NOVEMBER 2013 EXAMINATION DATE: 14 NOVEMBER 2013 DURATION: 3 HOURS PASS MARK: 40% (BUS-EC)

Size: px
Start display at page:

Download "NOVEMBER 2013 EXAMINATION DATE: 14 NOVEMBER 2013 DURATION: 3 HOURS PASS MARK: 40% (BUS-EC)"

Transcription

1 ECOBUS NOVEMBER 2013 EXAMINATION DATE: 14 NOVEMBER 2013 TIME: 09H00 12H00 TOTAL: 100 MARKS DURATION: 3 HOURS PASS MARK: 40% (BUS-EC) 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) SECTION B: SECTION C: SECTION D: CONSISTS OF 4 SHORT QUESTIONS CONSISTS OF 4 LONG ANSWER QUESTIONS CONSISTS OF 3 INTERPRETATIVE QUESTIONS ANSWER ANY ONE OF THE QUESTIONS (10 MARKS) (40 MARKS) (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 RULER, PENCIL AND NON-PROGRAMMABLE CALCULATOR TO COMPLETE THIS EXAM. DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 1 OF 8

2 SECTION A (30 MARKS) (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, then write it as The sum of the utility derived from consuming a product is: total utility. average utility. marginal utility. diminishing utility. 2. Which term is incorrect with regards to natural resources? exhaustible equally distributed scarce strategically important 3. Which statement is incorrect with regard to market-orientated monetary policy? an increase in the repo rate buying of government securities on the open market an increase in the reserve ratio requirement an increase in VAT 4. Which statement represents an increase in supply at all price levels? a movement down the supply curve a movement up the supply curve a rightward shift in the supply curve a leftward shift in the supply curve 5. Which of the following is not a characteristic of money? stable value measure of value standard of postponed payments recovery function 6. Which statement best describes the free-market (capitalist) system? The central government divides resources. Resources are divided by the price mechanism. The consumer has limited choices. Central government accepts full responsibility for the economy. DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 2 OF 8

3 7. Money spent by tourists visiting South Africa are reflected in which account on the Balance of Payments? long-term capital capital account current account visible imports current account invisible exports current account invisible imports 8. Which statement is FALSE with regard to a recession? subsidies increase government revenue falls government revenue increases consumption decreases 9. A shift to the left of the demand curve for South African rands may be caused by: a decrease in the demand for imports. a decrease in the demand for exports. an increase in the South African interest rate. None of the above. 10. A vertical supply curve may be described as: relatively elastic. perfectly elastic. relatively inelastic. perfectly inelastic. [10] (ii) TRUE OR FALSE QUESTIONS Indicate whether the following statements are True or False. Motivate all your answers. 1. An industry is an oligopoly when total output is supplied by just a few firms. 2. The aggregate demand (AD) curve relates to the total value of goods and services that firms would willingly produce in a given period. 3. Total variable costs (TVC) are costs incurred by a firm even when the output is zero. 4. The exchange rate is the price of a nation s currency in terms of some foreign currencies. 5. National defence is a public good. [5 2 = 10] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 3 OF 8

4 (iii) MATCHING-STATEMENT QUESTIONS Match the terms in Column B to the statements in Column A. Write down the answers only, for example 1.. Column A Column B 1. pressure to increase wages fiscal policy 2. central government divides resources SARB 3. quantity supplied equals quantity demanded trade unions 4. issuing of bank notes monetary policy 5. intermediaries that channel funds from lenders to borrowers (e) domestic 6. government expenditure (f) floating exchange rate 7. colluding on prices and dividing markets (g) communism 8. free of government intervention (h) financial institutions 9. within the boundaries of a country (i) equilibrium 10. open market transactions (j) cartel [10] [30] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 4 OF 8

5 SECTION B: SHORT QUESTIONS (10 MARKS) QUESTION 1 What institution issues bank notes in South Africa? [2] QUESTION 2 Explain your understanding of the law of demand. [2] QUESTION 3 Name the motive for demanding money for unforeseen expenditures. [2] QUESTION 4 Describe the difference between economic goods (economic products) and free goods. [2 2 = 4] [10] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 5 OF 8

6 SECTION C: LONG ANSWER QUESTIONS (40 MARKS) QUESTION 1 List the ten broad functions of the SA Reserve Bank (SARB). [10] QUESTION 2 International trade in goods and services takes place on a daily basis. Describe your understanding of the terms comparative advantage and absolute advantage. (2 2 = 4) Some local industries are unable to compete with overseas industries. In order to protect such local industries from overseas competition, the government imposes protective measures that discourage the importing of particular goods or the excessive exporting of a natural resource. Give four reasons for this protection. (4) Identify the symbols used in the GDP (gross domestic product), using the expenditure approach, to denote the foreign sector. (2) [10] QUESTION 3 Describe your understanding of the various categories (types) of elasticity of demand. [5 2 = 10] QUESTION 4 The value of labour is determined by its productivity, however, the market price of labour is relatively high. Give the reasons why the market price of labour is high. (3 2 = 6) If wage increases do not accompany a corresponding increase in productivity, inflationary pressure increases. Discuss this statement. (4) [10] [40] DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 6 OF 8

7 SECTION D: INTERPRETATIVE QUESTIONS (20 MARKS) ANSWER ANY ONE OF THE QUESTIONS QUESTION 1 The AS / AD (Aggregate Supply / Aggregate Demand) model is used for policy making. Using the AS / AD model, graphically illustrate and describe the effect of an Expansionary Monetary Policy by the MPC (Monetary Policy Committee) decreasing the repo rate. Briefly discuss this statement as well. Please remember to label your graph. [20] OR QUESTION 2 The functions of the Government in rendering services are divided into four main groups, namely general, community, social, and economic services. Describe each of these service deliveries. [4 5 = 20] OR QUESTION 3 Using the data in the table below, draw the demand and supply graph for Darkolates, dark chocolate box collections, then answer the questions that follow. Indicate the equilibrium (E1). (4) Price Quantity Demanded (000s) Quantity Supplied (000s) R45, R40, R35, R30, R25, R20, R15, A report is published in the newspaper that eating dark chocolate is good for a person s health. This results in an increase in the demand of 100 at each price level. Show this movement in demand on your graph as well as the new equilibrium (E2). (4) DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 7 OF 8

8 (e) There is a severe drought in West Africa where the cocoa is grown, resulting in a decrease in the supply of cocoa which is the main ingredient in manufacturing the chocolate. Due to the severity of the climatic conditions, the decrease in supply of Darkolates amounted to 100 at each price level. Illustrate this effect on your graph, indicating the new equilibrium (E3). (4) Using your completed graph calculate what shortage or surplus there would be at the price level of R25,00. (4) Identify the factors which could result in a change in demand of a product. (4) [20] [20] Section A: 30 marks Section B: 10 marks Section C: 40 marks Section D: 20 marks TOTAL: 100 MARKS DAMELIN CORRESPONDENCE COLLEGE NOVEMBER 2013 PAGE 8 OF 8