ECOBUS

JULY 2016 EXAMINATION

NATIONAL QUALIFICATION (NQF)
DATE: 12 JULY 2016
TIME: 09H00 – 12H00 TOTAL: 100 MARKS
DURATION: 3 HOURS PASS MARK: 50%

(CU-70)
ECONOMICS

THIS EXAMINATION PAPER CONSISTS OF 4 SECTIONS:

SECTION A: CONSISTS OF:

(i) 10 MULTIPLE-CHOICE QUESTIONS (10 MARKS)
(ii) 5 TRUE OR FALSE QUESTIONS (10 MARKS)
(iii) 10 MATCHING-STATEMENT QUESTIONS (10 MARKS)
ANSWER ALL THE QUESTIONS

SECTION B: CONSISTS OF 3 SHORT QUESTIONS

ANSWER ALL THE QUESTIONS (10 MARKS)

SECTION C: CONSISTS OF 4 LONG ANSWER QUESTIONS

ANSWER ALL THE QUESTIONS (40 MARKS)

SECTION D: CONSISTS OF 2 INTERPRETATIVE QUESTIONS

ANSWER ONE OF THE QUESTIONS (20 MARKS)

INSTRUCTIONS:

1. Read the following instructions carefully before answering the paper, as failure to act upon them will
result in a loss of marks.
2. Write your answers in your answer book, which is provided in the exam.
3. Ensure that your name and student number are clearly indicated on your answer book.
4. Write your answers in either blue or black ink in your answer book.
5. Read each question very carefully before you answer it and number your answers exactly as the
questions are numbered.
6. Begin with the question for which you think you will get the best marks.
7. Note the mark allocations for each question  give enough facts to earn the marks allocated.
Don't waste time by giving more information than required.
8. You are welcome to use diagrams to illustrate your answers.
9. Please write neatly  we cannot mark illegible handwriting.
10. Any student caught cheating will have his or her examination paper and notes confiscated.
The College will take disciplinary measures to protect the integrity of these examinations.
11. If there is something wrong with or missing from your exam paper or your answer book, please inform
your invigilator immediately. If you do not inform your invigilator about a problem, the College will not
be able to rectify it afterwards, and your marks cannot be adjusted to allow for the problem.
12. This paper may be removed from the examination hall after the examination has taken place.
NOTE: YOU WILL NEED A PENCIL, RULER AND NON-PROGRAMMABLE CALCULATOR.

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__________________________________________________________________________
SECTION A (30 MARKS)
__________________________________________________________________________
ANSWER ALL THE QUESTIONS
__________________________________________________________________________

(i) MULTIPLE-CHOICE QUESTIONS

Choose the correct option for each of the following. Write only the question
number and your chosen answer. For instance, if you think that the correct
answer for number 1 is (a), then write it as 1. (a).

1. Which component of national income comprises approximately 60% of

total domestic expenditure?

(a) consumer expenditure

(b) investment expenditure
(c) government expenditure
(d) export expenditure

2. A shift in the demand curve for fans, resulting from the recent heat
waves, will result in:

(a) higher prices.

(b) lower prices.
(c) a shift in the supply curve.
(d) lower output.

3. Which of the following measures will tend to remove a BOP deficit?

(a) an increased budget deficit

(b) a reduction in the interest rate
(c) a tightening of monetary policy
(d) a reduction in import tariffs

4. Supply will NOT be influenced by:

(a) the market price of a commodity.

(b) the costs of production.
(c) the state of technology.
(d) a change in income.

5. Money spent by tourists to SA taking advantage of the weak rand would

be reflected in which account?

(a) long-term capital – capital account

(b) current account – visible imports
(c) current account – invisible exports
(d) current account – invisible imports

6. Which statement is FALSE with regard to a recession?

(a) subsidies increase

(b) government revenue falls
(c) government revenue increases
(d) consumption decreases

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7. If a 25% decrease in the cost of cell phone charges leads to a 40%

increase in the quantity of calls demanded, demand elasticity would be:

(a) perfectly elastic.

(b) elastic.
(c) unit elastic.
(d) inelastic.

8. Currency control is a function of:

(a) the banks.

(b) the state.
(c) the SARB.
(d) the employer.

9. Which statement would NOT apply to a perfectly competitive market?

(a) a large number of sellers

(b) free competition
(c) preferential treatment
(d) complete knowledge

10. To an economist ‘marginal’ means:

(a) an extra bit of some item.

(b) the ratio of two quantities.
(c) the sum of two quantities.
(d) something of little interest.

(ii) TRUE OR FALSE QUESTIONS

Choose whether the following are True or False. Motivate your answers.

1. Microeconomic equilibrium occurs when aggregate demand (AD)

equals aggregate supply (AS).

2. An increase in VAT will affect the poor the most.

3. Scarcity is depicted on the right of the production possibility curve

(PPC).

4. Profit can be maximised only where marginal revenue is equal to

average cost.

5. South Africa’s exports consist mainly of capital equipment. [5 × 2 = 10]

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(iii) MATCHING-STATEMENT QUESTIONS

Match the terms in Column B to the statements in Column A. Write down the
answers only, for example 1. (a).

Column A Column B
1. selling exports at below cost of (a) economic system
production
2. means of exchange (b) VAT
3. imperfect competition (c) SARB
4. the mechanism responsible for (d) dumping
allocating society’s resources
5. responsiveness of quantity (e) capitalism
demanded to change in price
6. during off-peak periods (f) direct taxation
7. resources are divided by the (g) price elasticity of demand
price mechanism
8. holds cash reserves of banking (h) money
institutions
9. opportunities for tax avoidance (i) seasonal unemployment
10. tax pressure is indirect (j) monopoly
[10]

[30]

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__________________________________________________________________________
SECTION B: SHORT QUESTIONS (10 MARKS)
__________________________________________________________________________
ANSWER ALL THE QUESTIONS
__________________________________________________________________________

QUESTION 1

What causes cost-push inflation? [4]

QUESTION 2

Name three main factors (problems) influencing economic development of a

country. [3]

QUESTION 3

Briefly discuss cyclical unemployment. [3]

[10]

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__________________________________________________________________________
SECTION C: LONG ANSWER QUESTIONS (40 MARKS)
__________________________________________________________________________
ANSWER ALL THE QUESTIONS
__________________________________________________________________________

QUESTION 1

Using the expenditure approach, calculate the National Income from the following
Balance of Payment figures. Show all your calculations.

Investment spending R55 000

Subsidies R8 000
Indirect taxes R19 500
Consumer spending R48 000
Net foreign spending R18 000
Depreciation R11 000
Government spending R24 000
Net factor payments R9 000
[10]

QUESTION 2

Discuss five reasons for international trade. [5 × 2 = 10]

QUESTION 3

Bake4U is a local bakery baking the most scrumptious breads and rolls in town.
Every Sunday morning everyone flocks to get their loaves of breads fresh from
the oven. The following table shows the quantity demanded and supplied at
various prices for their daily loaves of bread.

Price Quantity Quantity

Demanded Supplied
R8,00 200 500
R7,50 250 450
R7,00 300 400
R6,50 350 350
R6,00 400 250
R5,50 450 200
R5,00 500 150

(a) Draw a graph and show the equilibrium price and quantity (E1). (3)

(b) Determine the price elasticity of demand over the price range R6,00
to R6,50. (3)

(c) Due to a new school opening in the area, there was an increase in
demand of 100 loaves per day. Calculate the new equilibrium price
and quantity (E2). Also show this on your graph. (3)

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(d) The government introduces a bread subsidy which results in the

supply of bread increasing by 50 loaves a day. What is the new
equilibrium price and quantity (E3)? Show this on your graph too. (3) [12]

QUESTION 4

Briefly explain your understanding of the following statements:

(a) Balance of payments allows rand to fall. (4)

(b) Interest rates reach record level as rand drops. (4) [8]

[40]

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__________________________________________________________________________
SECTION D: INTERPRETATIVE QUESTIONS (20 MARKS)
__________________________________________________________________________
ANSWER ONE OF THE QUESTIONS
__________________________________________________________________________

QUESTION 1

Currently the minister of finance’s biggest challenge is to boost the sluggish

economy.

(a) Discuss five sources of income for the government. (10)

(b) Describe the effects of fiscal policy on the economy. (10) [20]

OR

QUESTION 2

Thomas is a very sporty person and every weekend he is either on the

soccer field or on the tennis court. Bearing this statement in mind and
knowing the satisfaction Thomas receives from playing a game of tennis or
soccer, answer the following questions:

(a) Define ‘utility’ in your own words. (2)

(b) Define ‘total utility’ in your own words. (2)

(c) Define the ‘law of diminishing marginal utility’ in your own words. (4)

(d) Thomas enjoys playing soccer and tennis. The table below shows the
total utility he receives from the two sports.

Total utility (TU) from

Hours per week Total utility (TU) from tennis
soccer
0 0 0
1 60 20
2 110 38
3 150 53
4 180 64
5 200 70
6 210 70

Draw graphs showing:

i. Thomas’ total utility from tennis and soccer. (5)

ii. Thomas’ marginal utility from soccer and tennis. (5)

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(e) State your conclusion about his choice between soccer and tennis. (2) [20]

[20]

Section A: 30 marks
Section B: 10 marks
Section C: 40 marks
Section D: 20 marks
TOTAL: 100 MARKS

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