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PRELIMINARY EXAMINATIONS 2020 : ECONOMICS GR.12 : PAPER I Page 1 of 33HILTON COLLEGE
PRELIMINARY EXAMINATIONS
SEPTEMBER
2020
ECONOMICS: Grade 12
Time: 3 hours 300 marks
Examiner: H Dry
Moderators: J Webb, M Mchunu
Examination Number: _____________________________________________
Teacher: ________________________________________________________
PLEASE READ THE FOLLOWING INSTRUCTIONS CAREFULLY
1. This paper consists of 33 pages (including Answer Sheet). Please check that
your question paper is complete.
2. Read the questions carefully.
3. Answer ALL the questions.
4. Answer the multiple choice questions on the answer sheet provided and the
remainder of the questions in the space provided on the question paper.
5. Answer questions, where possible, point by point but in full sentences. A
systematic presentation of facts is required.
6. It is in your best interest to write legibly and to present your work neatly.
7. Non-programmable calculators may be used.
8. Please do not write in pencil as work in pencil will not be marked. Any
sketches or diagrams may be done in pencil.
1
, PRELIMINARY EXAMINATIONS 2020 : ECONOMICS GR.12 : PAPER I Page 2 of 33
SECTION A: Multiple Choice
1. Select the correct alternative and enter the letter of the correct answer in the block on the answer
sheet provided.
1.1 When I + G + X > S + T + Z, the national income will …
A Decrease.
B Increase.
C Remain unchanged.
D Expenditure = Income = Injections. (2)
1.2 The flows of private and public goods and services are … flows and they are
accompanied by … flows of expenditures and taxes.
A Factor; income
B Financial; constant
C Real; monetary
D Monetary; financial (2)
1.3 This is NOT a characteristic of a public/collective good:
A It is excludable.
B It is non-rivalrous.
C Free-riding.
D It is non-competitive. (2)
1.4 Portugal is a highly taxed economy. Some economists have suggested that if the
government were to cut tax rates, it would actually receive more tax revenue. Why
may cutting taxes increase revenue?
A It may encourage emigration.
B It may increase the tax burden.
C It may reduce tax evasion.
D It may lead to a fall in investment. (2)
1.5 China has announced a devaluation of their currency as part of a strategy to soften
the Covid-19 impact on their economy. All other things being equal this devaluation
should …
A Increase exports.
B Decrease exports.
C Increase imports.
D Increase the size of the trade deficit. (2)
2
, PRELIMINARY EXAMINATIONS 2020 : ECONOMICS GR.12 : PAPER I Page 3 of 33
1.6 Which one of the following is an example of restrictive Monetary policy?
A Reduction in interest rates.
B An increase in government spending.
C A decrease in the money supply.
D An increase in tax rates. (2)
1.7 Total utility … as more units are consumed.
A Increases at a constant rate
B Increases at a decreasing rate
C Increases at an increasing rate
D Decreases (2)
1.8 Which one of the following statements regarding the circular flow model is correct?
A The two most important flows are goods and services markets.
B Within the circular flow cycle, resources flow from households via the factor
market to firms.
C Firms provide production factors via the real flow.
D Money flows include the flows of expenditure and production factors. (2)
1.9 The marginal propensity to consume (MPC) is defined as …
A The number by which the change in initial spending results in a change in
national income.
B A change in spending that causes a disproportionate change in aggregate
demand.
C The proportion of additional income which households save.
D The proportion of additional income which households spend on (2)
consumption.
1.10 If the government reduces its spending and the South African Reserve Bank
(SARB) increases lending rates, the most likely forecast will be:
A Inflation will decrease, but unemployment will increase.
B Total demand will decrease, but inflation will increase.
C Total supply will decrease, but economic growth will increase.
D Unemployment will increase, but the financial account of the Balance of
Payments will improve. (2)
3
, PRELIMINARY EXAMINATIONS 2020 : ECONOMICS GR.12 : PAPER I Page 4 of 33
Study Table 1 below and answer Questions 1.11 and 1.12 below:
Table 1: National Accounts
Year Nominal GDP Real GDP CPI
R million R million 2010 = 100
2017 2 360 000 1 969 5900 110
2018 2 600 000 A 117
2019 2 653 390 B 122
2020 2 900 250 2 316 154 124
1.11 Real GDP figures in 2018 and 2019 are:
A R4 960 000 million and R5 253 390 million.
B R5 253 390 million and R5 553 640 million.
C R2 222 222 million and R2 174 910 million.
D R304 200 000 million and R323 713 580 million. (3)
1.12 The economic growth rate for 2020 is …
A 1.5%.
B 9.3%.
C 12.8%.
D 6.5%. (3)
1.13 South Africa’s current debt to GDP stands at approximately … and it refers to …
A 15%; the Budget expenditure that exceeds tax revenue.
B 80%; the comparison between what a country owes with what it produces.
C 30.1%; the Balance of payments deficit.
D 65%; the total South African consumer debt. (3)
1.14 This is how the balance on the Balance of Payments (BOP) account is calculated:
A Current Account + Capital Transfer Account + Financial Account +
Unrecorded transactions.
B Trade Balance + Income and Services Receipts – Income and Services
Payments +/- Current Transfers.
C Current Account + Trade Balance + Financial Account + Capital Transfer
Account.
D Current Account + Financial Account + Reserves Account. (3)
4
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