MOPANI WEST DISTRICT
GRADE 12
ECONOMICS
GRADE 12
REVISION PACKAGE
MACRO-ECONOMICS
This package of activities consists of 22 pages
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Revision Package/Macro-Economics 2 Mopani West/August
CIRCULAR FLOW PART 1
QUESTION 1
1.1 Various options are provided as possible answers to the following questions.
Choose the answer and write only the letter (A–D) next to the question
number.
1.1.1 Earnings received from the export of goods and services are called …
A Leakages
B injections
C investments
D Taxes
1.1.2 The method used to derive total remuneration on factors of production is
called the … method.
A Production
B circular
C expenditure
D income
1.1.3 A measure used to indicate the economic prosperity of a country is called
the …
A gross domestic income.
B per capita national income.
C net national income.
D taxation
1.1.4 The total remuneration that the owners of production factors
receive is called national …
A production.
B expenditure.
C exports.
D income.
1.1.5 Households in South Africa spend most of their income on …
A durable goods.
B semi-durable goods.
C non-durable goods.
D services.
1.1.6 The circular-flow model of an open economy shows the functioning of an
economy that includes the … sector.
A public
B business
C foreign
D domestic
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1.1.7 Savings flow back into the circular flow as …
A investment
B government spending
C exports
D imports
1.1.8 The national aggregate that represents the value added in each
phase of production is called the …
A gross domestic expenditure.
B gross domestic product.
C gross national income.
D gross domestic income
1.1.9 In an economy where injections exceed leakages, the …
A production of goods and services will decrease.
B national income will increase.
C national income will decrease.
D gross value added in production will decline.
1.1.10 Long-term funds are borrowed or saved on the ... market.
A capital
B money
C foreign exchange
D goods
1.1.11 An open economy is best described as a … sector economy
A one
B two
C three
D four
1.1.12 Investment is an example of a/an ... in the circular flow model.
A leakage
B injection
C withdrawal
D loss
1.1.13 Production by the citizens of a country, locally and abroad, is called the …
product.
A gross national
B gross domestic
C net national
D net domestic
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1.1.14 National income will increase when …
A G+I+X > S+T+M
B G+I+X < S+T+M
C G+I+X = S+T+M
D S+T+M > G+I+M
1.1.15 If the marginal propensity to consume (mpc) is 0,6 in a 2-sector model, the
marginal propensity to save (mps) will be …
A 4
B 6
C 9.4
D 0.4
1.1.16 The continuous flow of production, income and expenditure
between participants in the economy.
A business cycle
B economics equilibrium
C money market
D circular flow (16x2)
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Revision Package/Macro-Economics 5 Mopani West/August
1.2 Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the correct letter next to the question number
COLUMN A COLUMN B
1.2.1 Disequilibrium A. Spending by firms
1.2.2 Gross domestic B. prescribed by the United Nations to compile
product gross domestic product figures
1.2.3 Multiplier effect C. long-term financial instruments, for example
bonds
1.2.4 Households D. movement of income and expenditure
between participants in the economy
1.2.5 Leakages E. outflow of money from the economy
1.2.6 Capital market F. Total value of all goods and services produced
within the borders of a country within a
specified period
1.2.7 Marginal propensity G. A small initial change in spending produces a
to consume proportionately larger increase in national income
1.2.8 System of national G.
accounts H. Portion of income not consumed
1.2.9 Money flows I. spending that takes place irrespective of the
level of income
1.1.10 Autonomous J. owners of the factors of production
consumption
1.1.11 Real flows K. when leakages are more than injections ASC
2016
1.1.12 Investment L. proportion of their disposable incomes that
households spend
M. the flow of goods and services
(12x1)
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Revision Package/Macro-Economics 6 Mopani West/August
1.3 Give ONE term for each of the following descriptions. Write only the correct
term next the question numbers in the ANSWER BOOK. Abbreviations,
acronyms and examples will NOT be accepted.
1.3.1 Primary participants and owners of the factors of production
1.3.2 A model which illustrates the flows between participants in the
economy
1.3.3 The introduction of money in the circular flow
1.3.4 A market for short-term savings and loans
1.3.5 The total value of final goods and services produced within the borders
of a country in a given period
1.3.6 The process whereby a relatively small change in injections results in a
proportionally larger increase in national income
1.3.7 The sector that needs to be included for the economy to be regarded as
an open economy
1.3.8 Total market value of all final goods and services produced by
permanent residents of a country within a specified period.
1.3.9 An economy that excludes the foreign sector
1.3.10 The movement of goods and services as well as factors of production
1.3.11 The withdrawal of money from the circular flow
1.3.12 An economy that includes the foreign sector (12x1)
QUESTION 2 Answer all questions
2.1 Give TWO examples of non-durable goods. (2)
2.2 State any TWO methods to calculate national account aggregates. (2)
2.3 Give any TWO examples of leakages. (2)
2.4 Name TWO markets that form part of the economic circular flow (2)
2.5 Give TWO examples of injections in the circular flow. (2)
2.6 Name the TWO financial markets in the circular-flow model (2)
2.7 List two components of consumption function (2)
2.8 Name TWO items that convert Gross Value Added at factor costs to Gross
Value Added at basic prices. (2)
2.9 List the TWO flows in the circular flow model. (2)
2.10 List any TWO participants in a closed economy (2)
2.11 List any TWO sectors that are used to calculate the Gross Value Added
at basic prices (2)
2.12 Give any two examples of secondary sector (2)
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Revision Package/Macro-Economics 7 Mopani West/August
PART 2 HIGH ORDER QUESTIONS
1 How can the household, as an important participant in the circular flow
model, contribute to building the economy?
2 Evaluate the functioning of markets in the circular flow model
3 Calculate the change in aggregate income if there is an injection of R20
billion into the economy with a marginal propensity to save of 0,3. Explain
how the multiplier effect could influence the government to create more
jobs. Show ALL calculations. (8)
4 Calculate the multiplier and its effect if the marginal propensity to
consume (mpc) is 0,6 and investment increases by R10 bn and briefly
discuss this impact on the national income. Show all the calculations. (8)
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Revision Package/Macro-Economics 8 Mopani West/August
BUSINESS CYCLES
QUESTION1
1.1 Various options are provided as possible answers to the following questions.
Choose the answer and write only the letter (A–D) next to the question
number
1.1.1 Estimating unknown data based on a pattern of known data is called …
A. the amplitude
B. a trend
C. extrapolation
D. length
1.1.2 Negative economic growth for at least two consecutive quarters of the year is
known as a …
A. boom
B. depression
C. recession
D. recovery
1.1.3 Exogenous factors such as … can cause fluctuations in the level of
economic activity.
A. weather patterns
B. inflexibility of markets
C. demand patterns
D. indirect links
1.1.4 The point where economic contraction is at its lowest is
called a …
A. trough.
B. peak.
C. trend.
D. recovery
1.1.5 The new economic paradigm that relates to the smoothing of
business cycles is rooted in …-side policies.
A. public relations
B. Trade
C. international
D. demand-and-supply
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1.1.6 The Reserve Bank uses the… policy to influence aggregate
money supply.
A. fiscal
B. monetary
C. budgetary
D. inflationary
1.1.7 An indication of long-term growth in the economy is referred to as
the …
A. trend line.
B. amplitude.
C. length.
D. trough.
1.1.8 A diagram that shows expansion and contraction periods of economic
activities is called a(n) … cycle.
A. business
B. economic
C. productivity
D. employment
1.1.9 The removal of unnecessary restrictions by legislation is known as …
A. regulation
B. decentralisation
C. centralisation
D. deregulation
1.1.10 Severity of cyclical fluctuations in business cycles is indicated
by …
A. amplitudes.
B. moving averages.
C. extrapolations
D. trend line
1.1.11 Fiscal policy is an action taken by government in respect of taxation and … to
influence economic activity.
A. exchange control
B. money supply
C. expenditure
D. credit control
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1.1.12 A period when there is a general increase in economic activities is known as
a(n) …
A. downswing
B. upswing
C. depression
D. recession
1.1.13 Indicators that change at the same time and in the same direction as the
economy changes are known as … indicators.
A. leading
B. lagging
C. composite
D. co-incident
1.1.14 The difference in the value of the output at the peak and the value of the
output at the trough of a business cycle is known as the …
A. length.
B. trend line.
C. amplitude.
D. real output.
1.1.15 The activity that minimizes the effects of short-term economic fluctuations is
called …
A. amplitude
B. a trend
C. moving average
D. extrapolation
1.1.16 The point where economic expansion is at its highest
A. boom
B. peak
C. recovery phase
D. trough (16x2)
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1.2 Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the letter next to the question number
COLUMN A COLUMN B
1.2.1 Moving averages A. measures the distance of oscillation of a variable
from the trend line to the peak and trough
1.2.2 Real business B. Removal of unnecessary laws, by-laws and power
cycle imbalances that inhibits free operations
1.2.3 Monetary policy C. the peak of economic activities
1.2.4 Prosperity D. Economic fluctuations emanating from outside the
market system
1.2.5 Deregulation E. give advance warning of changes in economic
activity
1.2.6 Amplitude F. uses taxation to influence the level of expenditure
1.2.7 Lagging indicator G. evens out short-term fluctuation in economic data
ASC 2016
1.2.8 Exogenous H. The upper turning point of the business cycle
factors
1.2.9 Leading II. Does not change until after the business cycle
indicators has changed
1.2.10 Peak J. uses interest rates to influence the level of
expenditure
K. obtained when the effects of irregular events and
seasons are removed from time series data ECON
P1 Grade 12
(10x1)
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Revision Package/Macro-Economics 12 Mopani West/August
1.3 Give ONE term for each of the following descriptions. Write only the correct term
next the question numbers in the ANSWER BOOK. Abbreviations, acronyms and
examples will NOT be accepted.
1.3.1 The turning point in the business cycle where the level of economic
activities is at its lowest
1.3.2 A summary of the value of different indicators of the same type into a single
value
1.3.3 A negative economic growth rate for at least two consecutive quarters
1.3.4 A policy that targets taxes and government expenditure to influence economic
activity
1.3.5 Predicting the future economic activities using facts or information that is
known
1.3.6 It measures the distance between the peak and the trough of a business
cycle
1.3.7 A fluctuation in economic activities over a period of time
1.3.8 Measures the duration of the business cycle from peak to peak
1.3.9 Removal of unnecessary laws and regulations to improve the functioning of
the economy
1.3.10 Used by the RBSA through interest rates and money supply to influence the
economy
1.3.11 It illustrates (shows) the relationship between unemployment and inflation
1.3.12 Factors that originate outside of the economy that cause business cycles
(12x1)
QUESTION 2 Answer all questions
2.1 Name TWO instruments of fiscal policy (2)
2.2 Name any TWO monetary policy instruments used by the South African
Reserve Bank. (2)
2.3 Name any TWO phases of a business cycle. (2)
2.4 Name TWO types of business cycles that occur in a market economy (2)
2.5 Name any TWO types of business cycle indicators used in forecasting
economic activities (2)
2.6 Name two turning points of the business cycle
2.7 Name any two factors of the supply-side policies that can be used to
influence economic growth (2)
2.8 List two economic aspects illustrated by the Phillip’s curve (2)
PART 2 High order questions
1 Analyse the relationship between inflation and unemployment (8)
2 How can the monetary policy contribute to economic growth? (8)
3 Explain the importance of moving averages in the forecasting of business
cycles. (8)
4 Analyse how deregulation benefits households. (8)
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Revision Package/Macro-Economics 13 Mopani West/August
PART 3 ESSAYS
1 Discuss in detail the new economic paradigm, i.e. the demand and
supply side policies to smooth out business cycles. (26)
Use a fully labelled graph to explain the effect of the demand and
supply side policies on prices. (10)
2 Discuss ALL the features underpinning the forecasting of business
cycles. (26)
Why is price stability important to prevent extreme fluctuations in
business cycles? (10)
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Revision Package/Macro-Economics 14 Mopani West/August
PUBLIC SECTOR
QUESTION 1
1.1 Various options are provided as possible answers to the following questions.
Choose the answer and write only the letter (A–D) next to the question
number
1.1.1 The mini-budget that covers a period of three years, which is tabled in
October each year, is called the …
A. main budget
B. long term expenditure frame work
C. short-term budget
D. medium term budget policy statement
1.1.2 South African Defence Force services is provided by ... government
A. district
B. local
C. provincial
D. national
1.1.3 The state aims towards a more equal distribution of income by using a …
personal income tax system
A. proportional
B. regressive
C. progressive
D. constant
1.1.4 When the government sells more than 50% of the state-owned shares of a
public enterprise, it is called …
A. privatisation.
B. nationalisation.
C. free trade.
D. circulation
1.1.5 The government is responsible for … sector provisioning.
A. private
B. foreign
C. public
D. financial
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1.1.6 Public goods for which consumers have to pay are known as … goods.
A. community
B. private
C. collective
D. inferior
1.1.7 Goods characterised by non-rivalry and non-excludability are known as …
goods.
A. public
B. common
C. private
D. normal
1.1.8 Large public corporations or business entities in the public sector are known as
A. corporates.
B. businesses.
C. parastatals.
D. households
1.1.9 Goods and services that benefit the society are called ... goods.
A. demerit
B. harmful
C. common
D. merit
1.1.10 The Laffer curve shows the relationship between …
A. tax revenue and tax rate
B. income and expenditure
C. nominal and real figures
D. tax revenue and wages
1.1.11 Which ONE of the following is presented in October to inform parliament of
changes in the budget since February?
A. main budget
B. medium-term budget policy statement
C. medium- term expenditure framework
D. national budget
1.1.12 The … government encompasses metropolitan, districts and
municipalities.
A. local
B. provincial
C. national
D. central (12x1)
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1.2 Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the letter next to the question number
COLUMN A COLUMN B
1.2.1 Economic equity A. a system of government with complicated
administrative procedures and rules which
causes delays
1.2.2 Nationalisation B. transfer of ownership from the private sector to
the public sector
1.2.3 Privatisation C. An official in a government department
1.2.4 Medium term D. Taxes that cannot be shifted by the taxpayer to
expenditure someone else
framework
1.2.5 Bureaucracy E. provided by the government for use by all
members of society, for example public libraries
1.2.6 Public goods F. when a state-owned business is sold to a
private sector enterprise
1.2.7 Demerit goods G. progressive tax scales are used
1.2.8 Direct taxes H. Shows income and expenditure estimates for
three years
I. Harmful goods
(8x1)
1.3 Give ONE term for each of the following descriptions. Write only the correct
term next the question numbers in the ANSWER BOOK. Abbreviations,
acronyms and examples will NOT be accepted
1.3.1 The document showing government's anticipated revenue and estimated
expenditure for the coming fiscal year.
1.3.2 The curve that shows the relationship between tax rates and tax revenue
1.3.3 Goods that are harmful to society, for example cigarettes
1.3.4 An increase in the real gross domestic product
1.3.5 The main source of revenue to the state
1.3.6 Businesses owned wholly or partly by the state and run by a public
authority.
1.3.7 Goods and services, like education, that benefit society as a whole.
1.3.8 A transfer of functions and ownership from the public sector to the
private sector.
1.3.9 Taxes levied on the sale of goods and services.
1.3.10 Implies that prices do not change much over time. (10x1)
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Revision Package/Macro-Economics 17 Mopani West/August
QUESTION 2 Answer all questions
2.1 Name any TWO macroeconomic objectives of the state. (2)
2.2 Give any TWO reasons for public sector failure. (2)
2.3 Give any TWO examples of indirect taxes. (2)
2.4 Name any TWO sources of state revenue. (2)
2.4 Name TWO problems of public sector provisioning
(2)
PART 2 High order questions
1 How can inefficiencies that contributed towards public sector failure be
solved? (8)
2 How will corruption impact negatively on the efficiency of the government? (8)
3 Evaluate the provisioning of public goods and services in South Africa. (8)
4 Evaluate taxation as part of the government's strategy to grow the economy (8)
5 With the aid of the well labelled Laffer curve, explain the impact of the tax
rate increase on state revenue (8)
6 How can the South African government improve the efficiency of service
delivery? (8)
7 Evaluate the government’s plan to divide Eskom in to three different units (8)
8 How does public sector failure affect the economy? (8)
9 How can South African municipalities improve efficiency in service delivery?
(8)
10 How can taxation be used to stimulate employment in South Africa? (8)
PART 3 ESSAYS
1 Discuss in detail the macro economic objectives of the government. (26)
How successful is the main budget in achieving its economic goals? (10)
2 Discuss reasons for public sector failure. (26)
How does public sector failure affect the economy? (10)
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Revision Package/Macro-Economics 18 Mopani West/August
INTERNATIONAL TRADE
1.1 Various options are provided as possible answers to the following questions.
Choose the answer and write only the letter (A–D) next to the question
number
1.1.1 Countries with fundamental balance of payment problems can apply for
financial support from the
A. International monetary fund
B. Federal bank
C. Reserve bank
D. Imperial Bank
1.1.2 The purchasing or selling of equities forms part of … investments in the
balance of payments.
A. portfolio
B. direct
C. current
D. net gold
1.1.3 When a country's total imports exceeds its total exports it is referred to as a …
on the trade balance.
A. surplus
B. deficit
C. equilibrium
D. constant
1.1.4 The exchange rate system used by South Africa is called the ...exchange rate
system.
A. fixed
B. managed floating
C. free-floating
D. gold standard
1.1.5 The term used to compare a country's export prices with its import prices by
means of indices is called the …
A. balance of payments
B. terms of trade
C. balance of trade
D. exchange rate
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1.1.6 The financial account in the balance of payments records transactions
related to …
A. production.
B. merchandise exports.
C. net gold exports.
D. assets and liabilities
1.1.7 Economies of scale are associated with …
A. mass production
B. limited output
C. long-term average cost increases
D. increased wastage
1.1.8 Where one country can produce more goods or services than another country
within a given time period it is called …
A. comparative advantage
B. absolute advantage
C. terms of trade
D. free trade
1.1.9 A supply reason for international trade is/are …
A. income levels
B. preferences and tastes
C. the size of the population
D. labour resources
1.1.10 The balance of payment has … account(s).
A. two
B. one
C. three
D. four
1.1.11 If country A is able to produce both maize and tea at a cheaper cost than
countries B and C, it is said to have a/an … advantage
A. absolute
B. best
C. restrictive
D. comparative
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1.1.12 The type of investment that is known as “hot money” is …
A. an investment in equities
B. an investment in real estate
C. a trade credit
D. a short term investment (12x2)
1.2 Choose a description from COLUMN B that matches the item in COLUMN A.
Write only the letter next to the question number
COLUMN A COLUMN B
1.2.1 Terms of trade A. An increase in the price of the currency in
terms of another currency due to market
forces
1.2.2 Free floating B. deliberate decrease in the value of the
currency in terms of another currency
1.2.3 Balance of payments C. exchange rate system where the value of the
currency is determined by market forces only
1.2.4 Special drawing rights D. Buying and selling of equities/ shares
1.2.5 Devaluation E. decrease in the value of the rand in terms of
the pound due to market forces
1.2.6 Appreciation F. price of one country's currency in terms of
another country's currency
1.2.7 Portfolio investment G. a statement of a country's transactions with
the rest of the world
1.2.8 Exchange rate H. compares a country's export prices with its
import prices by means of an index ASC
2016
I. Gives member countries the opportunity to
obtain financial support from IMF
(8 marks)
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1.3 Give ONE term for each of the following descriptions. Write only the correct
term next the question numbers in the ANSWER BOOK. Abbreviations,
acronyms and examples will NOT be accepted
1.3.1 An account in the balance of payments that shows records of investments
by South Africans in other countries
1.3.2 The authorities deliberately increase the value of the currency
1.3.3 Account in the balance of payments that records all international transactions
relating to production, income and expenditure
1.3.4 A set of accounts that shows a systematic record of the trade and financial
transactions between a country and the rest of the world
1.3.5 The market engaged in the buying and selling of foreign currencies
1.3.6 The value of a country's currency exchanged for another currency
1.3.7 Compares a country's export prices to its import prices by means of indexes
1.3.8 An increase in the price of a currency in terms of another currency due to
market forces
1.3.9 The value of goods exported minus the value of goods imported
1.3.10 The exchange of goods and services across borders of the country
1.3.11 A situation where one country can produce goods or services cheaper
than another country
1.3.12 Money received without any productive services rendered. (12)
Mind the gap
QUESTION 2
2.1 Name TWO items in the financial account of the balance of payments. (2)
2.2 Give TWO supply reasons for international trade. (2)
2.3 List two types of exchange rate system (2)
2.4 Name any TWO reasons for a demand for foreign currency, such as US
dollars (2)
2.5 Give any two demand reasons for international trade (2)
2.6 List any two effects of international trade (2)
PART 2 High order questions
1 Assess how an increase in import prices and an increase in export prices
(terms of trade) will affect the South African economy. (8)
2 How can the Reserve Bank reduce the deficit on the balance of payments? (8)
3 How can imports be targeted to reduce the deficit on the balance of trade
In South Africa? (8)
4 Explain, by means of a neatly labelled graph, the effect on the value of the
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rand if there is a sharp increase in the number of South African tourists
visiting the USA. (8)
5 How is the South African economy influenced by the effects of
international trade? (8)
6 Evaluate the effectiveness of the methods used to correct the balance of
payments disequilibria. (8)
7 How effective is international trade in the world economy? (8)
8 How does an improvement in the terms of trade influence the balance
on the current account? (8)
PART 3 ESSAY
Discuss in detail the reasons for international trade. (26)
How does efficiency impact on international trade? (10)
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