakes
uret
hat
t
hei
nves
tigat
e
al
lthec
oll
usi
vebehavi
ourt
hatmaybedonebybus
ines
ses
 Theyneedt
omakes
uret
hatal
lthos
efi
rmst
hatar
efoundc
oll
udi
ngpaya
hugef
inet
hatwi
l
l
di
scour
ageot
herf
ir
msf
rom doi
ngt
hes
ame
 Ci
rcul
atet
hei
nfor
mat
iont
obus
ines
sest
omaket
hem awar
eofwhatwoul
d
happent
othos
ewhoar
ecol
l
udi
ng
 Cur
btheec
onomi
cpowert
obi
gcongl
omer
atest
oar
ri
veatamor
e
equi
tabl
edi
str
ibut
ionofi
ncomeandweal
th
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)

ACTI
VITY3
3.1 Studyt
heextr
actbelowandans
wertheques
tionst
hatf
oll
ow.
SACOMPETI
TIONCOMMI SSI
ONPROSECUTESBANKSFORCOLLUSI ON

TheCompet itionCommi ssionofSout hAf ri

cahasr eferr
edac as eofc ollusiont o
theTr i
bunalf orpr osecuti
onagai nstBankofAmer i
ca,Mer l
i
nLync hInter national,
LimitedInvestLt d,St andardBankofSout hAf r
icaLimi t
ed,ABSABankLi mi t
ed
andBar c l
aysBank.Thec ommi ssi
onhasbeeni nves t
igati
ngac aseofpr ic efixi
ng
andmar ketallocationinthet r
adi ngoff orei
gnc urr
enc ypair
si nvol
vingt heRand
sinceApr i
l2015.I thasnowr eferredthec asetot heTr i
bunalforpr osecut ion.
Thec ompet it
ioni ss eeki
nganor derfr
om t heTribunaldec l
ari
ngt hatt he
respondent shavec ontravenedt heAc t.Furt
hert heCommi ssioniss eeki ngan
orderdec lar
ingt hes ebanksmus tbeliableforpaymentofadmi nis
t r
ativepenal t
y
equalto10%oft hei rannualturnover.
[Sour
c e:www. googl e.
com.Ac cessedon12
February2023. ]

3.
1.1 NameanyONEt ypeofcoll
usi
on. (
1)
Overtcol
lus
ion
Taci
tcoll
usi
on
3.
1.2 Whichcompetit
ioni
nsti
tuti
onisnotment
ionedi
ntheaboveext
rac
t?
(1)
Competit
ionAppealCourt

112|
Page
3.
1.3 Des cri
bet hec onceptc oll
usion.
(2)
Collusioni sanagr eementbet weenbus inesseswiththeaim oflimi
ti
ng
compet iti
onbet weent hem
byf i
xingpr ic
es .
(Acc eptanyot herc orrec trelevantrespons e.
)
3.
1.4 Explainnon- pr i
cec ompet i
tioninanol igopolymarket.
(2)
Oli
gopol iesprefert oc ompet ebas edonpr oductdiff
erenti
ationandef f
icient
servicebec ausepr ice
compet iti
onc anr esultinpr icewar s.
(Acceptanyot hercorrectr elevantr esponse.)
3.
1.5 Whywoul dbanksof tenc olludeal t
houghi tisi
ll
egalinSouthAf ri
ca?
(4)
 Collusionbet weenbanksoc curbec auseitisaneffortt
or educeunc er
tainty,
thati s,theyagr eeon
thepr icest heyar egoi ngt odemandandt hequant i
ti
estheyar egoingto
produc e
 Theyc anenj oyt headvant ageofl i
miti
ngc ompet i
ti
onandmaki ngitdi
ffi
c ult
forot herbus i
nessest o
entert hemar ket
 Collusionbet weenbanksoc curbec ausetheywantt olimi
ts upplytorais
e
pricesandmaxi mi sepr ofit
s
(Acc eptanyot herc orrec trelevantrespons e)

ACTI
VITY4
4.
1.1 NameTWOt
ypesofc
oll
usi
on`
(
2)
Car
tel
Pr
icel
eader
shi
p
4.
1.2 Whyc
oll
usi
onexi
sti
nol
i
gopol
y?
(
2)
 Col
l
usi
onexi
stbec
aus
eexi
sti
ngf
ir
msi
nthei
ndus
tryar
etr
yingt
omaxi
mis
e
t
hei
rrevenueandapr
ofi
t
 Fi
rmsar
etr
yingt
oli
mitt
hec
ompet
it
ionamongs
tthems
elvesi
nor
dert
ohave
amar
ketpowerordomi
nanc
e
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
113|
Page
4.
2.St
udyt
hepi
ctur
ebel
owandans
wert
heques
tionst
hatf
oll
ow.

Sour
ce:googl
e.c
om

4.
2.1 I
dent
if
yonec
har
act
eri
sti
cthati
snotf
orol
i
gopol
y
(
1)
Adver
ti
si
ng
4.
2.2 Namet
hec
har
act
eri
sti
cthatr
epr
esentt
hemut
ualdependenc
y.
(
1)
I
nter
dependenc
e
4.
2.3 Br
iefdes
cri
bet
het
erm pur
eol
i
gopol
y.
(
2)
Pur
eol
i
gopol
yref
ert
oanol
i
gopol
ythats
ellhomogenouspr
oduc
t
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
4.
2.4 Whyol
i
gopol
i
esar
epr
efer
redasamar
kets
truc
tur
e?
(
2)
 I
tmaybet
hatt
heymakes
uper
nor
malpr
ofi
tint
hel
ongr
unduet
othei
r
mar
ketpowerandabi
l
ityt
oinf
luenc
ethepr
icet
osomeext
ent
 Ol
i
gopol
i
sti
cfi
rms
,whi
l
efewi
nnumber
,of
tenhavet
her
esour
cesands
cal
eto
ac
hieveec
onomi
esofs
cal
e,whi
chc
anl
eadt
olowerpr
oduc
tionc
ost
sand

114|
Page
 bet
teref
fi
ci
enc
y
 Todi
ff
erent
iat
ethems
elves
,fi
rmsi
nol
i
gopol
ymayf
ocusonpr
oduc
inghi
gher
qual
i
typr
oduc
tsorpr
ovi
dingbet
ters
ervi
cest
oat
trac
tcus
tomer
s
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
4.
2.5 Howar
eot
herf
ir
msbl
ockedi
njoi
ningol
i
gopol
yindus
try?
(
4)
 Exi
sti
ngf
ir
msmi
ghtc
oll
udet
ocol
l
ect
ivel
ydet
ernewent
rant
sbys
ignal
l
ing
t
hei
rwi
l
li
ngnes
stoaggr
ess
ivel
ycompet
eorengagei
npr
icewar
s
 Regul
ator
yrequi
rement
s,l
i
cens
esandper
mit
scanmakei
tdi
ff
icul
tfornew
ent
rant
stonavi
gat
elegalhur
dlesandc
ompl
ywi
thi
ndus
try-
spec
ifi
c
r
egul
ati
ons

 Exi
sti
ngf
ir
msmi
ghthaveac
hievedec
onomi
esofs
cal
e,al
l
owi
ngt
hem t
o
pr
oduc
eatl
owerc
ost
sduet
ohi
ghpr
oduc
tionvol
umes
,newent
ranc
ewoul
d
s
truggl
etoc
ompet
ewi
tht
hes
ecos
tadvant
ages
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)

ACTI
VITY5
5.
1 Ans
wert
heFol
l
owi
ngques
tions
.
5.
1.1 NameanyTWOnon-
pri
cec
ompet
it
ions
trat
egi
esus
edbyol
i
gopol
i
es.
(
2)
Aggr
ess
iveadver
ti
si
ng
Br
andi
ng
Pr
oduc
tdi
ff
erent
iat
ion
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
5.
1.2 Whyi
sol
i
gopol
yregar
dedasbei
ngi
nef
fi
ci
entmar
kets
truc
tur
e?
(
2)
I
tchar
gesapr
icet
hati
sabovet
hemar
ginalc
ost
Fi
rmsunderol
i
gopol
ysuppl
ylowerquant
it
iesathi
gherpr
ices
(
Acc
eptanyc
orr
ectr
elevantr
espons
e)
5.
2 St
udyt
hepi
ctur
ebel
owandans
wert
heques
tionst
hatf
oll
ow.

115|
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 Sour
ce:
googl
ecar
toons

5.
2.1 I
dent
if
ythemar
kets
truc
tur
ethati
sdepi
ctedbyt
heabovec
art
oon.
(
1)
Ol
i
gopol
y
5.
2.2 Namet
hei
ndus
tryr
epr
esent
edbyt
heabovec
art
oon
(
1)
Pet
rol/Fuel
/Oi
li
ndus
try
5.
2.3 Br
ief
lydes
cri
bet
het
erm duopol
y
(
2)
Oc
cur
swhent
hemar
keti
sdomi
nat
edbyt
wof
ir
ms
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
5.
2.4 Whyol
i
gopol
i
es makeec
onomi
cpr
ofi
tint
hel
ongr
un.
(
2)
 Hi
ghbar
ri
erst
oent
ryl
i
mit
sot
herf
ir
mst
oent
erandc
ompet
ewi
thexi
sti
ng
f
ir
ms
 Exi
stenc
eofc
oll
usi
onmakesi
thar
dforot
herf
ir
mst
ocompet
ewi
thexi
sti
ng
f
ir
ms
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
5.
2.5 Howdoesc
oll
usi
onbyol
i
gopol
i
esaf
fec
tcons
umer
s?
(
4)

116|
Page
  Col
l
usi
onr
educ
esc
ons
umerwel
far
eands
oci
alef
fi
ci
enc
ybyc
reat
inga
monopol
yout
come
 Col
l
usi
onl
eadst
ohi
gherpr
icesf
orc
ons
umer
swhi
chaf
fec
tthes
tandar
dof
l
i
vingnegat
ivel
y
 Col
l
usi
ondi
scour
agesot
herf
ir
mst
oent
ert
hemar
ketandc
ons
umer
schoi
ces
bec
omesl
i
mit
ed
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)

ACTI
VITY6
6.
1 Ans
wert
hef
oll
owi
ngques
tions
6.
1.1 NameanyTWOi
ndus
tri
esf
oundi
nanol
i
gopol
y
(
2)
Cementi
ndus
try
Banki
ngi
ndus
try
Cel
l
phonei
ndus
try
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
6.
1.2 Whyf
ir
msunderol
i
gopol
yar
esai
dtobei
nter
-dependent
?
(
2)
Eac
hsel
l
eri
sinf
luenc
edbyt
heac
tionsoft
heot
hers
ell
ers
Eac
hsel
l
erwat
chesc
los
elyatt
heac
tionsofot
hers
ell
ersandmakeadec
isi
on

(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
6.
2 St
udyt
heext
rac
tbel
owandans
wert
heques
tionst
hatf
oll
ow.

117|
Page
6.
2.1 I
dent
if
ythei
nst
it
uti
ondi
scus
sedi
ntheaboveext
rac
t
(
1)
 Compet
it
ionc
ommi
ssi
on
 Compet
it
iont
ri
bunal
6.
2.2 Namet
het
ermt
hatr
epr
esentunf
airpr
act
icet
hatl
i
mit
scompet
it
ion
(
1)
 Col
l
usi
on
6.
2.3 Br
ief
lydes
cri
bet
het
erm ec
onomi
cpr
ofi
t
(
2)
 Ec
onomi
cpr
ofi
t–I
sther
evenuet
hati
sabovet
henor
malpr
ofi
twher
ethe
aver
ager
evenuei
sgr
eat
ert
hant
heaver
agec
ost
(
Acc
eptanyr
elevantr
espons
e)
6.
2.4 Whyi
tisnoti
dealf
oranol
i
gopol
ytoi
ncr
eas
ethepr
iceoft
hepr
oduc
t?
(
2)
 Ther
eisi
nter
dependenc
yinanol
i
gopol
yifaf
ir
minc
reas
ethepr
iceot
her
swi
l
l
notf
oll
ow
 Whent
hef
ir
minc
reas
est
hepr
icei
twi
l
llos
ecus
tomer
sandpr
ofi
twi
l
l
dec
reas
e
Ac
ceptanyr
elevantr
espons
e

118|
Page
  Whent
hef
ir
m dec
reas
est
hepr
iceoft
hepr
oduc
tot
her
swi
l
lfol
l
owandt
hat
wi
l
lcaus
epr
icewar
s
 Whenaf
ir
m dec
reas
est
hepr
icei
twi
l
lhavel
i
ttl
etogai
nsi
nceot
her
swi
l
ldo
t
hes
ame
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
6.
2.5 Howdoesexi
stenc
eofc
oll
usi
oni
nfl
uenc
ethes
uppl
yofgoodsands
ervi
ces
?
(
4)
 Col
l
usi
onl
i
mit
sthec
ompet
it
ions
inc
eitc
reat
eabar
ri
ert
oent
ryi
ntot
he
mar
ket
 Si
ncef
ewf
ir
msdomi
nat
est
hemar
kett
hiswi
l
lcaus
eles
sgoodsands
ervi
ces
t
obes
uppl
i
ed
 Goodands
ervi
cesmaybes
uppl
i
edatar
elat
ivel
yhi
gherpr
iceasf
ir
mswi
l
l
expl
oitc
ons
umer
sduet
othei
rcol
l
ect
iveagr
eement

(
Acc
eptanyc
orr
ectr
elevantr
espons
es)

ACTI
VITY7
7.
1 Ans
wert
hef
oll
owi
ngques
tions
:
7.
1.1Namet
woc
ount
ri
esi
nvol
vedi
nOPEC
(
2)
Li
bya/
Uni
tedAr
abEmi
rat
es/
Alger
ia/
Niger
ia/
Venez
uel
a/
Republ
i
cof
Congo
7.
1.2Whyf
ir
msc
oll
udet
aci
tl
y? (
2)
Theyc
oll
udet
aci
tl
ybec
aus
eiti
sil
l
egalt
ocol
l
udei
nSout
hAf
ri
caandi
fthey
ar
efoundc
oll
udi
ng,t
heywi
l
lbec
har
gedaf
ine
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
7.
2St
udyt
hec
art
oonbel
owandans
wert
heques
tionst
hatf
oll
ow.

119|
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 Sour
ce:
googl
e.c
om

7.
2.1I
dent
if
ythec
ount
ryt
hati
sbeggi
ngf
oroi
li
ntheabovec
art
oon
(
1)
Amer
ica
7.
2.2Whi
chor
gani
sat
ionc
ont
rol
sthepr
iceofoi
l
?
(
1)
OPEC
7.
2.3 Br
ief
lydes
cri
bet
het
ermt
aci
tcol
l
usi
on
(
2)
Tac
itc
oll
usi
onr
efer
stoonef
ir
msett
hepr
icet
hatot
herf
ir
mswi
l
lfol
l
ow
wi
thoutanyexpl
i
cit
agr
eement

(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
7.
2.4 Expl
aint
hei
mpac
tofc
oll
usi
ononc
ount
ri
espr
oduc
ingoi
l
(
2)
Thepr
iceofoi
lwi
l
linc
reas
egl
obal
l
y
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
7.
2.5 Howdoesadec
reas
eindemandofoi
laf
fec
tOPECc
ount
ri
es?
(
4)
 OPECc
ount
ri
esmayexpor
tles
soi
l

120|
Page
  Thes
ecount
ri
esmaybef
orc
edt
odec
reas
ethepr
iceofoi
l

 Theywi
l
lsuppl
yles
squant
it
yofoi
landgl
obalec
onomymaydec
reas
e
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)

ACTI
VITY8
8.
1 Di
scus
stheai
msofc
ompet
it
ionc
ommi
ssi
on.
(
8)
 As
sis
tini
nves
tigat
ingandpr
osec
uti
ngunf
airc
ompet
it
iont
hrought
he
c
ompet
it
ionc
ommi
ssi
on
 Regul
atemer
ger
sandt
akeovert
oregul
atemar
ketpowerofmer
ger
ssuc
has
Mas
smar
tandWal
mar
twher
econdi
ti
onswer
eimpos
edt
opr
eventpos
sibl
e
unempl
oymentt
hatmayr
esul
t
 I
mpl
ementt
hec
ompet
it
iont
ri
bunalbyac
cept
ingorr
ejec
tingt
hei
nves
tigat
ion
andr
ecommendat
ionoft
hec
ompet
it
ionc
ommi
ssi
on
 Theor
igi
nalc
ompet
it
ionpol
i
cydi
dnotac
countt
hei
mpac
tofmer
ger
sand
ac
qui
si
ti
onsofSMMEsi
nter
msoff
airpr
ici
ng 
 Theyai
mtoi
dent
if
yandaddr
esspr
act
icesl
i
kec
oll
usi
on,pr
icef
ixi
ngandot
her
ant
i-c
ompet
it
iveagr
eementamongbus
ines
ses
 Compet
it
ionc
ommi
ssi
ons
tri
vet
opr
otec
tcons
umer
sfr
om unf
airpr
ici
ngand
poor
-qual
i
typr
oduc
ts
 Byf
ost
eri
ngc
ompet
it
ion,t
heyenc
our
agec
ompani
est
oinnovat
einor
dert
o
s
tayahead,whi
chbenef
it
scons
umer
sthr
oughi
mpr
ovedpr
oduc
tsand
s
ervi
ces
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
8.
2 Di
scus
smut
ualdependenc
yandc
ompet
it
ionasc
har
act
eri
sti
csofol
i
gopol
y.
(
8)
Mut
ualdependency
 I
tref
erst
otheac
tionsofonef
ir
mint
heol
i
gopol
ythatc
onc
ernsot
herf
ir
ms
ac
tion
 Fi
rmst
hatar
emut
ualdependentt
rybyal
lmeanst
ocompet
ewi
thl
owpr
ices

121|
Page
 
 Theyal
wayst
ryt
osat
isf
ythei
rcus
tomer
sus
ingdi
ff
erents
trat
egi
es
Compet
it
ion
 Ol
i
gopol
ycons
istofonl
yaf
ewl
argef
ir
mst
hatc
oll
ect
ivel
ycont
rolas
igni
fi
cant
por
ti
onoft
hemar
ket
 Ol
i
gopol
i
esof
tenengagei
nnon-
pri
cec
ompet
it
ions
trat
egi
ess
uchas
aggr
ess
iveadver
ti
si
ng,br
andi
ng,pr
oduc
tdi
ff
erent
iat
ionandc
ust
omers
ervi
ce

 Ol
i
gopol
i
sti
cmar
ket
stendst
ohaves
igni
fi
cantbar
ri
erst
oent
ry,whi
chc
an
l
i
mitt
heent
ryofnewc
ompet
it
ors
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
8.
3 Wi
tht
heai
dofagr
aphdi
scus
sdemandc
urveofol
i
gopol
i
es
(
8)
i
Prc

D
1mar
kforl
abel
l
edaxi
s

1 1mar
ksequi
l
ibr
ium poi
nt
8
 Ki
nkeddemandc
urvec
ons
istoft
wos
egme1ma
ntto
kpo
r ordn
f eb
ema ei
ndc
unr
vgh
e i
ghl
yel
ast
icand
bot
tom
15onebei
nghi
ghl
yinel
ast
ic E 1mar
kforaxi
s

Maxof4mar
ksf
orthe
 Ol
i
gopol
yhaveaki
nkeddemandc
urves
inc
eo therfir
ms l
o okc
los
elyatwhat
ot
her
sar
edoi
ngbef
oret
aki
ngadec
isi
ont
her
eisi
nter
dependenc
y
 Whenaf
10 i
rmi
ncr
eas
est
hepr
iceot
her
sdonotf
oll
owandt
hatbus
ines
slos
es
pr
ofi
t
D
 Whenaf
ir
m dec
reas
est
hepr
iceot
her
sfol
l
owsandt
hatc
aus
espr
icewar
s
0 2 4 5 Quant
it
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
8.
4 Us
ethegr
aphbel
owt
odi
scus
stheki
nkeddemandc
urvef
orol
i
gopol
i
es
(
8)
 Theki
nkeddemandc
urvec
ont
ainst
wos
egment
stoponebei
nghi
ghl
yel
ast
ic
andbot
tom one bei
nghi
ghl
yinel
ast
ic
 Thef
ir
m pr
oduc
esatpoi
ntEwher
ethepr
icei
sR10andquant
it
yis85t
o
maxi
miz
ethei
rrevenue

122|
Page
  Whenaf
ir
minc
reas
est
hepr
icef
rom R10t
oR15andot
herf
ir
msdonotf
oll
ow
t
hef
ir
mlos
esc
ust
omer
sandpr
ofi
tbec
aus
ever
yfewc
ons
umer
swi
l
lbuyf
rom
t
hem 
 Whent
hef
ir
m dec
reas
est
hepr
icef
rom R10t
oR8t
hequant
it
ywi
l
linc
reas
e
f
rom 85t
o90whi
l
ether
evenuedec
reas
es
 Thef
ir
m mus
tnotadj
ustt
hepr
icebec
aus
etheyl
oser
evenuewheni
ncr
eas
ing
ordec
reas
ethepr
ice
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
8.
5 Eval
uat
ethei
mpac
tofhi
ghbar
ri
erst
oent
ryi
nanol
i
gopol
i
sti
cmar
ket
.
(
8)
 Hi
ghbar
ri
erspr
eventent
ryofnewf
ir
msi
ntot
hemar
ketwhi
chwi
l
lli
mitt
he
s
uppl
yofgoods
 Hi
ghbar
ri
ersl
i
mit
sthec
ompet
it
ionc
ons
umer
senduphavi
ngl
i
mit
edc
hoi
ces

 Bar
ri
erst
oent
rybenef
it
sinc
umbentf
ir
mss
inc
eitpr
otec
tthei
rmar
kets
har
e
f
rom newent
ry
 Bar
ri
ersofent
ryhaveanegat
ivei
mpac
tont
heec
onomys
inc
eit
’si
mpede
c
ompet
it
ion
 I
thasanegat
ivei
mpac
tont
hepr
oduc
tionofgoodsands
ervi
cess
inc
eot
her
f
ir
msar
ebl
ocked.
 Bar
ri
erst
oent
ryhaveanegat
ivei
mpac
tonempl
oyments
inc
eitbec
omes
di
ff
icul
ttoc
reat
emor
ejobs
 Ther
eisl
i
mit
edc
hoi
cesf
orc
ons
umer
ssi
nceonl
yfewf
ir
msdomi
nat
est
he
mar
ket
 Thi
swi
l
lhaveanegat
ivei
mpac
tint
hegover
nmentr
evenues
inc
egover
nment
wi
l
lcol
l
ectl
owi
ncomef
rom t
axes
 Thes
tandar
dofl
i
vingi
nthec
ount
rywi
l
ldet
eri
orat
esi
ncec
ons
umer
swi
l
lpay
hi
gherpr
ices
(
Acc
eptanyot
herr
elevantr
espons
e)
8.
6 Howc
anbus
ines
sesi
ncr
eas
ethei
rmar
kets
har
ewi
thoutc
aus
ingpr
icewar
s?

123|
Page
 (
8)
 Theyc
anus
enonpr
icec
ompet
it
ions
trat
egi
est
osuc
has
:
 Adver
ti
si
ngt
hei
rpr
oduc
tsi
nor
dert
oat
trac
tmor
ecus
tomer
s
 Theyc
anal
soi
mpr
oves
ervi
cer
ender
edt
othei
rexi
sti
ngc
ust
omer
ssot
hat
t
heywi
l
lhaveagood wor
dofmout
handat
trac
tnewc
ust
omer
s
 Ext
endwor
kinghour
stoal
l
owt
hos
ewhowor
klat
etohavet
imet
obuy
 Af
ters
ales
ervi
cekeepc
ust
omer
sloyal
tyandi
ncr
eas
esal
es
(
Anyot
herr
elevantc
orr
ectans
wer
)
8.
7 Howdoesc
ompet
it
ionc
ommi
ssi
onc
ont
ri
but
epos
iti
vel
ytot
heec
onomyof
t
hec
ount
ry?(
8)
 Compet
it
ionc
ommi
ssi
onc
ont
ri
but
ebypr
event
ingmer
ger
sthatc
anc
aus
elow
pr
oduc
tion
 I
tpr
eventc
ons
umerexpl
oit
ati
ont
hatc
anl
eadt
ohi
gherpr
icesandi
nfl
ati
on

 Cr
eat
ejoboppor
tuni
ti
est
hatl
eadt
ohi
ghr
evenuef
ort
hes
tat
eduet
oVAT
andPAYE
 Mor
ebus
ines
sesmaybec
reat
edbec
aus
enoc
oll
usi
vebehavi
ouri
sdonet
hat
pr
ohi
bitot
her
stoj
oint
hei
ndus
try
 Theyens
uref
air
nes
swhenbus
ines
sest
radeofwhi
chpr
icesmaybel
owbut
wi
thahi
ghqual
i
ty
 Thes
ecommi
ssi
onsenc
our
agebus
ines
sest
ooper
ateef
fi
ci
ent
ly,i
nnovat
eand
opt
imi
zet
hei
rpr
oces
sest
ost
ayc
ompet
it
ive,t
hisl
eadst
oimpr
oved
pr
oduc
tivi
tyandr
esour
ceal
l
ocat
ionac
ros
sindus
tri
es
 Vi
brantandc
ompet
it
ivemar
ket
scont
ri
but
etoover
allec
onomi
cgr
owt
hby
s
timul
ati
ngbus
ines
sac
tivi
ty,j
obc
reat
ionandi
nves
tment
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
8.
9 Howdoesmut
ualdependenc
ybyol
i
gopol
yaf
fec
tthec
ompet
it
ion?
(
8)
 Mut
ualdependenc
eaf
fec
tthec
ompet
it
ioni
nthes
ens
ethatone’
sac
tionwi
l
l
c
aus
eot
herf
ir
mtof
oll
ow

124|
Page
 i
nor
dert
omai
ntai
ncus
tomer
s
 I
fonef
ir
mreduc
est
hepr
iceot
her
swi
l
lfol
l
owbec
aus
eift
heydonot
c
ust
omer
smays
wit
cht
ocompet
it
ors
 Ther
evenueoft
hef
ir
m mi
ghtdec
reas
eiff
ir
msr
educ
ethepr
iceunpl
anned

 Thec
ompet
it
ionmydec
reas
ebec
aus
efi
rmswi
l
lendupwor
kingt
oget
heri
n
or
dert
oavoi
dreduc
ingt
hepr
ice
 Mut
uali
nter
dependenc
yenc
our
agesf
ir
mst
ocompet
ethr
oughmeansot
her
t
hanpr
icess
uchaspr
oduc
tdi
ff
erent
iat
ion,br
andi
nget
c.
 Exi
sti
ngf
ir
msc
anc
oor
dinat
eac
tionst
odet
ernewent
rant
sandmai
ntai
nthei
r
c
oll
ect
ivemar
ketpower
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
8.
10 HowdoesOr
gani
sat
ionoft
hePet
rol
eum Expor
ti
ngCount
ri
es(
OPEC)
negat
ivel
yinf
luenc
e
s
uppl
yandpr
ice? (
8)
 Or
gani
sat
ionoft
hepet
rol
eum expor
ti
ngc
ount
ri
esc
oll
udet
oinc
reas
ethe
pr
iceandorl
owert
hequant
it
ysuppl
yofoi
l

 Ac
ount
ryt
hathasabs
olut
eadvant
agei
npr
oduc
ingoi
lwi
l
lbeunabl
eto
c
har
geal
owpr
ice,t
heywi
l
lhavet
ocompl
ywi
thOPECr
egul
ati
ons

 Count
ri
eswi
thoutoi
lmaybes
ubj
ect
edt
ohi
gherpr
icesbec
aus
etheywi
l
lnot
haveac
hoi
cet
ochoos
efr
om s
inc
eal
lcount
ri
esc
har
gess
amepr
ice
 Ri
chc
ount
ri
esmayaf
for
dmor
eoi
landendupexpl
oit
ingdevel
opi
ngc
ount
ri
es

 Pr
iceofgoodsands
ervi
cesi
nal
lcount
ri
esdependont
hepr
iceofoi
lfr
om
t
hes
ecount
ies
,ther
efor
eift
heyi
ncr
eas
ethepr
iceofoi
li
twi
l
lleadt
ohi
gh
pr
icesofgoodsands
ervi
ceal
lgener
al
 Hi
gherpr
iceofoi
lmayl
eadt
ogl
obali
nfl
ati
onandadec
reas
eins
uppl
y
(
Acc
eptanyot
herr
elevantr
espons
e)

MARKETFAILURE
ACTI
VITY1
125|
Page
1.
1.Vari
ousques ti
onsar epr ovidedaspos sibleanswer stothefoll
owingques ti
ons.
Chooset hec orrec tans werandwr i
teonl ythelet t
er(A.–D.)nexttotheques ti
on
number( 1.1.1- 1.1.5)int heans werbook,forexampl e1.1.6B.
1.
1.1 Reduc t i
oninec onomi cwel farecausedbyar educ
tioninbothc ons
umerand
pr
oducersur plus.
A.deadwei ghtl oss
B.spi l
loveref fec t
C.alloc ati
vei nef fi
ciency
D.pr oduc ti
vei nef fi
c i
enc y
1.
1.2 Pric
es etbyt hegover nmentabovemar ketpr i
cet
obenef i
tbusinessesisknown
asprice…
A.floor s
B.cei l
ing
C.war s
D.Admi nistration.
1.
1.3 Thec os torbenef i
tt othirtyparti
eswhi c harenotincludedinthemar ketpric
e
arecalled…
A.ef f
iciencies .
B.ext ernali
ties .
C.exc ludabi l
iti
es .
D.Infor mation.
1.
1.4 Socialc ostc ons istsoft hes um ofpri
vat eand….c ost
A.inter nal
B.publ ic
C.ext ernal
D.var i
abl e
1.
1.5 Theef fec tofami nimum pr icewilli
ncreas ethe….goods
A.demandf or
B.suppl y
C.cons umpt ionof
D.spendi ngon (5x2)10

1.
2 Chooseadescr
ipt
ioni
nCOLUMNBt hatmat
c hesani
tem i
nCOLUMNA.
Writ
eonlythel
ett
er(A–I)nexttothequest
ionnumber(1.2.
1–1.
2.8)i
nthe
ANSWERBOOK,f orexample1.
2.9F.
NO. COLUMNB
COLUMNA
1.
2.1 Paret
o A Spill
overef
fectofaneconomicact
ivi
tyont
hir
d C
eff
ici
enc
y part
ies

1.
2.2 Ext
ernal
i
ty B Ani
nst
rument
sus
edbyt
hegover
nmentt
o A

126|
Page
 eval
uat
epubl
i
cpr
ojec
ts

1.
2.3 Maximum C Whenitisi
mpossi
bletoinc
reasethewelf
areof G
pr
ices onepers
onwithoutdecr
easingthewel
fareof
anot
her.

1.
2.4 Fr
eer
ider
s D Theseareunders
uppli
edbyt
hemar
ketbut F
benefi
ci
altothesoc
iet
y.

1.
2.5 Subs
idy E Pai
dbyc ons
umer
swhenbuyi
nggoodsand H
ser
vic
es.

1.
2.6 Mer
itgoods F Enj
oyt
hepr
oduc
twi
thoutpayi
ngf
ori
t D

1.
2.7 Feas
ibi
l
ity G Governmentint
ervenestomakegoodsmore J

st
udy af
fordabl
e
pr
ice
1.
2.8 Cost
-benef
it H Aform off
inanci
algrantt
osuppor
taneconomi
c B
anal
ysi
s act
ivi
ty.

J Eval
uati
ngdegr
eeofdif
fi
cul
ti
esofapr
ivat
e
proj
ectbef
orei
tst
art
s.

(
8x2)
8
1.
3 GiveONEt er
mf oreac
hofthefol
lowi
ngdes cri
pti
ons
.Wr it
eonl
ythet
erm
nexttothequesti
onnumber(1.
3.1–1.3.
8)intheANSWERBOOK.
Abbrevi
ati
ons,acr
onymsandexampleswillnotbeaccept
ed.

1.
3.1 Thirdpar tyeffect
s,suchasthec os tofpoll
uti
on,thatisnotincl
udedi nthe
marketprice.
Negat iveext ernali
ty
1.
3.2 Reduc ingi ncomei nequal
it
yus i
ngpr ogressi
vetaxs yst
em.
Redis t
ribut i
onofi ncome
1.
3.3 Themar ketinwhi chthei
ll
egalgoodsar eboughtands old.
Blackmar ket
1.
3.4 Theval ueoft henextbestalternativegivenup.
Oppor tuni tycost
1.
3.5 Ac ombi nedc ostofgoodsands ervicestoproducers,consumer
s ,andsoci
ety
asawhol e.
Soc i
alc ost
1.
3.6 Goodst hatar eseent obesoc i
allyhar mful
.
Demer i
tgoods 
1.
3.7 Thel owes thourlywagethatanempl oyeri
srequiredtopayt otheir

127|
Page
employees.
Minimum wage
1.3.
8 As i
tuat
ionwherethemar
kets
uppl
i
esgoodst
hatmat
chest
heneedsoft
he
consumers.
All
ocati
veeff
ici
enc
y
(
8x1)
8

ACTI
VITY2
2.
1 St udyt
hei
nfor
mat
ionbel
owandans
wert
heques
tionst
hatf
oll
ow.

2.
1.1 I
dent if
yanydemer i
tgoodf rom t heaboveext r
act.
(1)
Drugs /Fas tfood
2.
1.2 NameONEmet hodus edbygover nmentt or educenegati
veexternal
i
ties.
(1)
Passingl aws/ taxes 
2.
1.3 Describet het erm negat i
veext er nalit
y
(2)
Negat iveext ernalit
yi sac ostt oat hir
dpar tywhichisnotinc
ludedinamar ket
pri
ceofagood/ produc t

(Acceptanyc orrectrelevantr es pons es)
2.
1.4 Explainhowdemer itgoodsc aus emar ketfai
lure
(2)
Demer i
tgoodar ehar mfultos oc iety
Thedemer itgoodsar eover s
uppl y
(Acceptanyot herc orrectrel
evantr esponse)
2.
1.5 Howdoest hegover nmentdi sc ouraget heus eofdemer i
tgood
(4)
 Gover nmentof teni mpos estaxesorexc isedutiesonthesegoods,eff
ec t
ively
rai
si
ngt heirpr i
c esand

128|
Page
 makingt hem lessatt
ractivetoc onsumer s .Thisappr oachi
sc ommonl yseen
withitemsli
ket obaccoandal cohol.
 Thegover nment smayr es t
ri
ctadver tisi
ngandmar keti
ngf
ordemer itgoodsto
reducetheirappealandc onsumpt ion,es pec i
all
yamongvul nerable
populati
ons.
 Regulati
onsandr es
tri
c t
ionsc anbei mpos edont hes al
eanddistr
ibutionof
thesegoods .Forinst
anc e,gover nment sof tenenf orceagerest
ri
ctionson
purchasingalcoholandt obac coproduc ts.
(Acceptanyot hercorrectrelevantr espons e)

ACTI
VITY3
3.
1Studythegr
aphbel
owandans
wert
heques
tiont
hatf
oll
ow.

3.
1.1 Ident if
yt hes oc i
allyef f
ici
entlevelofproducti
oninthegr aphabove.
(1)
15000
3.
1.2 Whatt ypeofext ernal i
tyisdepictedinthegraphabove?
(1)
Apos itiveext ernality
3.
1.3 Brieflydes c ri
bet het erms ocialbenefi
t.
(2)
Thisi nc l
udest het ot albenefitexperi
encedbys oci
ety.Forexample,
muni c i
pal i
tiespr ovidec l
ean
wat ert os oc i
etywhi chresult
si nfeweril
lnes
ses
(Ac ceptanyc orrectr el
evantr espons
es)
3.
1.4 Whatar et heec onomi cbenef i
tsofasafeCOVI D-19vaccineontheSout
h
Africanec onomy?( 2)
 Vac cinat edpeopl emayf eellessanxi
ous,andthismayi mprovethei
rwel
l-
beingandwor kpr oduc t
ivi
ty.

129|
Page
  Peopl ewhoar evac c
inatedar elessl
ikel
yt ogetasever ei
nfec tionresult
ingin
l
essmedi calc arec os ts

 Mor egoodsands erviceswillbeproducedbec auseofaheal t hi
er
populati
on
(Acc
eptanyc or rec trel
evantr esponses)
3.
1.5 Whywoul daf r
ees uppl yoftheCOVI D-19vac ci
nesNOTnec essari
lyleadtoa
marketfail
ure? (4)
 Gover nmenti st heonl ybuyeroft heCOVI D-19vac c
ines.
 Itredistr
ibutest hevac c i
neunders tr
ictcondit
ionstoitsci
tizens .
 Thes uppl yi
sguar anteedbec ausegovernment spr
ovidegr ant sforresearc
h,in
somei ns
tanc ess ubs idisi
ngt heproduc t
ion.
 Themar ketshor tagei ss uppli
edbygover nmentbec auseitisamer itgood.
(Acc
eptanyc or rec trel
evantr esponses)

ACTI
VITY4
4.
1Studythepi
ctur
esbel
owandans
wert
heques
tiont
hatf
oll
ow.

Sour
ce:www.
i
nves
topedi
a.c
om

4.
1.1 Whatt ypeofi neff
ici
encyi sevidentinthei l
l
us t
rat
ionsabove?
(1)
Produc t
iveineff
ici
ency
4.
1.2 Whatwi l
lhappenwhens uppl yisles
st handemand?
(1)
Mar ketdisequil
i
brium/s hort
age/ shortf
all

4.
1.3 Briefl
ydes cri
bethec onceptpr oducti
vei neff
ici
ency.
(2)
Produc t
iveineff
ici
encyiswhenabus inessdoesnotpr oduceatt
hel
owes
tcos
t.


130|
Page
 (
Ac ceptanyc orr
ec trelevantr espons es)
4.
1.4 Explaintheef fectonpr i
cei ftherear eshortagesint hemarket.
(2)
Pri
ceswi lli
ncreas eifther eisas hortageonamar ket.
(
Ac ceptanyc orr
ec trelevantr espons es)
4.
1.5 Howc ans ubsidi
esbeus edt os ol
vet hemar ketfail
ur e?
(4)
 Governmentc anus edirec tsubs i
dys uchasc ashgr antli
keint
erestfreel
oans
toas s
istduringinef fic
ienc y
 I
ndirects ubsi
dy,depr eciationorr entrebatesonbehal foft
hebus i
nes scanbe
used.
 Thebus inessc anus et hesef ormsofs ubsi
diestoinc reaset
heiroutput,t
hus
minimisi
ngt hes hor tageont hemar ket
(Acceptanyc orr
ec trelevantr espons es)

ACTI
VITY5
5.
1Studythegr
aphbel
owandans
wert
heques
tiont
hatf
oll
ow.

5.
1.1 I
dentif
yt hecurvet
hatr elat
est oall
ocati
veeff
ici
enc
y.
(1)
I
C/Indif
ferenceCur
ve
5.
1.2 Whatquant it
yofri
cewi llbes uppli
edif800unit
sofmai
zeareproduced?
(1)
0
5.
1.3 Bri
efl
ydes cri
betheterm mar ketfai
lur
e.
(2)
Occurswhent hemar ketforces(suppl
yanddemand)fai
ltoall
ocater
esourc
es
ef
fi
c i
entl
y
131|
Page
 /optimum out puthasnotbeenac hi eved.
(Acceptanyot herc orrectrelevantr espons e)
5.
1.4 Howc ant hegover nmentdi scour aget hec onsumpt i
onofdemer i
tgoods ?
(2)
 Thegover nmenti ncreasest heexc isedut ieslevi
edondemer itgoodss uc has
alcohol.
 Providesi nf
ormat i
on( educ ation)t ot hepubl icaboutt heharmf uleff
ectsof
thesepr oduc ts.
 Banningandr egul ati
ngt hec ons umpt ionofdemer i
tgoodse. g.,bottl
es t
or es
arenotal lowed
tos ellalcoholonSundays 
(Acceptanyc or r
ec trelevantr espons es)
5.
1.5 Whywi llproduc ti
onatpoi ntEber egar dedasi neff
ici
ent?
(
4)
 Fewgoodsands erviceswillbepr oduc edduet oineff
ici
entus eofresourc es.

 Duet oi neffi
ci
entus eofr esour ces ,c ostofpr oducti
onwi l
lincrease.
 Goodsands ervicesar enotpr oduc edanopt i
mum level.
 Fewj oboppor tuni ti
eswi l
lbec r
eat edr esulti
nginlowers tandardofl i
ving.
(Acceptanyot herc orrectrelevantr espons e)

ACTI
VITY6
6.
1 St udyt
heGr
aphbel
owandans
wert
heques
tiont
hatf
oll
ow.

6.
1.1 Whati
sthemaximum pri
ceint
hegraphabove?
(
1)
R70
6.
1.2 I
dent
if
ythequanti
tyofgoodswhi
chwillbes
uppli
edi
famaxi
mum pr
iceof

132|
Page
 R70i
s
i
mpl
ement
ed.
(
1)
50nit s
6.
1.3 Bri
eflydes cri
bet heterm mar ketfailure.
(2)
Marketf ail
ureoc curswhent hebes tavai l
ableoptimalpr oduct
ionhasnotbeen
achi
eved
whent her eisallocat
iveand/ orproduc t
iveineffi
ci
enc y
(Acceptanyr elevantrespons e)
6.
1.4 Whywi llthegover nmenti mplementmax i
mum pr icesonc ert
aingoods?
(2)
 Tomakegoodsmor eaffordable
 Togi vet hepoorgr eaterac c
es scertaingoodsands ervi
ces
 Tos af eguar dt heinterestoft hecons umer
(Acceptanyc orrectrel
evantr espons es)
6.
1.5 Explai nt heimpac tofmaxi mum pr icesont hemar ket.
(
4)
 Att hemaxi mum pr ic
eatR70s uppli
er swillreducethes upply50whil
e
consumer swi l
l
i
ncreas et heirdemandt o150 
 Thedemandwi l
lexceedt hes upplyby100,t hereforec r
eati
ngas hor
tageon
themar ket
(Acceptanyc orrectrel
evantr espons es)

ACTI
VITY7
7.
1 St udyt
heGr
aphbel
owandans
wert
heques
tiont
hatf
oll
ow.

133|
Page
 [
Adapt
edf
rom Googl
eimages
.com]

7.
1.1 Giveanexampl eofanegat i
veext er nality
(1)
Pollut i
on/s ubs tanc eabus e/t r
affi
cc onges ti
on
7.
1.2 Namet hes hadedar ea( A)i nt hegr aphabove.
(1)
Wel far elos s/deadwei ght/ext ernalc os t/negativeext ernality
7.
1.3 Brieflydes cri
bet het erms oc ialcost.
(2)
Soc i
alc ostist hec ostt os ociet ywhic hi ncl
udespr ivatec ostandext ernalcost/
Combi ned
cos t
sofgoodsors ervicest opr oduc ersandc onsumer sands ocietyasa
whol e
(Acc eptanyr elevantr espons e)
7.
1.4 Expl ainal ac kofi nfor mat i
ont oentrepr eneur sasac aus eofmar ketfail
ure?
(2)
 Tomakegoodsmor eaf fordabl e
 Togi vet hepoorgr eat erac ces scertaingoodsands ervices
 Tos af eguar dt hei nteres toft hec ons umer
(Acc eptanyc or r
ec trelevantr espons es)
7.
1.5 Whyi st hes oc i
allyopt imalout putmor ebenef ic
ialt os oc i
ety?
(
4)
 Att hes ociall
yopt i
malout putc ompani eswoul dpayf ort heext ernalcost
(exter nalit
y)whi ch
woul dbenef i
ts oc i
ety.
 Fi rmswoul dr educ et hepr oduc ti
ont hatwi l
ll
owert hei mpac toft henegat i
ve
exter nalityon

134|
Page
 s
oci
etywhi
chi
smorebenefi
ci
al
(
Acc
eptanyot
herc
orr
ectrel
evantres
pons
e)

ACTIVITY8
8.
1 St udyt
heext
ractbel
owandans
wertheques
tionst
hatf
oll
ow.
MINIMUM WAGEINCREASEFROM 1MARCH2023

Thenat i
onalminimum wage( NMW) ,aswellasminimum wagesinsomeother
sect
ors,willi
ncreas
ewi t
hef f
ectfrom 1Mar ch2023.
R25,42perhour
Themi ni
mum wageofR23, 19perhourwi lli
ncreasetoR25,42perhour(
an
i
ncreaseofappr oxi
mately9,6%).Thenewmi ni
mum s etsanewbaseli
neacr
ossal
l
sect
ors,withaf ewexcepti
ons.
Far
mwor kersanddomes ti
cworker s
Themi ni
mum r ateforf
arm workersanddomes ti
cwor ker
sarebothonparwit
hthe
NMW atR25, 42perhour.

Sour
ce
ht
ts:
//www.
gov.
za/
sit
e/l
abour

8.
1.1 I
dent
if
ythenewmi
nimum r
ateperhour
(
1)
R25,
42
8.
1.2 Gi
veanywor
ker
sthatwi
l
lbenef
itf
rom mi
nimum wage?
(
1)
Far
mwor
ker
s /
Domes
ticwor
ker
s
8.
1.3 Br
ief
lydes
cri
bet
het
erm mi
nimum wage.
(
2)
Thel
owes
twageper
mit
tedbygover
nmentt
obepai
dinal
li
ndus
tri
es
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
8.
1.4 Howwoul
dwor
ker
sbenef
itf
rom mi
nimum wages
?
(
2)
 Theys
har
eint
her
edi
str
ibut
ionofi
ncome.
 Theyc
anaf
for
dmor
egoodsands
ervi
ces
.
(
Acc
eptanyc
orr
ectr
elevantr
espons
es)
8.
1.5 Howsucces
sfulhast
hegovernmentbeeni
nredis
tri
but
ingweal
th?
(4)
 us i
ngpr
ogressi
vetaxbyt
axingtheri
chmorethanthepoor
.

135|
Page
  Usi
ngthelawtoenfor
ceredist
ri
but
ion,focus
ingonBEE,af
fi
rmat
iveac
tion,
l
andredi
stri
but
ionandpropert
ysubsi
dies.
(
Acceptanyrel
evantr
esponse)

ACTI
VITY9

9.
1.1 I
dent
if
yONEexampl
eofanext
ernalbenef
iti
nthet
abl
eabove.
?
(
1)
Oppor
tuni
ti
esf
ornewbus
ines
ses/
reduc
edt
rans
por
tcos
tsf
ori
ndi
vidual
s
9.
1.2 Namet
hes
ect
ori
nwhi
chac
ostbenef
itanal
ysi
sisappl
i
ed.
(
1)
Publ
i
csec
tor

9.
1.3 Br
ief
lydes
cri
bet
het
erms
oci
alc
ost
s.
(
2)
Thet
otalc
ost
sinc
urr
edbyt
hes
oci
etyasawhol
e/i
ncl
udepr
ivat
eandext
ernal
c
ost
s
(
Acc
eptanyot
herc
orr
ectr
elevantr
espons
e)
9.
1.4 Howc
anal
ackofi
nfor
mat
ionamongent
repr
eneur
sleadt
omar
ketf
ail
ure?
(
2)

136|
Page
  Ent
repr
eneur
smayl
acki
nfor
mat
ionaboutc
ost
s,avai
l
abi
l
ityandpr
oduc
tivi
ty
ofs
omef
act
orsofpr
oduc
tion,r
esul
ti
ngi
nir
rat
ionaldec
isi
onmaki
ngand
was
tageofr
esour
ces
.
(
Acc
eptanyot
herc
orr
ectr
elevantr
espons
e)
9.1.
5 Det erminewhet hertheproj
ecti
svi
abl
eornotbycalcul
ati
ngthecostbenef
it
rati
o.ShowALL
c
alculati
ons.?
(4)
 R280000/ R200000 =1, 4 ORR280000/R215000 =1, 3
 Thepr ojectisviabl
e bec auset
hebenef
it
sexceedthecosts
/theCBRis
gr
eatert han1.
(
Ac c
eptanyr el
evantres
ponse)

ACTIVI
TY10
10.
1 Br iefl
ydi s
cussproducti
veineff
ici
encyandal l
ocat
iveineff
ici
encyint
ermsof
market
fail
ure.
(8)
PRODUCTI VEINEFFICIENCY:
 Whenbus i
ness
esdonotmaxi mis
eout putsfr
om giveninputs
 Therei sroom t
or educecostswithoutproduci
ngfewergoodsorwi thout
produc i
ngal owerqualit
ygood

ALLOCATIVEI NEFFICIENCY:
 Thepr oduc tmixdoesnotr efl
ectconsumers'
tast
es
 Busi
nes sesareallocatedr esourc
esineff
ici
entl
yandproducegoodsand
ser
vicest hatconsumer sdonotwant .
 Thequant i
ti
esrequiredbyt heconsumersarenotavai
l
able
(Acc
eptanyc orrectrelevantresponses)

10.
2 Us et
hegr aphbel
owt
oexpl
aint
heef
fec
tsoft
hepos
iti
veext
ernal
i
tiesi
nthe
market
. (8)

137|
Page
  Bec aus epos i
ti
veext ernali
ti
esarenotincludedinthepr i
cewhenthemarket
produc esQuni ts
 I
fwel faregainisinc l
udedt hedemandwi l
li
ncreaseandmar ketwi
llpr
oduceat
Q1uni tsatahi gherofP1. 
 Thes hadedar ear epresentsawel f
aregain.
 Thec urveDDr epresentthedemandf r
om peoplet ousethepubli
cgoods
e.g.
,educ ati
on
 Qr epr esentswhatt hemar ketprovi
des,andQ1r epres
entagr owi
ngdemand
foreduc ati
on
(Acc eptanyc or r
ec trel
evantresponses)

ACTI
VITY11

11.
1 Eval uat
ethes ucces
sandf ai
l
uresoft
heSout
hAf
ri
cangover
nment
i
nterventiontodiscour
aget he
consumptionofdemer i
tgoods
(8)
Successes
:

 Thegover nmentus esvar

iousformsofr egul
ati
ons(l
aws)t
oprohi
bitorc
ont r
ol
theuseofundes ir
ablegoods.
 Anagel i
mi ti
slegi
slati
ontoper sonstowhom suchgoodscanbesolde.
g.,18
year
st opur c
haseal c
oholorcigarett
es
 Legi
slati
onpr ohi
bitspeopletosmokei npubli
careas

Fai
l
ures
 Abanofdemer
itgoodsus
ual
l
yres
ult
sinbl
ackmar
ket
ssuppl
yingt
he

138|
Page
 productsil
l
egall
y.
 Thewi l
ltomaximiseprofi
tsresul
tsins omesupplier
sofc
igaret
teandalc
ohol
nottoadher et
ot heagelimit.
 Manypeopl eareignori
ngt henegativepublici
tyondemeri
tgoods,l
arge
quantit
iesofdemeritgoodsar es
t i
l
lc onsumed.
(Acceptanyrel
evanthighor derconclusi
on.)

11.
2 Explainwhygovernmentssomet
imesproceedwit
hapr oj
ecteveni
fthe
pri
vat
ecosts
exceedthepr
ivatebenef
it
sinacost
-benefi
tanal
ysi
s
(8)

 thepr i
maryobj ectiveist oprovidepubl i
cgoodsands ervi
ces
.
 socialcost
sands oc i
albenef i
tsar eal
s oconsi
deredwhendec i
dingonapr
ojec
t.
 As ervic
eisvit
alt ot heexi s
tenc eofthec ommunity.
 Whenaneedf orinf rast
ructureisnec essar
ybutmi ghtnothaveanybenef
itsi
n
termsofpr of
it
,e. g.,thebui l
dingofac ommunitycentreorabr i
dge
 restruct
ureaddst ot hewel f
ar eofthec ommunityatlargeandisnon-
excludabletoanyoneus ingit.
(
Ac ceptanyot herc orrectrelevantresponse)

ACTI
VITY12

139|
Page
  Disc
ussindetai
l
,wit
houtthegraphs,c
ausesofmarketf
ail
ure
(26marks)
 Eval
uatetheuseofi
ndir
ecttaxat
iontosol
vemarketfai
l
ure
(10marks)

I
NTRODUCTI ON
Marketf ai
l
ureoccurswhenmarketfor
c esofdemandands uppl
ydonotensur
et he
corr
ec tquant
it
yofgoodsands ervi
cesarepr oducedtomeetdemandatt
heright
pri
ce.
(Acceptanyotherrelevantl
ow-
orderintroducti
on.)
(2)

Ext
ernali
ties
 Thes ear eknownass pill
-overeffectstothirdpar t
ywhi chisnotdir
ec t
lyinvolved
inthepr oduc ti
onpr ocess.
 Asext ernaliti
esinpr oduc t
ionandc ons umpt i
onof tenexistandout putisus ual
ly
basedonpr ivatec os tsandbenef it
s,thisisas i
gnifi
c antcauseofmar ketfail
ure.

Negati
veext ernali
ties
 Negat i
veext ernali
tiesar ec oststothirdpar t
iesthatar enotincl
udedi nthe
mar ketpr icee. g.pol luti
on.
 Thec os tsofnegat i
veext ernal
iti
essuc hasi l
lhealt
har enotpaidbyt hepr oducers.

 Harmf ul,thes egoodsar eof t
enoverpr oduc edint heec onomywhi chisnot
sociall
ydes i
rable.
Posi
ti
veExt ernali
ti
es
 Apos i
tiveext ernali
t yoc curswhent hereisabenef i
tt oat hi
rdpartyfrom the
acti
onordec i
si
onofanot herpar t
y.e. g.,education 
 Thes egoodsar eof tenunder -produc edbyt hemar ketandgover nments tepsin
topr ovidef orthes hor t
-fal
l.

Publicgoods /Missingmar kets

 Canonl yf orm underc er t
ainc onditi
onsandwhent hesec onditi
onsareabsent
mar ket sstrugglet oexis t
.
 Publ i
cgoodsar enotpr ovidedf orbymar ketmec hanism bec auseproducers
cannotwi thholdt hegoodsf ornon- paymentands i
ncet hereisoftennowayof
meas uringhowmuc haper sonc onsumes ,thereisnobas i
st oestabli
shamar ket
price.
 Mar ket smeas uringhowmuc haper soncons umes ,thereisnobas i
sfor
establ is
hingamar ketpr i
cef orli
ghtning,floodc ontrol,st
orm wat erdrai
nageand
l
ight hous es.
 Col lec t
ivegoods :thesear egoodsands ervicessuchaspar ks,beachesandbeac h
faci
lities,str
eets ,pavement s,roads,bri
dges ,publictranspor t
,seweragessystems,
was ter emoval s,wat erreticulati
onandr ef useremoval s.

140|
Page
 Communi tygoods :thesearegoodss uchasdef enc e,pol
ic
es er
vices,pr
ison
ser
vices
,s t
reetli
ghts:thesear
egoodsands er
vicess uchasparks,beachesand
beachfacil
it
ies,str
eets,pavements
,roads ,bri
dges ,publi
ctransport
,sewerages
syst
ems ,wasteremoval s,wat
erret
iculat
ionandr efuseremovals.

Meri
tgoodsanddemer i
tgoods :
 Mer i
tgoods :Somegoodsar ehi ghlydes ir
abl efort hegener alwelfareoft he
peopleoft hec ountryandar eoft ennothi ghlyrat edbyt hemar ket.
 Ifpeoplehavet opaymar ketpr icesf ort hem,r elativelyli
ttl
ewoul dbec ons umed.

 Demer i
tgoods :It
emss uchasc i
gar ettes,al coholandnon- prescri
ptivedr ugsar e
exampl esofdemer i
tgoods .
 Inaf r
eemar ketec onomy,t hes egoodsar eover - cons umed.
 Gover nmentc anbant heirc onsumpt i
onorr educei tbymeansoft axations uchas
excisedut i
esandbypr ovi
di nginf ormat ionaboutt heirharmfulsideef f
ec ts.
I
mperfectc ompet iti
on
 Inmar ketec onomi es,c ompet iti
oni sof teni mpai redbypower .
 Powerof t
enl i
est oagr eaterext entwi thpr oduc erst hanwi t
hc onsumer s
.
 Mos tbus i
nes sesoper at eunderc ondi t
ionsofi mper f
ec tc
ompet i
ti
ont hatal low
produc erstor estri
ctout put ,i
nc reasepr icesandpr oduc ewher epric eexc eeds
mar gi
nalc ost.

Lac
kofi nformat i
on
 Cons umer s,wor kersandent repreneursdonotal wayshavet henec es sar
y
inf
ormat ionatt heirdisposaltomaker ationaldeci
sions.
 Cons umer s:Althoughadvanc esintechnol ogyincr
eas et
heamountofi nf
ormation
towhi chpeopl ehaveac cess,theyobvi ouslydonothaveper fectinformation.
 Wor kers:Theymaybeunawar eofjoboppor tuni
ti
esoutsidetheircurrent
empl oyment .
 Entrepreneur s:Theymayl ackinformationaboutt hec ost
s,avai
labil
ityand
produc ti
vityofs omef actorsofpr oduction,andmaybeoper ati
ngont hebas i
sof
incorrectinfor
mat i
on.

I
mmobi l
ityoft hef actorsofpr oduc tion
 Mos tmar ketsdonotadj ustr api
dl ytoc hangesi ns uppl yanddemand.
 Labour :mayt aket imet omovei ntonewoc c upationsandgeogr aphical
lytomeet
thec hangesi nc ons umerdemand.
 Physicalcapi t
al:Fac torybui ldingsandi nfr
as t
ructur esuc hastelephonel i
nes,
bri
dges ,railli
nksandai r
por tsar enotmoveabl eatwi ll
.
 Thisc apit
allas tformanyyear sbutc annotbemovedt ofitchangei ndemand.
 Technol ogicalappl icati
onsc hangepr oductionmet hods :Technologyus edinthe
produc ti
onmayc hanges uchast heus eofr obotsr athert hanlabouri nmines.
 I
ttakest i
mef ormos tindus tri
est oadapt–wi t
hgr eatertechnologi c
alchanges

 Wor kersneedt obef l
exible,ups kil
ledandbeabl et oc hangeempl oyment,aswell

141|
Page
 aswor
kpat
ter
ns.

I
mperfectdistribut
ionofi nc omeandweal t
h:
 Themos ti mpor t
ants hor tcomingofmarketsyst
emsisthatiti
sneutrali
nthe
i
ssueofi ncomedi st
ri
but i
on.
 I
fthei ni
tialdist
ributi
oni sunequal,t
hefi
naldist
ri
buti
onwillbetoo.
 Forthisreas on,iti
sof tenar guedthatt
hemar ketfai
l
s.
(
Acceptanyot hercorrectr elevantr
espons
e.) (Max.26)(
26)

ADDI TI
ONALPART
I
ndirecttaxati
onistheimpos i
tionofat axongoodsandser
vic
esratherthanon
i
ncomeorpr ofi
ts(i
.
e.,di
recttaxati
on).Indi
rec
ttaxesar
eass
ociat
edwi t
hmar ket
fai
l
uret o‘int
ernal
is
et heexternali
ti
es’ofconsumpti
onorpr
oducti
on.

Positi
ve
 Theyar eusedt or ais erevenuef orgover nmentt opr ovidepubl i
candmer itgoods
andt or edistri
but einc ome.
 Gover nment susei ndirec tt axestor educ esalesofgoodst hatar eharmfuland
havec onsumpt ionext ernal it
iessuchast obaccoandal cohol,thatisdemer it
goods .
 Revenuer aisedc anbeus edt oredis t
ri
but eincomet hr
ought hewel f
arestate,or
providei nfrast
ruc ture
Negat i
ve
 Indirec ttaxesc anal s oleadt ouni ntendedc ons equenc esthatpr oducemor e
i
nef f
icientout comes ,f orexampl e,at axonc i
garettesmays eec onsumer s
switcht os mokingi l
legalandmor ehar mfulsubs t
itute
 Cons umer smayal s ot rytoavoi dat ax,whi chresultsinar i
sei nblackmar kets
thatr equir
eext rapol ici
ng 
 ( e.g.,c i
garettes muggl i
ng) .
(Acceptanyot herc orrec tr el
evantr espons e)
(10)

CONCLUSI ON
Thegovernmentistryi
ngtos af
eguardtheint
eres
tsoft
hecommuni
tyandi
mpr
ove
theeff
ici
encyinmarketsbutthereiss
til
lmoretobedone
(Acc
eptanyr el
evanthi
ghor derconcl
usi
on.
)

ACTI
VITY13

 Wit
ht heaidofgraphsdis
cussi
ndetai
lst
ateint
ervent
ionasac
ons
equenc
eof
marketfai
lureunderthef
oll
owi
ngsubheadi
ngs:
o Mi nimum wages
o Maxi mum pri
ces

142|
Page
 o Pr
oduc ers
ubsi
dy (
26mar ks
)
 Whatcanthegovernmentdot
oreduc
ethenegat
iveef
fec
tsofmi
nimum
wages
? (10marks)

I
NTRODUCTI ON
Whenanec onomyisnotfunct
ioni
ngandlivinguptoexpectat
ionsofsoc
iet
y,iti
s
i
mper at
ivef
orgovernmentst
ointer
venefort hebenef
itoft
heec onomyandthe
wel
fareofsoci
ety
(Ac
c eptanyotherc
orrec
trel
evantconc
lusion.)

BODY–MAI NPART
Whenthegover
nmentenfor
cesamini
mum wage,i
tmeansworker
sshouldbepai
da
cer
tai
nmini
mum remuner
ati
onthatwi
l
lleadt
oahigherst
andardofl
i
ving.

 Thegr aphs howst hatift hewager ateissetatW,t hecorr

espondingdemand
ands upplyoflabourwi llbeQ
 Ifami ni
mum wagei ss etW1,t hedemandf orlabourwil
ldecreasefr
om Qt o
Q1,s omepeopl emaybeunempl oyed
 However ,thes upplyofl abourwi lli
ncreasef rom Qt oQ2,asmor epeoplewi l
l
offerthei
rlabours ervicesbec auseofahi gheri nc
ome
 Mi nimum wageswi llleadt omor ebar gainingpowerofwor kers
(Acceptanyot herc orrec tr
elevantr esponse)
Maxi
mum pr i
ces
 Thegover nmentmays ett hepr i
ceofagoodors ervi
ceatamaxi mum pri
c e
thatisbelowt hemar ketpr i
ce
 Thegover nmenti ntervenesandpas sesal awt hatsuppl
ier
smaynotc harge

143|
Page
 morethanthemaximum pr i
ce
 Maxi
mum pr ic
esareusuall
yonbas i
cgoodssuc
hasf oodandt
rans
por
t,s
o
t
hatcit
izenshaveaccesstocert
aingoodsandser
vic
esandachi
eveacer
tai
n
mini
mum s t
andardofli
ving.

 I
nt heabovediagram,pri
c ei
ssetatP,whi l
emaximum pr i
ceissetat
P1
 Theimmedi at
eeffectwouldbethatthequant i
tysuppli
edwoul ddropfrom
Qt oQ1
 Thes hor
tagecausedbyt hepri
ceceil
ingcreatesaproblem ofhowt o
al
locatethegoods i
ncethedemandwi l
lexceedsupply
 Blackmarketswil
ldevel
opwher eil
l
egalgoodswi llbeboughtands old

(
Acc
eptanyot
herc
orr
ectr
elevantr
espons
e)

Pr
oduc
ersubsidi
es
 As ubsi
dyisaf
orm off
inanci
algrantf
rom t
hegover
nmenttosupportt
he
producti
onofagoodoras ervi
cether
ebylower
ingthec
ostofproduct
ion

 Subsi
diesc
anbedi
rec
te.
g.c
ashgr
ant
sori
ndi
rec
te.
g.depr
eci
ati
onwr
it
e
off
s

144|
Page
  Themar ketpr icedec r
eas esf r
om Pt oP1andt hequant i
tycons umedwi ll
i
nc reas ef r
om Q1t oQ2duet ot hes ubsidy/produc ersprofitincreases
 Thepr oduc erbenef itsfr om as ubsidy,pr ofi
tsinc r
eas ebec aus eoft heincrease
i
npr icesf rom PandP2
 Thec ons umerbenef it
sf r om as ubsidybypayi ngl ess,pricedec reas esfr
om P
toP1
(Ac
ceptanyot herc or r
ectr elevantr espons e.) max
26
ADDITI
ONALPART
 Gover nments houl dmoni torthei ncreas einpr i
c ess othatpr oduc ersdonott r
y
toinc reas epr icestoabs orbt hec os toflabour
 Strengt hent het ourisms ec torwhi chi slabouri ntens i
ve,s othatt hos ewhol os
t
theirjobsbec auseofs etmi nimum wagemaybeabs orbed
 I
nves tint rainingpr ogr ammesf ort heyout hdoi ngt echnologyf ort hem tobe
produc tiveandc reateempl oymenti nthepr oces s
 Gover nments houl dmakes ocialwel farepayment st opeopl ewhower e
retrenc hedduet os ettingofmi nimum wage
 I
nc reas edear nedI ncomeTaxCr editsmaybegi vent olow- i
nc omewage
earner s–gover nmentr efundst axt oincentivisewor k
 I
ns pec tionoft hewor ks itesonar egularbas istoens uremi nimum wagesar e
i
mpl ement edbybus i
nes sesandpuni sht hosewhovi olatethei mplement ati
on
ofthemi nimum wage

145|
Page
 (
Acceptanyotherc
or r
ectr
elevantr
esponse.
)
(
All
ocateaminimum of2mar ksf
ormereli
sti
ngoff
act
s/exampl
es.
)
(
10)

CONCLUSION
 Gover nmentshouldal
waysbeofs er
vic
et othepeoplewhenevert
heec
onomy
i
sinturmoil
,becausei
tisalwayst
hepoort hatsuf
fer
s.
(Ac
ceptanyot hercorr
ectr
elevanthi
gherorderconcl
usi
on.
) (
2)

TOPIC12:I NFLATI ON
INFLATI ON
ACTIVITY1
1.1 Opt ionsar epr ovidedaspos si
bleans werstothef oll
owingques ti
ons.Choosethe
answerandwr iteonl ythel ett
er(A–D)nextt ot heques tionnumber .
1.1.
1 Thei ndext hatmeas uresi nfl
ationus i
ngthec ostofpr oduc i
nggoodsand
servi
cesint hec ount r
y….
A. admi ni steredpr i
c es.
B. c ons umerpr i
cei ndex.
C. pr oduc erpr iceindex.✓✓
D. pr icedi s
c ri
minat i
on.
1.1.2 Thei nflati
onr ateofmor ethan50%i scall
ed…i nflati
on
A. s tagflat i
on
B. headl ine
C. hyper ✓✓
D. al l
- i
nc lusive
1.1.3 Theindi catort hatmeas uresthecos tofli
vingexc ludingmor tgagebondi s..
.
A. GDPDef lec t
or.
B. CPI X.✓✓
C. pr oduc erpr iceindex.
D. c ons umerpr i
cei ndex.
1.1.
4 Thei nf l
ationt hatoc curswhent otaldemandexc eedst ot als
upplyis
call
ed……. iflati
on
A. c os t- pus h
B. c or e
C. hyper
D. demandpul l✓✓
1.1.
5 Ther ateatwhi c hther es ervebankc hargesinteres ttoc ommer c
ialbanksis…
A. i nteres trate.
B. r epor ate.✓✓
C. pr imer at e.

146|
Page
 D. i
nfl
ati
onr
ate. (
5X2)
10

1.
2.Chooseadescr
ipt
ionfrom COLUMNBt hatmat
chestheitem i
nCOLUMNA.Wr it
e
onl
ythelet
ter(
A-I)nexttotheques
tionnumbers(1.
2.1.t
o1.2.5)i
ntheANSWER
BOOK.
COLUMNA Ans
wer
s COLUMNB
1.
2.1. Cons
tantpr
ices C✓ A. Sust
ainabl
edecl
i
nei
ngener
alpr
isesovert
he
speci
fi
cperi
od
1.
2.2. Def
lat
ion A✓ B. Steptakenbymi ni
steroff
inanc
etocont
rol
i
nflat
ionthroughtaxati
onandgover
nment
spending.
1.
2.3. Al
l-
incl
usi
ve E✓ C. Takesint
oaccounttheeff
ect
sofi
nfl
ati
onon
i
nfl
ati
on grossdomes
ticproduct
.

1.
2.4. St
agf
lat
ion F✓ D. Meas
uresus
ebySARBt
ocombati
nfl
ati
on
1.
2.5. Fi
scalpol
i
cy B✓ E. Meas
uresthei
nfl
ati
onr
atef
ort
heec
onomi
cas
t
hewhole
F. Loweconomicgr
owt
h,hi
ghunempl
oymentand
hi
ghinf
lat
ion.

(5x1)=5
1.
3 GiveONEt er
mf orEACHofthef ol
lowingdescr
ipt
ions
.Writ
eonl
ythet
erm
nextt
othequestionnumbers(1.
3.1.t
o1.3.4.
)
1.
3.1 Pri
cesofgoodsandservi
cesthataresetbygovernment.

Adminis
teredpri
ce✓
1.
3.2 Exc
ludesitemsfr
om theCPIbasketthatar
ehighl
yvolati
leorpric
esaf
fec
tedby
gover
nmentpol i
cy
Coreinf
lat
ion✓
1.
3.3 Asustai
nableandsi
gnifi
canti
ncreas
ei ngener
alpr
iceleveloverti
me.

i
nfl
ati
on✓
1.
3.4 Agenerali
ncr
eas
einpr
icel
evelc
aus
esbyani
ncr
eas
eint
hec
ostofl
i
ving

Cos
tpus
hinf
lat
ion (
5x1)(
5)

ACTI
VITY2

147|
Page
2.
1 Ans werthef ol
lowingques tions
2.
1.1 Namet woexampl esofgoodst hatareex cl
udedinc or
einfl
ati
on
(2)
Freshand f rozenmeat✓
Nuts✓
(acceptsanyot herrelevantr es
pons e)
2.
1.2 Explaintheef f
ec tofadec r
eas eintheint er
estrat
eoni nfl
ati
on?
(
2)
Creditwillbecomec heaper,whi c
hwi l
lleadtoincreaseinaggregat
edemand
leadingtoinc r
eas eininf
lat
ion
(Acceptsanyot herrel
evantr esponse)

2.
2. St
udyt
heext
rac
tbel
owandans wert
heques
tionst
hatf
oll
ow.
INFLATI
ONSLOWDOWN

Steadyint
eres
tratesl
ikel
yasinf
lat
ionsur
pri
ses,f
alli
ngbel ow5%f orthefi
rst
ti
mei ntwoyearsEconomist
shavebeenpleasant
lys urpri
sedasinf
lat
ionfel
l
fast
erthanexpect
edt oatwo–yearlowof4,7%inJ uly,f
rom 5,4%inJune.
(
source:http//bus
ines
smaveric
k.or
g)

2.2.
1 I
dent i
fythemonet arypolic
yi nstr
umentus edtomeasureinfl
ati
oni
ntheabove
extr
ac t
. (1)
I
nterestrate✓
2.2.
2 NameONEmet hodusedt omeas ureinfl
ati
on.
(1)
Pri
ceindicesPPI/CPI✓/Wei ghting✓ /nflat
ionrate✓
2.2.
3 Bri
eflydescri
bet heterm openmar kettransact
ion.
(2)
Opent ransact
ionisamonet arypolicyinstr
umentthatdealswit
hbuyi
ngor
sel
li
ngs ecuri
ti
esorgover nmentbond✓✓
(Acceptanyot hercorr
ectrelevantr esponse)
148|
Page
2.
2.3 Explaint hei mpac tofhi ghi nf
lat
ionr areont hebalanceofpayment
.
(
2)
Thei nfl
at i
onmakesi tdi f
fi
culttoexpor tgoodsast heybecomemoreexpens i
ve,
whenexpor tsdec l
ine,
thewi l
lbeadef i
c i
tont hebalanc eofpayment .✓✓
(Ac ceptanyot herc or rectrel
evantr esponse)
2.
2.4 Howwi llani ncr easei ni nf
lati
onr ateinfl
uenceeconomi cgr
owth?
(
4)
 Hi ghpr icel evelwi lldec reaseaggr egatedemandf orgoodsandser
vices
,less
goodswi llbepr oduc ed
thent heec onomywi lldec l
ine✓✓
 Cons umer swi llnotaf fordtobuyt hegoodsands ervi
cesandtheproducerswil
l
bef orcedt oc utout
produc ti
onr esultingt hedec r
easei ntheeconomy✓✓
(Ac ceptanyot herr elevantans wer )

ACTIVI
TY3
3.
1Answert hef oll
owingques ti
ons
3.
1.1 Nameanyt woex ampl esofproductorser
viceswi t
hadmi ni
ster
edpr i
c es.
(2)
Fuelpr ic
es ✓/Par af
fin✓/Sani
tati
onlevi
es✓/Pos talst
amps ✓
3.
1.2 Whatc oul dbet hec auseofhigherrat
esofinfl
ationinSouthAfric
a?
(2) Continuousincr
easeinpr i
ceofc rude
oil
✓✓
Hugec ostscausedbyt hemismanagementofpubl icsect
ormonopol ies.✓✓
Highc ostofelec t
ric
ityintheeconomy.✓✓
(
Ac ceptanyot herc orrectandrel
evantanswer)
3.
2 St udyt hediagram bel owandans wertheques ti
onsthatfol
low.

149|
Page
3.2.
1 Identifyt hec aus eofc os tpus hi nf l
at i
oni ntheabovedi agram.
(1)
Higherwagedemands✓
3.2.
2 Namet het ypeofi nfl
at iont hati sas soc i
atedwi thhighunempl oyment ,l
ow
economicgr owt hand
highinf lation.
(1)
Stagflation✓
3.2.
3 Brief
lydes c r
ibet het er mi nflation.
(2)
Infl
ationi sas ustainedands ignif i
canti ncreaseingener alpr i
celevelwhichres
ult
s
i
nadec r
easei n
thebuyi ngpowerofmoney✓✓
(Acceptot herc or r
ec tr elevantr es pons es)
3.2.
4 Howc anwagei ncreas eaf f
ec tt hec ostpus hinfl
ation?
(2)
• Increas esi nwagesl eadt oani nc reasei nc ostofproduc ti
onwhi chleadtoan
i
ncreas ei npr i
ces ,
t
heref orewagei nc r
eas esar es our ceofc ostpus hinfl
ation.✓✓
(
Acc eptot herc orrec trelevantr espons es)
3.2.
5 Exami net her ol
eofpr iceexpec t ationoni nfl
ati
oni nSout hAf r
ica.
(4)
• Cons umer sandf ir
msus uallyac tont heirexpec tat
ionsther ebyc ausi
nghigh
infl
ati
on.✓✓
• Ifwor ker sexpec tf utur einflat i
ont heybar gainforhigherwagest ocompensat
e

150|
Page
 foranexpect
ed
• i
nc r
easedcostofli
ving.✓✓
• Successofahigherwagebar gaincont
ributedt
owar
dsi
nfl
ati
on.✓✓
(Acceptot
hercorrectrel
evantrespons
es )

ACTI
VITY4
4.
1 St udyt
hec
art
oonbel
owandans
wert
heques
tiont
hatf
oll
ow.

s
our
ce:Googl
ecar
toons

4.
1.1 Identif
yt het ypei nflations howni ntheabovec ar
toon.
(1)
Stagflation✓
4.
1.2 Nameoneexampl eofs upplyshoc kasc auseofc ostpush.
(1)
OilPrices ✓/Dr oughtt hatdes tr
oysc rops ✓/Hi
gheruni onpressure✓/Tsunami✓
4.
1.3 Br i
eflydes cribet het erm hyper infl
ati
on.
(2)
Hyper inflati
oni sanext remel yrapidandout -
of -contr
oli
ncreaseinthegeneral
pricelevelof
goodsands er viceswi thinanec onomy,t ypi
call
yexc eedi
ng50%.Thi s
phenomenoner odest her eal
valueofac ount ry'sc urrenc yandc anl eadtos evereeconomicinstabi
l
ity.✓✓
(Acceptot herc or rectrel evantrespons es)
4.
1.4 Explaint heef fec tofi nflationondebt ors.
(2)
Debt orsbenef itbec aus et heyr ecei
vemoneywi thahighpurchasingpowerand
repayt hei rdebtwi t
h

151|
Page
 moneywi t
hl owpur chas ingpower✓✓
(Acc
eptot herc orr
ectr elevantr es ponses)
4.
1.5 Howi smor als uasionus edbySout hAf r
icanRes ervebankt ocurbdemand- pull
i
nfl
ati
on? (4)
 TheSout hAfr i
c anRes erveBankempl oymor alsuasionbypubl i
cl
yurging
busi
nes s
esandc onsumer st oexer ciserestrai
ntint heirspendingandpr i
cing
deci
sionstoc ombatdemand- pullinfl
ati
on.✓✓
 SARBal soengagei ndi rec tcommuni cati
onwi t
hc ommer ci
albanks,encouraging
them toti
ght enl endings tandar dsandi nc r
eas einterestrates
.✓✓
 SARBc oll
abor at ewitht hegover nmentt oal i
gnfiscalpolici
eswi t
htheiri
nflat
ion-
fi
ghti
nggoal s,ens uringac oordinat edappr oacht oc urbi
ngexc essi
vedemand.
✓✓
(Acc
eptot herc orr
ectr elevantr es ponses)

ACTI
VITY5
5.
1 St udyt
hepi
ctur
ebel
owandans
wert
heques
tionst
hatf
oll
ow.

Sour
ce:
googl
e.c
om

5.
1.1 I
denti
fyonemonet ar
yinst
rumentintheabovepi
ctur
e.
(1)
RepoRate✓
5.
1.2 GiveONEr eas
onforanincreas
eintheinf
lat
ionr
ate?
(
1)
Highaggregatedemand✓

152|
Page
 I
ncr eas edpr oduc t
ionc os t✓
(
Acc eptot herc orrec trel evantr espons es )
5.1.
3 Bri
ef lydes cri
bet het er mi nflati
on.
(2)
I
nflat ioni sas us tainedands ignif
icanti nc reaseingener alpricel
eveloverper iod
oftime.✓✓
(Acc eptot herc or r
ec tr elevantr espons es )
5.1.
4 Explai nt heef fec tofani ncreas einint er estratesoni nflati
on.
(2)
 Ani nc reas eini nter estr atesmakesbuyi ngonc reditmor eexpens ive.Thi
sof t
en
res
ul tsi nadec r eas einaggr egatedemandwhi c
hwi llleadt olowi nfl
ati
on.✓✓
(Acc eptot herc or r
ec tr elevantr espons es )
5.1.
5 Howdoesf oreigndi rec tinves t
menti nf l
uenc einf l
ationi ntheec onomy?
(
4)
 FDIc anl eadt oi nc reas edec onomi cac ti
vi t
yandhi gherdemandf orgoodsand
ser
vi c es,pot ent i
allyc aus i
ngdemand- pul linfl
ati
oni fs uppl ycannotkeepup.✓✓
 FDIc ani ntroduc enewt ec hnologiesandef fi
ci
enc i
es ,whi chc anlowerpr oduct i
on
costsandmi ti
gat ei nflat i
onar ypres sur es .✓✓
 FDIc anal s oimpac texc hanger ates;ifi tleadst oas trongerdomes t
iccurrency,i
t
canmakei mpor tedgoodsc heaper ,c ont ri
buti
ngt odi sinf
lati
onaryef fect
s.✓✓
(Acc eptot herc or r
ec tr elevantr espons es )

ACTIVI
TY6
6.1 Howwoul dt hec ostofkeyi nput scont ri
but etoahi gherinflationr ate?
(8)
 I
fac ount ryr eli
esheavi lyoni mpor t
sf ores senti
alrawmat erialsor
i
nt ermedi ategoodsus edi npr oducti
on,ar iseinthepr i
cesoft hesei nputsc an
raisepr oduc t
ionc ostsfordomes ti
cindus t
ries.✓✓
 Whenbus ines sesf ac ehigheri nputc osts,theymaypas st hos ec ostsont o
cons umer si nt hef orm ofhi gherpr i
cesf orf i
nishedgoodsands ervices.✓✓
 Exc hanger atef luctuationsc anaf f
ectt hec ostofi mports;aweakerdomes t
ic
currenc yrel ati
vet ot hec ur
renc i
esoft radingpar t
nerscanmakei mpor tsmor e
expens i
ve,f urtherdr i
vinguppr oduct i
onc os t
s.✓✓
 I
ft hes epricei nc reasesbec omeper sistent,theyc anleadt owagedemands
from wor ker s,c reatingawage- pri
ces piralthatc ontr
ibutest os ust ai
ned
i
nf l
at i
onar ypr es suresint heec onomy.✓✓
(Ac ceptot herc orrectrelevantr espons es)
6.2 Whyi samonet arypol i
c yeffecti
veinr educ ingdemand- pullinflation?
(8)

153|
Page
  Monet ar ypol icydec reas esaggr egat es pendi ngbyi nc r
eas inginterestrates✓✓
 Ani nc reas ei nthec as hr es erver equi rement sl i
mi tst heamountavai l
ablet o
cons umer s,whi chr educ esdemand✓✓
 Saleofgover nmentbonds( openmar kett rans ac ti
ons )reduc esthemoney
suppl ywher ebankshavel essmoneyt os uppl y✓✓
 Banksc anbeper suadedbyt hec ent r
albankt olimi tt heamountofc r
edit✓✓
 Hel pst or aiset hec os tofc reditint hevar iouss ec tor soft heec onomy✓✓
(Ac ceptot herc orrec trel evantr espons es)
6.3 Di scus st heFi scalmeas uret oc ombati nfl
at ion.
(8)
 Fiscalmeas urear emeas ur est akenbyt heMI NI STEROFFI NCANCEr egar ding
taxat i
onandexpendi t
ur e.✓✓
 Ani nc reas ei ndirectt axat ion( Per sonali ncomet ax)whi chwi llhelptodec rease
demand.
 Ani nc reas ei nindirec ttaxat ion( VAT)c our sess pendi ngdec reasebec aus egoods
bec omemor eexpens i
ve.
 Al oanl evyr educ est hedi spos abl eincomeofc ons umer s.✓✓
 Thes tatec utsbac konexpendi turebyc anc elli
nggover nmentpr ojec
tslike
ROADS,HOSPI TALSandSCHOOLS.Thec ount y’sf inanc ebug✓✓
 Thec ount r
yf inancebudgetdef icitisnon- inflationar y(thegover nmentus es
loansf rom t henon- banki ngs ec tortol i
mi ti nflation) .✓✓
 Thes tatei mpos ess urc har gesoni mpor tedgoods .✓✓
(Ac ceptot herc orrec trelevantr es pons es )
6.4 Di fferent iatebet weent hec ons umerpr icei ndex( CPI )andt hepr oducerpr ic
e
(PPI
). (8)
CPI PPI
TheCPImeas urest hec os tofl i
ving.✓ PPImeas urest hec os tofpr oducti
on.✓
TheCPIbas ketc ons i
stsofc ons umer PPI ,capi talandi ntermedi ategoodsonl y.✓
goodsands er vices.✓
CPIfi
gur esc apitalandi nter medi ate t hePPI ,c apitalandi ntermedi at
egoodsar e
goodsar eexc luded.✓ i
nc luded✓

CPIdoesnots howpricesofi mpor t

ed i nPPIpr i
cesareshownexpl
ici
tl
y✓
goodsexplic
itl
y.✓
CPIi
ncludesinter
estrate.✓ PPIexc
ludesinter
estrat
es✓✓
(Acceptothercorr
ec trelevantresponses)
6.
5 Eval uatetheimpactofi nflat
iontargeti
nginSout hAfri
ca.
(
8)
 TheSARBmonet arypol i
c ysetstheinfl
ati
ont ar
getbetween3%t o6%.✓✓

154|
Page
  TheSARBhavebeens uc
c essf
ulinmai ntainingt hel evelofinf
lation
betweent heabover angei nfewyear sago.✓✓
 I
ft hei nfl
ati
ontargetrangei sexc eededt hemoni toryaut hori
ties(SARB)actsto
reduc et hedemandf ormoney,s uchasinc reasingi nterestrates.✓✓
 I
finflat i
onlevel
sincreasebeyondt heinfl
at i
ont ar getitleadstowage- pus
h
i
nflationandpos sibl
es tr
ikeac t
ion.✓✓
 Wagedemandsar eoftenac compani edbyvi ol
ents tr
ikes.✓✓
 I
ft het argetsar
eexc eededt hec ountri
esc reditr ati
ngc anbenegat ivel
yaffec
ted.
✓
(Acceptot hercorrec
tr el
evantr esponses)

CONTEMPORARYECONOMI CISSUES:ENVI
RONMENTALSUSTAI NABILI
TY
ACTI
VITY1
1.
1. Vari
ousopti
onsareprovidedaspossi
bleanswer
stothefoll
owingquesti
ons.
Choosethecor
rec
tans werandwr i
teonlyt
helet
ter(
A- D)nexttot
he
quest
ionnumber(1.
1.1-1.1.
4)i
ntheANSWERBOOK,f orexample1.1.
5.D.

1.
1.1Thi
ssummi
ttookpl
acei
n1992wi
tht
heai
mtoc
ons
erveandpr
eser
ve

Ec
o-syst
emsare…
A.Johannes
burgsummi
t

B Kyot oProtocol
C. UNFCC
D. Mi l
l
ennium Developmentgoals
1.
1.2 Thelong- t
ermincreaseinEart
h'saver
agesurf
acet
emperat
ureduet
othe
bui
ld-upofgreenhous egasesi
ntheatmospher
eisc
all
ed….
A.Proper t
yri
ghtstaxes.
B.Globalwarming.
C.Pos i
ti
veexternali
ti
es.
D.Gover nmentsubsidi
es.

1.
1.3 Thegr antingofalicens
etobusi
nessesthatal
l
owt hem t
opol
l
uteupt
oa
certai
ndegr eeisref
err
edtoas…
A.Marketablepermits
B.Legisl
ation
C.Taxablepermits
D.Lic
ens i
ng
1.
1.4 Cutti
ngdownoft r
eestoopenaconstruct
ioncompany
A Dumpi ng
B Quant i
tyControl
C OzoneLayer
D Deforestat
ion

155|
Page
 (
2x4) (
8)

1.
2. Chooseadescr
ipti
onfrom COLUMNBt hatmatchest
heit
em inCOLUMNA.
Wri
teonl
ythel
etter(
A- H)nextt
othequest
ionnumbers(
1.2.
1.t
o1.2.
5)i
nthe
ANSWERBOOK.
COLUMNA Answers COLUMNB

1.
2.1 C A.I
ntr
oduc
tionofhar
mfulor
Preservation E
undes
irabl
esubs
tanc
esi
ntot
he
1.
2.2 F
Externalit
ies A envi
ronment
.
1.
2.3 B B.Thenat
uralpr
oces
sbywhi
chs
oil
Cons ervation
1.
2.4 Pol luti
on andr
ocksar
eremovedf
rom t
he
1.
2.5 Er os i
on
Ear
th’
ssur
fac
e.
C. Theac
torpr
oces
sofpr
otec
tingand
mai
ntai
ningenvi
ronmenti
nit
s
exi
sti
ngs
tat
e.
D.Managi
ngi
mpor
tantr
esour
cest
o
pr
omot
efut
urepl
anni
ng.
E.Cos
tandbenef
it
sinc
urr
edbyat
hir
d
par
tynotdi
rec
tlyi
nvol
vedi
n
pr
oduc
tionpr
oces
s.
F.Thec
aref
ulands
ust
ainabl
e
managementofnat
uralr
esour
ces
.
(5x1)5
1.
3GiveONEt er
mf oreac
hofthefol
lowi
ngdescri
pti
ons.Wri
teonl
ythet
erm next
tothequesti
onnumber s
.
1.
3.1 At axc
hargedongoodsthatharmtheenvi
ronment.
Greentax
1.
3.2 Taki
ngc
areoft
heenvi
ronmentt
oens
uret
hatt
heneedsoft
hepr
esentand
f
utur
egener
ati
onsar
emet
.
Cons
ervat
ion
1.
3.3 Res
our
cest
hatc
anber
epl
acedorr
egener
atedbac
ktot
hei
rnat
urals
tat
e.
Renewabl
eres
our
ces
.
1.
3.4 Ther
eleas
eofhar
mfulgas
esi
ntot
heat
mos
pher
e.

156|
Page
 Ai
r pol
l
uti
on
(
1x4)(
4)

ACTIVI
TY2
2.
1.1 NameTWOt
ypesofpol
l
uti
on.
(
2)
Ai
rpol
l
uti
on,Wat
erpol
l
uti
on,Landpol
l
uti
on
(
Acc
eptanyot
herr
elevantandc
orr
ectans
wer
)
2.
1.2 Whydomuni
ci
pal
i
tiesc
har
gel
evi
esonr
ubbi
shc
oll
ect
ion?
(
2)
Tor
educ
ethei
mpac
tofwas
temat
eri
ali
nnat
ureandt
ocoverext
ernalc
ost
s.

(
Acc
eptanyot
herr
elevantandc
orr
ectans
wer
)
2.
2 St
udyt
hec
art
oonbel
owandans
wert
heques
tionst
hatf
oll
ow.

2.
2.1 Whatenvi ronment alproblem i
sdepi c
tedbythec ar
toonabove?
(1)
Rhinopoac hing
2.
2.2 Giveat ermt hatisusedt odescri
bes peci
esext
incti
on.
(1)
Biodivers
ityloss.
2.
2.3 Brief
lydes cr
ibethet m bi
er odi
vers
ity.
(2)
Biodivers
ityrefer
st othevar i
etyofplantandanimalli
fei
naparti
cul
arar
ea.

(
Acc
eptanyot
herr
elevantandc
orr
ectans
wer
)

157|
Page
2.
2.4 Whatnegat i
vei mpac twilltheext i
nc ti
onofs pec ieshavei ntheec onomy?
(2)
Theec onomywi l
lbeaf f
ec tednegat ivelybec aus et hiswil
lcausei mbalancein
thefoodc hain,endanger i
ngofec osys tem andl ossofnat uralr
es ources.
Thismayc aus es carc
ityofr esourceswhi chwi lldr i
vepr i
cesup.
(Acceptanyot herrelevantandc orrectans wer )
2.
2.5 Howwi l
lthec ons er
vat i
onbenef itthepeopl elivingneart herhinohabi t
at?
(4)
Localpeopl ewi l
lbenef i
tfrom al lfrom al ldevel opment smeantf orrhi
no
habitats uchas :
I mpr ovementi ninfrastruc t
ures uc hasr oads ,wat erandt r
ans port
I mpr ovingent r
epreneur ialabilit
iest hroughhandc r
aftandotherpr oduc t
sto
attractt ouristwhoar evi s i
ti
ngr hinohabi t
at .
(Ac ceptanyot herr el
evantandc or rectans wer )
ACTIVI
TY3
3.
1 St udyt hepi cturebelowandans wert heques tionst hatfoll
ow.

Sourc
e:www. busines smaveri
ck.org
3.
1.1I dentif
yt het ypeofpol luti
ondepi c
tedi ntheabovepi c
tur
e?
(1) Ai
rpoll
uti
on
3.
1.2 NameONEnon- r
enewabl eresource.
(1)
Coal
naturalgas .
(Acceptanyot herrel
evantandc orr
ectans wer)
3.
1.3 Br i
eflydes cribetheterm environment als
us t
ainabi
l
ity.
(2)
Environment alsustai
nabili
tyistheabili
tyoftheenvironmenttosurvi
veit
s
usef orec onomi c
acti
viti
es .
(Acceptanyot herrel
evantandc orr
ectans wer)
3.
1.4 Whatef fectswi l
loverexploi
tati
onofl andhaveonagr i
cul
tur
aloutputi
n
SouthAf ri
ca? ( 2)

158|
Page
 Agri
c ult
uraloutputwil
lbeaf fectednegati
velybecaus
elandavail
ablef
or
agri
c ul
turalpurposes
wil
lbel i
mi tedduetoover exploi
tati
on.
(Acceptanyot hercorrec
tr el
evantresponses)
3.
1.5 Howc anenvi r
onmentalsubs i
diesbeusedt oensuresus
tai
nable
development ? (4)
 Subsidiesc anbegrantedt obus i
nessestoreduceenvi
ronmentaldamage.

 Thegover nmentcansubsi
diesnewtechnol
ogythats
aveener
gys
uchas
energysavi
nglight
bulbs.
(Acceptanyothercor
rec
trelevantr
espons
es)

ACTI VITY4
4.1St udyt heext r
ac tbelowandans wertheques tionsthatfoll
ows .
Plast
icwas te,thebiggestissuesfacingthepl anett oday.
Plasticwas t
et hr
ownont heri
versandoc eansisoneoft hebigges ti
ssues
facingt hepl anett oday,wi thi
tsimpac tss t
ret
chingfarandwi de.Itcanbe
foundpol luti
ngt het all
estmount ainstot hedeepes toceant r
enc hes,andc an
affec thumanheal th,des troyecosystems ,andhar m wi
ldli
fees pecial
l
ymar ine
spec ies.Plasti
csc ant akeupt o500year stodec ompos e,dependi ngont heir
compos iti
onanddi s
pos al.

Sour c
e:www. news un.
org
4.
1.1 Namet het ypeofpol lutiondepi ctedbyt heextrac tabove.
(1)
Wat erpollut i
on
4.
1.2 Whatef f
ec tc anbec aus edbyt hehumanac ti
vit
yabove?
(1)
Harm wi l
dlife and/af fecthumanheal th
(acceptanyot herrelevantandc or r
ectans wer )
4.
1.3 Bri
ef l
ydes cribet heter m market ableper mi ts
.
(2)
Thegr antingofl i
cens est obusines sesthatal l
owst hem topoll
ut eupt oa
certai
ndegr ee.
(Acceptanyot herrelevantandc orr
ec tans wer)
4.
1.4 Whati sthemai npur pos eofpr eservation?
(2)
Topr eventt heext inctionofpl antandani malspec ies/toensuret hatnon-
renewabl er es ourc
esar enotlos t.
(Acceptanyot herrelevantandc orr
ec tans wer)
4.
1.5Howdoeshumanac t
iviti
esnegat ivelyaf f
ec tenvir
onment als
ust ainabi
li
ty?
(4)
 Humanac t i
vitiescaus esenvironment aldegr adation,whi chcaus esthe

159|
Page
 deplet
ionofresources.
 Acti
onstakenbyhumanss uchasburni
nganddes
truc
tionoff
ores
ts
damaget heenvir
onment .
(Acc
eptanyot herrelevantcorr
ectanswer
)

ACTI
VITY5
5.
1 St udyt
het
abl
ebelowandanswert
hequesti
onsthatfol
l
ows .
Thel
ossofbi
odi
ver
sit
yovert
helastfewc ent
uri
es

Cent
uri
es Popul
ati
on Landconver
tedf
or Lossofspec
iesi
n
humanuse ecosys
tems

1800 0,
9bi
l
li
on 7,
6% -
1,8%

2100 12mi
l
li
on 49,
1% -
17%

5.
1.1 I
dent ifythet ermt hatr ef erst othevar iet
yofpl antandani mallif
einec osystem.
(1)
Biodiver s
ityloss
5.
1.2 NameONEani malt hati st hr eatenedbyext i
nc t
ioni nSouthAf r
ica.
(1)
Rhino / Tiger / Cheet ah
(Acceptanyot herrel evantc or r
ec tanswer )
5.
1.3 Briefl
ydes cri
bet het er m gl obalwar ming
(2)
Referst ot hegr adualover allincreaseint emper atureoftheear t
h’s
atmos pher eduet ot hei ncreas eofpol lut
ioni ntot heatmos phere.
(Acceptanyot herrel evantc or r
ec tanswer )
5.
1.4 Explaint hec ontribut i
onofpr oduc er
st oenvir onment alsustai
nabil
it
y?
(2)
Thepr oduc erscanc ont ributet oenvi ronment als ustai
nabili
tyby:
 Devel opingnewt echnol ogyandequi pmentt hatar eus i
ngenvi r
onment all
y
energy
 Pr oduc i
ngenvi ronment allyfriendlysubs ti
tutess uchasunleadedpet rol
(Ac c
eptanyot herr elevantc orrectans wer)
5.
1.5 Howc antheSout hAf ri
c angover nmentc onser vet heresourcestoens urea
sustainableenvi ronment ?
(4)
SouthAf ri
c angover nmentc anens ureas ustainabl eenvir
onmentby:

160|
Page
  Br
ingi
ngabal
anc
eint
heec
osys
tem asani
mal
sandpl
anti
nter
act
sand
dependsononeanot
herf
orc
ont
inueds
urvi
val
.
 Pr
otec
tingf
ores
ts,ast
heyar
eimpor
tantf
orpr
oduc
ingoxygenandabs
orbi
ng
gr
eenhous
egas
es.
 Reduc
ingt
heamountofgr
eenhous
egas
est
hatr
eac
htheat
mos
pher
ether
eby
dec
reas
inggl
obalwar
ming
 Us
ingwat
erwi
sel
y,asi
tisbas
ict
opl
antandani
malexi
stenc
e.
(
Acc
eptanyot
herr
elevantc
orr
ectans
wer
)

161|
Page