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GRADE 10

EECCOONNOOMMIICCSS PAPER 1

OCT/NOV EXAMINATION

2015

MARKS: 150

TIME: 2 HOURS

This question paper consists of 13 pages including the cover page

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INSTRUCTIONS AND INFORMATION

1 Answer FOUR questions as follows in the ANSWER BOOK:

SECTION A: COMPULSORY SECTION B: Answer any TWO of the three questions. SECTION C: Answer any ONE of the two questions.

2 Answer only the required number of questions. Answers in excess of the required number will NOT be marked.

3 Number the answers correctly according to the numbering system used in this question paper.

4 Write the question number above each answer.

5 Read the questions carefully.

6 Start EACH question on a NEW page.

7 Leave 2 – 3 lines between subsections of questions.

8 Answer the questions in full sentences and ensure that the format, content and

context of your responses comply with the cognitive requirements of the questions.

9 Use only black or blue ink.

10 You may use a non-programmable pocket calculator.

11 Write neatly and legibly.

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SECTION A (COMPULSORY)

QUESTION 1 30 MARKS – 15 MINUTES 1.1 Various options are provided as possible answers to the following

questions. Choose the answer and write only the LETTER (A – C) next to the question number (1.1.1 – 1.1.8) in the ANSWER BOOK, for example 1.1.9 C .

1.1.1 Economics is a ... science

A physical B natural C social 1.1.2 For the ... approach, economists will gather lots of data and use it

as a basis for generalisation

A inductive B deductive C combination 1.1.3 ...studies quantities and the relationship between different

quantities

A Statistics B Accounting C Mathematics of finance 1.1.4 The ... of a household is the money that is left after members of

the household have paid their taxes

A savings B disposable income C taxable income 1.1.5 The economically active population of a country excludes children

and...

A women B illiterate people C retired people 1.1.6 The first bank in South Africa established in 1793 was called... A Cape of the Good Hope Bank B Lombard Bank C London Bank

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1.1.7 The first gold in South Africa was discovered on the... in 1886 A Gariep River B Witwatersrand C Mapungubwe 1.1.8 The economic law which prevailed between 1500 and 1800 to

govern commercial transactions was known as...

A Mercantilism B Feudalism C Guild (8 X 2) (16)

1.2 Choose a description from COLUMN B that matches an item in COLUMN A. Write

only the LETTER (A – I) next to the question number (1.2.1 – 1.2.8) in the ANSWER SHEET.

COLUMN A COLUMN B

1.2.1 Imperial bank A The use of machines, tools, and labour to make goods to sell or use

1.2.2 Scarcity B When goods are exchanged for goods.

1.2.3 Manufacturing C The application of goods and services

1.2.4 Opportunity cost D The study of populations 1.2.5 Interest rates E The approach that assumed that the

wealth of a country depended on the possession of precious metals

1.2.6 Division of labour F The main economic problem 1.2.7 Bartering G Had all its shareholders and

headquarters in England

1.2.8 Demography H Each worker specialises in doing a specific task.

I The main monetary policy instrument J The value of the product that is

sacrificed to buy another product

(8 X 1) (8)

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1.3 Give ONE term for each of the following descriptions. Write only the term

next to the question number (1.3.1 – 1.3.6) in the ANSWER BOOK.

1.3.1 The movement of people from the rural to the urban areas of a

country.

1.3.2 Changes at the same time as the economy change.

1.3.3 Flow of goods and services in the circular flow diagram.

1.3.4 The branch of economics that focuses on strategies and policies that help countries to develop and grow.

1.3.5 The economic system in which the state provides for all the needs of all individuals.

1.3.6 The first indigenous people in South Africa. (6 X 1) (6) TOTAL SECTION A: 30 MARKS

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SECTION B

Answer any TWO of the three questions in this section in the ANSWER SHEET.

QUESTION 2: (MACROECONOMICS) 40 MARKS – 25 MINUTES 2.1 Answer the following questions:

2.1.1 List any TWO difficulties faced by the social sciences (2 X 1) (2) 2.1.2 In your opinion, what effect does the contractionary

phase has on the government’s revenue? (1 X 2) (2)

/4/

2.2 Study the table below and answer the questions that follow.

Year Nominal GDP (R millions)

Real GDP (R millions)

Economic Growth(%)

2008 2 274 139 1 814 134 3.6

2009 2 395 969 1 783 617

Source: SARB, Quarterly Bulletin, December 2010 2.2.1 Define the term GDP. ( 2 ) 2.2.2 What is the base year according to the above scenario? ( 2 ) 2.2.3 What does an increase in the nominal GDP indicates? ( 2 ) 2.2.4 Calculate the economic growth rate for 2009. ( 4 ) /10/

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2.3 Study the diagram below and answer the questions that follow. B R1 200

A

Government spending (R100)

R250 R 200

2.3.1 Use the information below to determine the values of A and B:

Total income R 1 200 Savings R 250 Taxation R 50

( 2 )

2.3.2 Which type of an economy is illustrated above? ( 2 ) 2.3.3 Explain the interaction between households and firms from the

diagram above. ( 2 )

2.3.4 Use the information from the completed diagram to calculate the

total leakages. ( 4 )

/10/

Factor market

Households Government Firms

Goods market

Financial market

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2.4 2.5

Explain how consumers spend their income on goods and services. With the aid of examples, discuss normative and positive statements.

(8) (8)

[40]

QUESTION 3: (ECONOMIC PURSUITS) 40 MARKS – 25 MINUTES 3.1 Answer the following questions:

3.1.1 Name any TWO commercial banks in South Africa today.

(2 X 1) (2)

3.1.2 What effect does the discovery of minerals had on

South Africa `s unemployment levels? (1 X 2) (2)

/4/

3.2 Study the diagram below and answer the questions that follow.

South Africa Unemployment Rate Declines to 24.3% in Q4 South Africa jobless rate decreased to 24.3 percent in the last three months of 2014 from 25.4 percent in the previous quarter. It is the lowest rate in a year as employment rose for the third consecutive quarter and the labour force decreased. Between 3rd Quarter 2014 and 4th Quarter 2014, the number of unemployed people decreased by 242 000 to 4.909 million. Yet, the labour force decreased by 39 000 to 20.22 million. The number of discouraged work-seekers decreased by 111 000 and the other (not economically active) group increased by 305 000, resulting in a net increase of 194 000 among the not economically active population. Statistics South Africa / joana.taborda@tradingeconomics.com 3.2.1 Describe unemployment according to the strict definition. ( 2 ) 3.2.2 What do you understand by the concept ‘economically active

population? ( 2 )

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3.2.3 Apart from the discouraged work seekers, what are the other

TWO groups of people classified as not economically active. ( 2 )

3.2.4 What do you think are the reasons for the decrease in

unemployment during the last two quarters? ( 4 )

/10/

3.3 Study the graph below and answer the questions that follow The dividend of democracy: 20 years of economic growth

3.3.1 Which stage of economic development is South Africa currently

in? ( 2 )

3.3.2 Explain the economic trend between the two eras in the graph

above. ( 2 )

3.3.3 What does the Democratic Era’s GDP mean to an ordinary South

African? ( 2 )

3.3.4 Explain TWO factors that contributed to the 2014’s GDP. ( 4 )

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/10/ 3.4 Discuss self-sufficiency and dependence of agriculture as early stages of

economic development. (8)

3.5 Discuss South Africa’s Phase 1(Stationery phase) of the demographic

cycle. (8)

[40]

QUESTION 4: (MACROECONOMICS AND ECONOMIC PURSUITS)

40 MARKS – 25 MINUTES

4.1 Answer the following questions:

4.1.1 Give TWO types of scarcity. (2 X 1) (2) 4.1.2 What do you think is the effect of the increased

mechanisation of manufacturing on employment levels (1 X 2) (2)

/4/

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4.2 Study the diagram below and answer the questions that follow.

4.2.1 What does the diagram above depict? ( 2 ) 4.2.2 Describe the term consumption. ( 2 ) 4.2.3 In your opinion, why are manufactured goods priced? ( 2 ) 4.2.4 Explain the role of the market in the economy. ( 4 ) /10/

4.3 Study the article below and answer the questions that follow.

Industrialization and Imperialism, 1870-1910

The Mineral Revolution

Mineral discoveries in the 1860s, the 1870s, and the 1880s had an enormous impact on southern Africa. Diamonds were initially identified in 1867 in

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an area adjoining the confluence of the Vaal and the Orange rivers, just north of the Cape Colony, although it was not until 1869 to 1870 that finds were sufficient to attract a "rush" of several thousand fortune hunters.

The British government, attracted by the prospect of mineral wealth, quickly annexed the diamond fields, repudiating the claims of the Voortrekker republics to the area. Four mines were developed, and the town of Kimberley was established. The town grew quickly and became the largest urban society in the interior of southern Africa in the 1870s and the 1880s. Adapted from Area Handbook of the US Library of Congress 4.3.1 In which South African province is Kimberley? ( 1 ) 4.3.2 Which diamond company monopolised the production and sales

of diamond from 1888 to 1910? ( 1 )

4.3.3 How do you think commercial mining affected the standard of

living and lifestyles of indigenous households? ( 4 )

4.3.4 What were the negative effects of colonialism and imperialism on

the economic development of South Africa? ( 4 )

/10/ 4.4 Discuss the exogenous reasons for business cycles. (8) 4.5 Discuss South African indigenous money. (8) [40] TOTAL SECTION B: 80 MARKS

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SECTION C: ESSAYS Answer any ONE of the two questions from this section in your ANSWER SHEET.

STRUCTURE OF THE ESSAY: MARK ALLOCATION: Introduction Max 2 Body: Main Part For example: Discuss in detail/In-depth discussion/Examine/ Critically discuss/Analyse/Compare/Evaluate/Distinguish/Explain/ Assess/Debate

Max 26

Additional Part For example: Give own opinion/Critically discuss/Evaluate/Critically evaluate/Draw a graph or diagram and explain/Use the graph given and explain/Complete the given graph/Calculate/Deduce/Compare/ Explain/Distinguish/Interpret/Briefly debate

Max 10

Conclusion Any relevant higher order conclusion that should include:

x A summary of what has been discussed without repeating facts already mentioned in the body.

x An opinion or valued judgement on the facts discussed. x Additional support information to strengthen the discussion. x A contradictory viewpoint with motivation. x Recommendation.

Max 2

TOTAL 40

QUESTION 5: (MACROECONOMICS) 40 MARKS – 40 MINUTES

South Africa has an open economy, thus the business cycles in this country are to a great extent affected by the business cycles of other industrial countries.

x Discuss the phases of a business cycle. Use a graph to support your discussion.

(26)

x Suggest ways that the government could use during the contractionary phase to make the economically marginalised groups less economically vulnerable.

(10)

[40]

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QUESTION 6: (ECONOMIC PURSUITS) 40 MARKS – 40 MINUTES

There are very definite parallels in the economic development of South Africa and the economic development of the rest of the world.

x Discuss the characteristics, factors that promoted and hampered South Africa’s economic development from 1910 to 1990.

(26)

x What role did sanctions and disinvestments play in the economic development of South Africa from the 1970s up to 1993?

(10)

[40] GRAND TOTAL: 150 MARKS

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GRADE 10

EECCOONNOOMMIICCSS PAPER 1

OCT/NOV EXAMINATION

2015

MEMORANDUM

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SECTION A

QUESTION 1 1.1 1.1.1 C99 (social)

1.1.2 A99 (inductive) 1.1.3 A99 (Statistics) s 1.1.4 B99 (disposable income) 1.1.5 C99 (retired people) 1.1.6 B99 (Lombard Bank) 1.1.7 B99 (Witwatersrand) 1.1.8 A99 (Mercantilism)

(8 X 2) (16)

1.2 1.2.1 G9 Had all its shareholders and headquarters in England 1.2.2 F9 The main economic problem 1.2.3 A9 The use of machines, tools, and labours to make goods to sell or use. 1.2.4 J9 The value of the product that is sacrificed to buy another product 1.2.5 I9 The main monetary policy instrument 1.2.6 H9 Each worker specialises in doing a specific task. 1.2.7 B9 When goods are exchanged for goods. 1.2.8 D9 The study of populations (8 X 1) (8) 1.3 1.3.1 Urbanisation9 1.3.2 Coincident indicators9 1.3.3 Real flow9 1.3.4 Development economics9 1.3.5 Planned/controlled9 1.3.6 San9 (6 X 1) (6) TOTAL SECTION A: 30 MARKS

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SECTION B

QUESTION 2

2.1 2.1.1 List any TWO difficulties faced by the social sciences

� People think and behave differently from each other9 � Controlled tests cannot be done to determine how people will react to a

change9 � It is difficult to change just one variable and keep all other variables

constant9 � Economists look at what other people are doing with regard to money9 � It is often difficult to measure the results of an experiment in

economics9 � The so-called laws in economics are in fact more like general

statements9 Accept any other relevant response

(2 X 1) (2)

2.1.2 In your opinion, what effect does the contractionary phase has on the government’s revenue? The revenue will decrease due to the shutting down or downsizing of businesses, job shedding or reduction of working hours. 99 Accept any other relevant response (1 X 2) (2) 2.2 Study the table below and answer the questions that follow. 2.2.1 Define the term GDP. GDP refers to the value of all final goods and services produced within the borders of a country over a year. 99 (2) 2.2.2 What is the base year according to the above scenario? 200899 (2) 2.2.3 What does an increase in the nominal GDP indicates? An increase in the prices of goods and services99 (2) 2.2.4 Calculate the economic growth rate for 2009. Comment on the economic performance. Economic Growth Rate = 1 783 617 - 1 814 134 x 100 1 814 134 1 99

(30 517) x 100 1 814 134 1 - 1.68%/ 1.7%99 (4)

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2.3 Diagram 2.3.1 Use the information below to determine the values of A and B: A = R 509 B = R1 1509 (2 x 1) (2) 2.3.2 Which type of an economy is illustrated above? Closed economy99 (2)

2.3.3 Explain the interaction between households and firms from the diagram above.

� There is a flow of money and goods and services between the household sector and business sector.99

� Households earn income in the form of wages by selling their factors of production to business. 99

� Business uses factors of production to produce goods and services on which the household sector spends. 99

� Thus the business will receive income99. (2)

2.3.4 Use the information from the completed diagram to calculate the

total leakages. Leakages = Savings + Taxes99 300 99= 250 + 50 (4) [10] 2.4 Explain how consumers spend their income on goods and services.

x Durable goods – goods that can be used over a long time9 for example, refrigerator, car, and carpets. 9

x Non-durable goods – goods that can be used only once9, for example food, fuel, paid. 9

x Semi-durable goods – goods that can be used over and over again for a limited period of time and would have to be replaced eventually9, for example, tyres, clothing, glassware9

x Services – are those activities that we need and for which we are prepared to pay9, for example, banking, health care, transport. 9 (8)

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2.5 With the aid of examples discuss normative and positive statement

Positive statement deals with objective explanation and the testing and rejection of theories. √√ For example, a rise in consumer incomes will lead to a rise in the demand for new cars, √√ A fall in the exchange rate will lead to an increase in exports overseas, √√ More competition in markets can lead to lower prices for consumers. √√ Any 2 X 2 (4)

Normative statement deals with opinions about what ought to be. √√ These are subjective statements rather than objective statements. i.e. they carry value judgments. √√ For example, The government should increase the national minimum wage to R60 per hour in order to reduce relative poverty. √√ Any 2 X 2 (4)

[40] QUESTION 3 3.1 3.1.1 Name any TWO commercial banks in South Africa today. ABSA9 / Standard Bank9 / FNB 9/ Nedbank9 (2 x 1) (2) 3.1.2 What effect did the discovery of minerals had on South Africa` s unemployment levels? Unemployment decreased. (1 x 2) (2) 3.2 3.2.1 Describe unemployment according to the strict definition. Unemployed are those people within the EAP who did not work during the seven days prior to the interview, who want to work and are available to start work within a week of the interview. / refers to people who are willing and able to work but do not find job opportunities at current wage levels.99 (2) 3.2.2 What do you understand by the concept ‘economically active population? Refers to people between 15 and 65 years of age who are employed or who want to work but are unemployed. 99 3.2.3 Apart from the discouraged work seekers, what are the other TWO groups of people who are classified as not economically active. Students9/ high school learners9/ people with disabilities9/ early retirees. 9 (2 x 1) (2)

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3.2.4 What do you think are the reasons for the decrease in unemployment during the last two quarters?

� Increase in demand for consumer goods resulted in a demand for extra

labour. 99 � High level of tourism created a demand for more temporary workers in

the sector. 99 � Due to high crime rate during the festive season, more private security

personnel are hired. 99 (4) Accept any other relevant response [10]

3.3 Graph 3.3.1 Which stage of economic development is South Africa currently in? Manufacturing and service stage99 (2) 3.3.2 Explain the economic trend between the two eras in the graph above. During apartheid era, the inflation was high followed by low economic growth.99 The democratic era showed low inflation rate and high economic growth. 99 (2) 3.3.3 What does the democratic era’s GDP mean to an ordinary South African? Prospects of more job opportunities99/ wider choice of goods and services99/ quality products99/ lower prices 99 (2) Accept any other relevant response 3.3.4 Explain TWO factors that contributed to the 2014’s GDP.

� Increase in productivity99 � Advanced communication and transport99 � Government initiatives and accelerated growth99 � Globalisation of trade and information99 (2 x 2) (4)

Accept any other relevant response 3.4 Discuss self-sufficiency and dependence on agriculture as an early stage of economic development. Self-sufficiency

� Earliest humans were nomadic hunter-gatherers, as people hunted for and gathered their food. 99

� They depended on nature for their needs. 99 � Their clothing was primitive and they lived in temporary shelters, such as

in caves and under the trees. 99 � The men hunted and women gathered fruit and wild plants. 99

Women also made clothes, cooked, looked after the family and cared for the elderly and children. 99 (Max.4)

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Dependence on agriculture

� Over time early people further developed tools to cultivate the land and weapons for protection and hunting. 99

� They also tamed various animals. 99 � Initially the tools were clumsy, vegetation was most difficult to clear, the

soil was often infertile and water was scarce. 99 � Early farmers preferred to cultivate next to swamps and river valleys

because they are more fertile. 99 � The food they gained from livestock and produced on their lands was

consumed rather than traded. 99 � Agriculture was the most important industry, production was labour

intensive and not much capital was used. 99 (Max.4) Accept any other relevant response 3.5 Discuss South Africa’s Phase 1(Stationery phase) of the demographic cycle.

� During this phase there is no birth control and the birth rate is very high. 99

� The community is poor and there is an absence of medical facilities and medical care. 99

� The death rate is also high thus the average age of the population is low. 99

� This is known as a young population. 99 � The natural growth rate during this phase is low. 99

Accept any other relevant response (8) [40] QUESTION 4 4.1 4.1.1 Give TWO types of scarcity.

Absolute scarcity99 and relative scarcity99 4.1.2 What do you think is the effect of the increased mechanisation of manufacturing on employment levels. Low employment levels99 4.2 4.2.1 What does the above diagram depict? Basic economic processes/ basic processes/ economic processes99 (2) 4.2.2 Describe the term consumption. Consumption refers to the application or use of a good or service99 (2) 4.2.3 In your opinion, why are manufactured goods priced? They are not freely available/ there are costs associated with their production.99 (2)

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4.2.4 Explain the role of the markets in the economy.

� Link the producer and consumer. 99 � Bring goods and services to the vicinity of consumers. 99 � Markets are processes by which the prices of goods and services

are established. 99 � Facilitate trade and enables the distribution and allocation of

resources in a society. 99 � Markets allow any trade-able item to be evaluated and priced. 99

Accept any other relevant response (2 x 2) (4) [10]

4.3 4.3.1 In which South African province is Kimberley? Northern Cape9 (1) 4.3.2 Which diamond company monopolised the production and sales of diamond from 1888 to 1910? De Beers Company9 (1) 4.3.3 How do you think commercial mining affected the standard of living and lifestyles of indigenous households?

� The majority of the unskilled indigenous people got employed. 99 � Rural people flocked to the cities where there were better

services99. � An increased demand for goods and services due to income from

employment created opportunities for entrepreneurs. 99 (4) Accept any other relevant response

4.3.4 What were the negative effects of colonialism and imperialism on the economic development of South Africa?

� New diseases introduced by the settlers had disastrous effects on the health of the indigenous people. 99

� Denial of political and economic rights of indigenous people as well as the introduction of discriminatory laws against the indigenous people. 99

� Disregard and disrespect for the social, cultural and economic traditions and customs of the local people often resulted in the breakdown of authority and lifestyle changes with damaging repercussions. 99

� Colonies’s natural and human resources were harvested by mother countries in an unsustainable manner and very little thought was given as to the future of the indigenous people. 99

� There was widespread disregard for the security of the local people. 99 (4) Accept any other relevant response

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4.4 Discuss the exogenous reasons for business cycles

� It is also known as a Monetarists theory99 � These are factors outside the market. 99 � For example, drought, shocks, technology, structural changes, political

events, money supply, weather conditions. 99 � Growth path of the economy is determined by natural growth in the supply

of resources. 99 � The imbalances that occur in the economy will be brought to equilibrium

by the market forces and price adjustments. 99 � Monetarists maintain that markets are inherently stable. 99 � The major cause is the inappropriate government policies, increase and

decrease in money supply. 99 � They suggest that the government should not interfere in the market but

control the amount of money in circulation. 99 (8) Accept any other relevant response

4.5 Discuss South African indigenous money.

� This is the money that belonged naturally to a certain group of people. 99 � In South Africa, valuable commodities that were used as indigenous

money included animal stock, salt blocks, jewellery, beads made of ostrich egg, tools, cotton and textiles. 99

� These valuables goods were in short supply and belonged naturally to certain areas of South Africa. 99

� For centuries cattle were the most important form of indigenous money in many African societies. 99

� People even concentrated their wealth in their cattle. 99 � A man’s wealth was measured by the number of cattle he owned. 99 � Cattle thus represented money, wealth and power in Africa. 99 � Explorers visited our shores traded items such as copper bracelets,

coloured glass beads and tobacco for the local products. 99 (8) Accept any other relevant response [40]

TOTAL SECTION B: 80

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SECTION C: ESSAYS Answer any ONE of the two questions from this section in your ANSWER SHEET.

QUESTION 5: South Africa has an open economy, thus the business cycles in this country are to a great extent affected by the business cycles of other industrial countries.

x Discuss the phases of a business cycle. Use a graph to support your discussion.

(26)

x Suggest ways that the government could use during the contractionary phase to make the economically marginalised groups less economically vulnerable.

(10)

[40]

INTRODUCTION Business cycle can be defined as the consecutive periods of increasing and decreasing economic activities. 99Many factors contribute to the upswing and downswing of economic activities like supply of power, investment in the country,

productivity of the labour force etc. 99 (2) Accept any other relevant introduction

BODY: MAIN PART

DIAGRAM

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Economic Activity Time

Marks allocation for graph: • Labelling of axes = 1 mark • Trend line = 1 mark • Shape of cycle = 2 mark MAX 4 MARKS

Phases of business cycle.

1. The prosperity phase. 9

� Optimism encourages entrepreneurs to borrow money and buy new machinery and equipment. 99

� More people are employed and production increases. 99 � Factories work overtime and skilled workers become extremely

scares. 99 � Prices, wages, interest rates and profit increases. 99 � Boom starts. 99 � Everything seems go to the extreme. 99 � Interest rates, salaries and wages increases to even higher levels

and together with a much greater demand for raw materials, costs of business increase almost beyond control. 99

� Inflation accelerates beyond previous high levels. 99 � Some businesses start to realize that the prosperity phase cannot

last forever. 99 (Max.6)

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2. The recession phase. 9 � Businesses start to provide for bad times by producing less and to

repay the larger parts of the loans. 99 � They selectively lay off the workers.99 � Spending by household and profit of business start to decrease.99 � Inflation is high and the central bank reduces the quantity of money

and credit in the economy.99 � The demand for goods and services decreases.99 � Interest rates increase.99 (Max.6)

3. The depression phase. 9

� Characterised by general pessimism by households and businesses. 99

� Spending of all sectors in the economy decrease drastically and consists mainly of expenditure. 99

� Businesses shows poor profit, many makes losses and some get bankrupt. 99

� Households cannot pay their debt. 99 � Have their furniture, motorcars and even the houses

repossessed. 99 � Many people loses their jobs and households income are low. 99 � Many people find their work in the informal sector. 99 � Inflation decrease and inflation falls. 99 � At some stage businesses, start to realize that conditions are going

to improve at some time and they first actions that will eventually lead to recovery. 99 (Max.6)

4. The recovery phase. 9

� Businesses realise that conditions are going to improve and start to service their machinery and improve their equipment. 99

� They increase their production slightly to provide stock for a possible increase in demand. 99

� They make better use of labour and employ more workers. 99 � There is an increase in income because there is in consumer

expenditure. 99 � Because interest rates are low, households’ bond repayments are

lower and households can spend more money on goods and services. 99

� Loans are available, but households and businesses are not keen borrow money. 99

� As soon as sales improve, business profit increases, entrepreneurs become more optimistic. 99

� Disturbances that existed are gradually phased out that the economy is in equilibrium again. 99

(Max.4)

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ADDITIONAL PART: � Increase social welfare grants99 � Provide free primary health care service99 � Provide free basic education99 � Provide low-cost housing99 � Establish labour intensive community projects99 � Provide feeding schemes in schools99 � Use legislation to encourage women development and employment 99

(10) Accept any other relevant response CONCLUSION Any relevant higher order conclusion that should include:

x A summary of what has been discussed without repeating facts already mentioned in the body.

x An opinion or valued judgement on the facts discussed. x Additional support information to strengthen the discussion. x A contradictory viewpoint with motivation. x Recommendation.

E.g. The term business cycle is somewhat misleading, because it seems to suggest that economic fluctuations follow a regular, predictable pattern. In fact, economic fluctuations are not at all regular, and they are difficult to predict with much accuracy. 99 (2) Accept any other relevant conclusion [40]

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QUESTION 6: There are very definite parallels in the economic development of South Africa and the economic development of the rest of the world.

x Discuss the characteristics, factors that promoted and hampered South Africa’s economic development from 1910 to 1990.

(26)

x What role did sanctions and disinvestments play in the economic development of South Africa from the 1970s up to 1993?

(10)

INTRODUCTION South Africa’s largely agricultural-mining economy, as at the end of the 19th century, was soon to be industrialised. 99 By 1910, the industrial sector was beginning to thrive. 99 In 1910, mining contributed more than agriculture, with industry third. By 1980, industry contributed twice as much as mining did and four times as much as agriculture. 99 (2) Accept any other relevant introduction BODY: MAIN PART Characteristics

� New technologies promoted fast industrial growth everywhere in the world. 99 � South Africa became a modern industrial state. 99 � Political upheaval and two world wars disrupted populations everywhere in the

world.99 � Wars and conflict between communist and non-communist countries prompted

new technological inventions. 99 � The Land Act of 1913 took away a land from black farmers, and apartheid was

made law in 1948. 99 � Many people spent their energy fighting against apartheid from the 1950’s

onwards.99 � Farming became commercialised and many farmers mechanised their

operations. 99 � More people moved to cities.99 (Max.10)

Factors that promoted economic development

� World war isolation stimulated local industry. 99 � Establishment of central bank, Eskom, Iscor and IDC by the government to

stimulate industrialisation. 99 � European war refugees brought their entrepreneurial skills. 99 � Raw materials from mines and agriculture encouraged the growth of processing

and manufacturing industries. 99 � South Africa had many working-age people. 99 � South Africa’s large reserves of cheap coal made it cheap to generate electricity.

99

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� Sanctions during apartheid era meant that South Africa had to produce many goods within the country because these could not be imported. 99

� A weak rand made South Africa’s exports more competitive internationally.99 (Max.8)

Factors that hampered economic development

� A relatively small domestic market meant factories could often not benefit from economies of scale to bring down unit prices.99

� Long distances made electricity distribution and communications expensive. 99 � A shortage of skilled labour made skilled labour expensive. 99 � A lack of capital made investment difficult. 99 � There was not enough quality education to provide people with the necessary

skills to drive and improve industrial development.99 � There was too much inequality in the workplace.99 � Job reservation during apartheid years kept the pool of skilled workers small.99 � Trade restrictions during apartheid made it difficult to import and export

goods.99 � Political upheaval caused many skilled people to leave the country.99 � A lack of water, especially during times of drought, was a problem in some � areas. 99 � A shortage of housing in the cities made it difficult for workers to find

accommodation. 99 (Max.8)

ADDITIONAL PART

� From 1985 to 1988, the net capital movement out of South Africa from the Westerners amounted to R23.9 billion. 99

� Since then, 200 USA and more than 60 British companies withdrew from South Africa. 99

� The capital flight triggered a dramatic decline in the international exchange rate of the South African currency, the rand. 99

� The currency decline made imports more expensive. 99 � The inflation rose at a steep 12 – 15% per year. 99 � The disinvestment forced the government to impose exchange control and a debt

repayments standstill. 99 � Under exchange control, South African residents were prohibited from removing

capital from the country and foreign investors could only remove investments via the financial rand rather than the commercial rand. 99 Accept any other relevant response (10)

16

CONCLUSION Any relevant higher order conclusion that should include:

x A summary of what has been discussed without repeating facts already mentioned in the body.

x An opinion or valued judgement on the facts discussed. x Additional support information to strengthen the discussion. x A contradictory viewpoint with motivation. x Recommendation.

E.g. The current pattern of industrial development in South Africa has been shaped by the country’s economic history. 99 (2)

Accept any other relevant conclusion [40]

TOTAL SECTION: 40

GRAND TOTAL 150