FINAL

NATIONAL
SENIOR CERTIFICATE

GRADE 12

ECONOMICS P1

MARKING GUIDELINE

PREPARATORY EXAMINATION

SEPTEMBER 2024

MARKS: 150

This marking guideline consist of 14 pages.

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SECTION A (COMPULSORY)

QUESTION 1

1.1 MULTIPLE CHOICE QUESTIONS

1.1.1. C (four) 
1.1.2. C (expansionary) 
1.1.3. A (international) 
1.1.4. D (collective) 
1.1.5. B (subsidies). 
1.1.6. A (National Development Plan.) 
1.1.7. D (Integrated manufacturing strategy) 
1.1.8. B (real GDP) 
(1x8) (8)

1.2 MATCH THE ITEMS

1.2.1 I (The minimum balance that banks are required by law to keep
in their accounts) 

1.2.2 D (The value of tangible exports minus tangible imports) 

1.2.3 E (Is a tariff charged as percentage of the value of imported goods) 

1.2.4 H (The lowest turning point in a business cycle) 

1.2.5 F (Nationwide government intervention to create employment

using labour intensive methods) 

1.2.6 A (All persons between the ages of 15 to 65 who supply labour for
productive activities) 

1.2.7 B (It is aimed at promoting investment projects in underdeveloped

areas where unemployment and poverty are high) 

1.2.8 G (Increase in the country’s production capacity)  (1x8) (8)

1.3 GIVE THE TERM

1.3.1 Repurchase Rate / Repo Rate 

1.3.2 Government bonds 

1.3.3 Public goods 

1.3.4 Broad Based Black Economic Empowerment 

1.3.5 Quotas 

1.3.6 Exchange Rate  (1x6) (6)

TOTAL SECTION A: 30
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QUESTION 2: MACROECONOMICS 40 MARKS – 30 MINUTES

2.1 Answer the following questions.

2.1.1 Name any TWO types of business cycle.

• Kitchin 
• Juglar 
• Kuznets 
• Kondratieff  (2x1) (2)

2.1.2 How can double counting be avoided when calculating the GDP?
• Double counting can be avoided by subtracting the value of
intermediate goods in the final market price of goods. 
• Double counting can also be avoided by considering only
productions made in each sector of production.  (1x2) (2)
(Accept any relevant answer)

2.2 Data response

2.2.1 Identify the primary participant in the diagram above. (1)

Households 

2.2.2 Name one factor of production provided by the factor market. (1)
• Entrepreneurship 
• Raw materials 
• Capital 
• Labour 

2.2.3 Briefly describe the term circular flow. (2)

Circular flow is a continuous flow of spending, production and income between
different sectors. 
(Accept any relevant answer)

2.2.4 Explain the role of firms in the economy. (2)

• Firms pay taxes to the government which are used to provide social
services. 
• Firms are responsible for production of goods and service which leads
to an increase in economic growth. 
• Firms create employment opportunities that lead to an improvement to
the standard of living. 
(Accept any relevant answer)

2.2.5 How can foreign direct investment influence national income? (2x2) (4)
• Foreign direct investment directly influence the country’s economic
growth by stimulating the level of economic activities. 
• FDI reduces poverty through the direct channel by creating jobs in
the private sector, which improves the general standard of living. 
• Foreign direct investment has a positive impact on the country’s
balance of payments capital flows into the country. 
(Accept any and correct relevant answer) (10)

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2.3 Data response

2.3.1 Identify the exchange rate system that is represented by the graph. (1)
Free floating exchange rate 

2.3.2 Which curve represents an increase in the demand for foreign currency? (1)
D1D1

2.3.3 Briefly describe the term exchange rate. (2)

• Exchange rate is the value of one countries currency when compared
and exchanged with another countries currency. 
(Accept any relevant answer)

2.3.4 What could have caused a shift of the demand curve to the right
from DD to D1D1? (2)
• An increase in the number of South Africans touring the United States. 
• An increase in the number of South African imports from the USA
(Accept any correct and relevant answer)

2.3.5 How can the SARB intervene to devalue the currency? (2x2) (4)
• Direct intervention: The Central bank buys foreign exchange when
the currency is overvalued. 
• Indirect intervention: When a currency is overvalued an increase in
interest rates invites an inflow of investments. 
• A surplus is created on the financial account that balances out the
deficit on the current account. 
(Accept any correct and relevant answer)

2.4 Discuss amplitude and length as features underpinning forecasting

business cycles. (2x4) (8)

Amplitude
• Amplitude refers to the vertical (height) difference between a trough
and the next peak of a cycle. 
• The larger the amplitude, the more extreme the changes that occur. 

Length
• Length is measured from peak to peak or from trough to trough. 
• Longer cycles show strength and shorter cycles show weakness with
regard to economic activities. 
(Accept any correct and relevant answer)

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2.5 How can the South African economy be influenced by the effect of
international trade? (4x2) (8)
• International trade enables businesses to create jobs and stimulate
economic growth. 
• International trade allows for an exchange of expertise and commodities,
which can help to address skills shortages in South Africa. 
• It leads to specialisation which increases the standard of living, especially
when the area of specialisation is in great demand due to a shortage. 
• Efficiency increases when there is competition which leads to lower prices
enabling the same income to buy more goods and services. 
• International trade increases innovation and consumer choice therefore
consumers can benefit from better quality of goods and relatively low prices. 
Negative
• International trade may lead to dumping.
• International trade due to competition then local businesses may suffer.
(Accept any relevant answer)

QUESTION 3: ECONOMIC PURSUITS 40 MARKS – 30 MINUTES

3.1 Answer the following questions

3.1.1 Name any TWO inflation rate indicators (2x1) (2)

• Producer price index 
• Consumer price index 

3.1.2 How can physical control be used to reduce imports? (1x2) (2)
The government may apply a complete ban or embargo on the import
of certain goods from a particular country. 

(Accept any relevant answer)

3.2 Data response

3.2.1 Identify one of the new BRICS countries. (1)

• Egypt 
• Ethiopia 
• Iran 
• Saudi Arabia 
• United Arab Emirates 

3.2.2 Name the country that assumed BRICS presidency in 2024. (1)
• Russia 

3.2.3 Briefly describe the term import substitution. (2)

Import substitution occurs when locally produced goods replace
goods that had previously been imported. 
(Accept any correct and relevant answer)

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3.2.4 Why is export promotion important for the South African economy? (2)

• The country achieves significant export-led economic growth which

enlarges the production capacity of the country. 
• Export markets are much bigger than local markets which benefits
local industry and improved Balance of Payment. 
(Accept any relevant answer)

3.2.5 How can South Africa benefits from being a member of BRICS? (2x2) (4)
• Being a member of BRICS has enhanced South Africa's position
and Influence as an important emerging economy. 
• BRICS membership gives us access to policy and technical
expertise of larger and established economies. 
• BRICS membership gives us access to the funding support of the
National Development Bank. 
(Accept any correct and relevant answer)

3.3 Data response

3.3.1 Identify the economic concept that is depicted by the cartoon above. (1)
North - South divide 

3.3.2 Name one country that is a member of the G7. (1)

• United States of America 
• Canada
• France 
• Italy
• Germany 
• Japan 
• United Kingdom 

3.3.3 Describe the term economic development. (2)

Economic development is an Increase in a country’s real gross domestic

product per capita over time. 

(Accept any correct relevant answer)

3.3.4 Why is South Africa regarded as one of the major polluters in the world? (2)
South Africa is regarded as a major polluter because the country relies on coal
for baseline electricity and coal is among the 32 common fossil fuels. 
(Accept any correct relevant answer)

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3.3.5 How can countries of the South solve the inequality gap? (2x2) (4)
• Countries of the South must establish labour intensive industries
that will create sustainable employment opportunities. 
• Increase the competitiveness of their manufacturing sector through
the diversification of the local industrial base. 
• Developing countries must create a conducive environment through
policy making that will attract foreign direct investment
(Accept any correct relevant answer)

3.4 Discuss population growth and life expectancy as demographic

indicators (4x2) (8)

Population growth
• Measuring population growth is important for delivering social services
and for identifying the size of the tax base (the total number of people
paying taxes). 
• The South African population is currently around 63 million people. 
(Accept any correct relevant answer)

Life expectancy
• This is the number of years a new born baby is expected to live from
birth to death. 
• The South African life expectancy is currently around 62 years of age. 
(Accept any correct relevant answer)

3.5 Evaluate the success of the Japan- South Africa partnership forum
for the South economy. (4x2) 8)
• SA exports to Japan increased from R61 billion in 2011 to
R150 billion in 2021. Last year, SA imported R34 billion worth of
goods, resulting in a R114 billion trade surplus in South Africa’s
favour with Japan. 
• Japanese investors have commitment to strengthening ties and
economic opportunities, including for small and medium
businesses. 
• Both countries agreed to an ambitious work programme that
includes collaboration on green industrialisation, electric vehicle
technologies and green hydrogen. 
• South Africa has opportunities to more Japanese businesses,
skills development in the local auto industry, work streams on
manufacturing opportunities and the exchange of technical
experiences. 
• The relationship has a positive impact on economic growth,
balance of payments and employment opportunities. 
(Accept any correct relevant answer)

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QUESTION 4: MACROECONOMICS AND ECONOMIC PURSUITS

40 MARKS – 30 MINUTES
4.1 Answer the following questions.

4.1.1 Name any TWO problems of public sector provisioning. (2x1) (2)
• Pricing policy 
• Privatization/ Nationalisation 
• Bureaucracy 
• Lack of accountability 
• Problems in accessing needs 

4.1.2 Why is education an important indicator for the development of a

country? (1x2) (2)
Education is important because it develops and capacitates the countries
human resource with the necessary skills to foster economic growth. 
(Accept any other correct relevant answer)

4.2 Data response

4.2.1 Name the phase of the business cycle that can be associated with high
inflation. (1)
• Prosperity 

4.2.2 Identify one challenge faced by the South African economy on the
cartoon above (1)
• Unemployment 

4.2.3 Briefly describe the term recession. (2)

Recession is a decrease in economic activities for at-least two consecutives
terms. 
(Accept any correct relevant answer)

4.2.4 Explain the impact of the high cost of food on the economy. (2)
High cost of food will negatively affect consumers’ buying power as consumers
will afford less goods and services which in turn reduce the standard of living. 
(Accept any correct relevant answer)

4.2.5 How can reserve bank use open market transaction to curb inflation? (4)
• The reserve bank must sell government bonds and securities on the
open market. 
• This will result in a leakage of money from the economy and consumers
will have less money to spend. 
• Aggregate demand will decrease and the negative multiplier effect will
kick in. 
(Accept any relevant correct answer)

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4.3 Data Response

4.3.1 Identify the percentage protest for water and sanitation. (1)
• 11.5%

4.3.2 Name the organisation that regulates electricity in South Africa. (1)
• NERSA- National Electricity Regulator of South Africa 

4.3.3 Briefly describe the term urbanisation. (2)

• Urbanisation is the movement of people from rural areas to urban
areas to seek for employment. 
(Accept any relevant correct answer)

4.3.4 Why is load shedding a threat to the South Africa’s economy? (2)
• Load shedding reduces the capacity of the country to produce goods
and services which results in negative impact on economic growth and
employment. 
(Accept any other relevant correct answer)

4.3.5 How can the government reduce the number of service delivery
protest? (2x2) (4)
• The government can ensure that they hire the most skilled and
qualified employees to carry out service delivery. 
• The government can ensure that there are consequences for lack of
service delivery among officials. 
(Accept any other relevant correct answer)

4.4 Discuss injections and leakages in the circular flow. (2x4) (8)
Injections
• Injections refer to an inflow of money into the economy. 
• When injections increase this can lead to an increase in employment
opportunities. 
• The following are injections (additions to) the circular flow,Investment (I)
Government expenditure (G) and Payments for exports (X).  MAX 4

Leakages
• Leakages refer to the outflow of money from the economy. 
• An increase in leakages has a negative impact on economic growth. 
• The following are leakages or withdrawals from the circular flow, Savings (S)
Taxation (T) and Payment for Imports (M). 
(Accept any correct relevant answer) MAX 4

4.5 How can trade liberalisation benefit developing countries? (4x2) (8)
• Economies of scale: Free trade allows economies of scale to be
maximised and thus, unit cost are reduced. 
• Choice: Free trade allows consumers the choice of what to buy from
the whole world, and not just what is produced domestically. 
Consumers’ welfare is thus increased because some consumers at
least will prefer to buy foreign goods rather than domestic goods. 
• Innovations: Free trade increases competition and this encourages
innovation in goods and processes. 
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• Improves global efficiency: Under free trade, resources are allocated more
efficiently as markets expand, because each country specialises in its most
effective production. 
• Free trade leads to greater world production of traded goods, leading to an
increase in economic welfare. 
• Economics of scale are a source of comparative advantage which leads to
mutual gains from international trade to all countries. 
(Accept any correct relevant answer)

SECTION C

QUESTION 5 MACRO-ECONOMICS 40 MARKS – 40 MINUTES

• Discuss in detail the reasons for public sector failure (26)

• How can the South African government improve accountability of
public sector officials? (10)

INTRODUCTION

Public sector failure occurs when the government fails to manage the economy and
the resources under its control optimally. (2)
(Accept any correct relevant introduction)

MAIN PART

Poor management/ management failure 

• The public sector organizations may have leaders with poor management skills. 
• Some of these managers may be lacking proper experience and training while
others may be having hidden agendas. 
• This may affect how they apply various policies or may get the timing of such
policies not right. 

Lack of motivation 
• Government employees often do not receive incentives for successful service
delivery. 
• There are no systems to evaluate service quality provided by the employees. 
• Even those who do outstanding work are not recognized therefore they end
up being demotivated. 

Apathy
• Some employees are apathetic (uninterested/ indifferent) about their work
because they lack accountability about their actions. 
• This means they often lack responsibility for their decisions which results in
poor service delivery. 

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Bureaucracy 
• Refers to excessively complex administrative procedure that are often
followed in government sector. 
• Bureaucrats (government officials) are criticised for being too rigid and inefficient. 
• A simple request end up entangled in endless processes, paperwork that slows
down an otherwise simple task. 
• Application for a particular project having to go from one administrative level to
another, taking very long period before an answer can be given. 

Politicians 
• Politicians are often interested in being re-elected to their positions rather than
serving the public. 
• Therefore, they often pursue vote-maximising strategies to secure or retain their
political offices. 
• The pressure of looming election often can make many politicians make decisions
just to make the voting public happy. 
• Some projects can be undertaken even if they were not budgeted for or no proper
cost benefit analysis was conducted. 

Structural Weaknesses
• Structural failure in the economy cause government not to reach its
macroeconomics objectives.
• Full employment and economic equity easily attainable

Special interest groups (rent seeking groups) 

• Rent seeking refers to when people spend money on lobbying in order to increase
their wealth without actually creating any more wealth. 
• Special interest groups such as farmers or organised labour often attempt to
influence government to their own advantage. 
• They make use of the law, lobbying, bribes and other favours to influence the
government officials to act in their interest. 

(Accept any correct relevant answer) (26)

Additional part
• The government can ensure that all public representatives are held accountable
in the national assembly during the parliamentary questioning. 
• The national treasury must implement strict rules on how the public purse can be
used. 
• There must be serious consequences for all those found by the auditor general to
have committed wasteful government spending. 
• There must be serious consequences including jail time and blacklisting all
directors and employees responsible for corruption. 
• The government must give incentives to all individuals that report any case of
corruption.
• Chapter 9 institutions such as the office of the public protector and constitutional
court must play their role of holding the executive accountable. 
(Accept any correct relevant answer)

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CONCLUSION (2)
• It is imperative that the government puts in the necessary internal control
systems to be able to deal with public sector failure because failure to do so
undermines the citizens socio economic rights. 
(Accept any correct suitable conclusion)

QUESTION 6. ECONOMIC PURSUIT 40 MARKS – 40 MINUTES

• Discuss in detail South Africa’s initiatives (endeavours) in regional

development. (26)
• How can Small Business Development Programme stimulate regional
development? (10)

INTRODUCTION
Regional development is aimed at increasing the economic livelihood of specific
areas or regions by limiting the negative effects of economic activities in only a few
Areas. 
(Accept any relevant introduction.) (Max 2)
BODY: MAIN PART
Spatial development initiatives (SDI’S) 
• SDI program attracts infrastructure and business investments to underdeveloped
areas to create employment. 
• Department of trade and industry is the driving force behind industrial and spatial
development. 
• DTI plans together with central, provincial and local government, IDC, parastatals
and research institutions. 
Key objectives
• Stimulate economic activity in selected strategic locations. 
• Generate economic growth and foster sustainable industrial development. Develop
projects of infrastructure in certain areas and finance them through lending and
private sector investment. 
• Establish private-public partnerships (PPP's) in areas with high poverty and
unemployment.
• High-level support in areas where socio-economic conditions require concentrated
government assistance where inherent economic potential exists. 
• The approach is towards international competitiveness, regional cooperation and a
more diversified ownership base. 
• Example KwaZulu-Natal ports of Durban and Richards bay
Industrial development zones (IDZs) 
• They are purpose-built industrial estates, physically enclosed and linked to a port
or airport. 
• Industrial development zones are built in duty-free import areas. 
• This strategy was aimed at making exports internationally competitive. 
• They focus on creating jobs and promoting exports. 
• Goods produced in these zones should be exported to foreign countries. 
• As services are provided from outside, the economy in the areas should be
stimulated. 
• An IDZ offers a world-class infrastructure, enjoys a zero rate of vat on supplies
from South African sources and reduced taxation on some products. 
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Each IDZ is designed to:
• Provide location for establishment of strategic investments. 
• Promote and develop links between domestic and zone-based industries. 
• Enable exploitation of resource-intensive industries. special economic zones 

Special Economic Zones

Geographically demarcated area where specific economic activities have been identified
to be developed. 
• It creates a basis for a broader range of industrial parks and provide economic
infrastructure to promote employment. 
• These areas may enjoy incentives such as tax relief and support systems to
promote industrial development. 
• There are plans to reduce tax to 15% as an incentive to attract new industries. 

The aim of creating SEZ is to attract:

• New businesses and businesses which are developing a new product line business
which are expanding their volume. 
• The DTI has indicated that the existing IDZs where special tax incentives do
not apply would be graduated into SEZs. 

Corridors
A corridor is a track of land that forms a passageway allowing access from one area to
another and particular advantages to mining, manufacturing and other businesses. 
• Examples of domestic corridors: Lubombo, West coast, fish river 

Benefits of corridors
• Corridors promote South Africa’s regional integration in southern Africa: 
• They lead to political and stable neighbours. 
• Corridors create important export markets and a future source of water and
energy supplies. 
• Integration may be a precondition for support from foreign investors, donors and
multilateral institutions. 
• A robust regional transport system and a solid infrastructure base hold the key to
attracting investment into the SADC region
• Improving competitiveness and promoting trade. 
(max.26)
(Accept any other relevant and correct response)
(a maximum of 8 marks for headings and examples.)

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Additional part
• Small business development programme transforms and integrate opportunities
in townships and rural areas into productive business ventures. 
• It focuses on creating platforms that provide the business support, infrastructure
and regulatory environment that enables entrepreneurs to thrive. 
• It overcomes the legacy of economic exclusion by creating a conducive
environment for entrepreneurial activity. 
• It provides dedicated business support to enterprises in rural and township areas
including access to funding. 
• Small business development program provides business skills training; product
development support; credit guarantee; pitch-for-funding; and access to funding
including working capital. 
• This policy has improved the competitiveness of the South African manufacturing
sector by focusing on both informal and formal sector business. 
(Accept any correct and relevant answer) (10)

CONCLUSION
A range of programs gives effect to government’s commitment to support regional
economic development and integration in the Southern African region and beyond. 
(Accept any correct and suitable conclusion)

TOTAL MARKS: 150

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