This Question Paper Consists of 13 Pages and a 2-Page Answer Sheet

EXAMPLAR-1-NC(V)

ECONOMIC ENVIRONMENT

NQF LEVEL 3

2008

(3011022)

(X-Paper)

09:00 – 12:00

EXEMPLAR

This question paper consists of 13 pages and a 2-page answer sheet.

TIME: 3 HOURS
MARKS: 200
______
NOTE: / If you answer more than the required number of questions, only the required number of questions will be marked. All work you do not want to be marked, must be clearly crossed out.

INSTRUCTIONS AND INFORMATION

1.
2.
3.
4.
5. / Answer ALL the questions in SECTION A and only FOUR questions in SECTION B.
Answer SECTION A on the ANSWER SHEET provided.
Read ALL the questions carefully.
Number the answers correctly according to the numbering system used in this question paper.
Write neatly and legibly.
Question / Topic / Marks / Recommended time
Section A
1 / Multiple Choice / 30 / 27 min
2 / Matching / 20 / 18 min
3.1 / Missing words / 10 / 9 min
3.2 / True and False / 20 / 18 min
Section B
4 / Basic economics & Financial markets and economic indicators. / 30 / 27 min
5 / Financial markets and economic indicators & Current affairs related to a specific business sector / 30 / 27 min
6 / Current affairs related to a specific business sector / 30 / 27 min
7 / Current affairs related to a specific business sector & International trade calculations / 30 / 27 min
8 / International trade calculations / 30 / 27 min
TOTAL / 200 / 180 min

SECTION A (COMPULSORY)

QUESTION 1

1.1 / Various possible options are provided as answers to the following questions. Choose the correct answer and make a cross (X) in the appropriate block next to the question number on the ANSWER SHEET.
1.1.1 / Lindiwe has to make a choice between buying a Michael Jackson CD and a text book for economics. She needs it for her studies. The CD and the textbook costs R95 each. She only has R100 available. This refers to ...
A
B
C
D / monetary policy
a study of macro economics
opportunity costs.
both a study of micro and macro economics. / (2)
1.1.2 / Most companies in South Africa raise capital on the ...
A
B
C
D / London Stock exchange.
Johannesburg Stock Exchange.
New York Stock Exchange.
None of the above / (2)
1.1.3 / The South African Government intervenes in the South African economy therefore South Africa has … economic system.
A
B
C
D / communist system
free market system
mixed market system
None of the abovementioned / (2)
1.1.4 / Le Roy Adams works to make ends meet. The remuneration that he earns offering his labour is called ...
A
B
C
D / profit.
wages.
interest.
rent. / (2)
1.1.5 / Tito Mboweni is the ...
A
B
C
D / South African Minister of Finance.
Governor of the South African Reserve Bank.
Speaker of Parliament.
None of the abovementioned / (2)
1.1.6 / The American financial sector is experiencing credit related problems. This will cause ...
A
B
C
D / financial shares on the Johannesburg Stock Exchange to drop sharply in value.
financial shares on the Johannesburg Stock Exchange to rise sharply in value.
financial shares to stay the same (no fluctuation).
None of the abovementioned / (2)
1.1.7 / The following will cause a reduction in the spending power of consumers:
A
B
C
D / A rise in the wheat price
A rise in the price of gold
A rise in interest rates
Both A and C are correct / (2)
1.1.8 / Procurement in the business deals with management ensuring that the ...
A
B
C
D / finances of the business are in order.
business gets all the materials they need in the production of goods and services.
business is adequately staffed.
assets of the business are effectively used. / (2)
1.1.9 / The following is/are factor/s that will affect the socio-political environment which could impact on a specific business sector:
A
B
C
D / Legislation passed ensuring minimum wages for waiters
The government changes the economic system
The HIV/AIDS rate is spiralling out of control
Both A and C are correct / (2)
1.1.10 / Inflation refers to ...
A
B
C
D / decreasing prices.
rising prices.
Both A and B are correct.
None of the abovementioned. / (2)
1.1.11 / The way banks process and approve applications has changed drastically over the years from handwritten to computer processing. Turnaround time has been shortened to minutes. This is due to ...
A
B
C
D / technological changes.
political changes.
socio-political changes.
economic changes. / (2)
1.1.12 / The main reason for the increase in oil prices is …
A
B
C
D / the assassination of the president of America.
terrorist threats and war in Iraq.
Oil shortages.
Both B and C is correct / (2)
1.1.13 / The interest rate rises by a hundred basis points from 12,5%. What will the new interest rate be?
A
B
C
D / 11,5%
13,0%
13,5%
14,5% / (2)
1.1.14 / Break-even is a point where ...
A
B
C
D / variable costs is equal to income.
income is equal to expenses.
income is more than expenses.
income is less than expenses. / (2)
1.1.15 / Thomas saved R50 000 to pay for an overseas trip holiday costing £5 000. The exchange rate £1 = R14.50. Thomas has ...
A
B
C
D / enough to pay for the holiday.
R22 500 too little.
R22 500 too much.
None of the abovementioned. / (2)
[30]

EXEMPLAR-1-NC(V)

QUESTION 2

2.1 / Choose an item/word from COLUMN B to match a description/item/word in COLUMN A. Write only the letter (A - J) next to the question number (2.1.1 - 2.1.10) on the attached ANSWER SHEET, example 2.1.11 K
COLUMN A / COLUMN B
2.1.1
2.1.2
2.1.3
2.1.4
2.1.5
2.1.6
2.1.7
2.1.8
2.1.9
2.1.10 / Businesses
War
Entrepreneurs
New York Stock Exchange
OPEC
Internet
Dollars
Basic Condition of Employment Act
Barter
Local economic indicator / A
B
C
D
E
F
G
H
I
J / South Africa has a shortage to start businesses and to manage effectively
Gold - $723
The oil and gold price are expressed in this currency
Provide goods and services to households
Lays down rules and regulations that protects the worker in the workplace against abuse by the employer
The first form of payment that existed
Is an event in the physical environment that can cause hardship in an economy
If shares in this institution falls sharply the rest of the markets follow suit
The fastest growing communication tool in the technological environment
The organisation that the oil producing countries belong to, to regulate oil output / [20]
3.1 / Complete the following sentences by filling the missing word(s). Write only the word(s) next to the question number (3.1.1 - 3.1.10) on the attached ANSWER SHEET.
3.1.1 / ... are charged on products which are imported. / (1)
3.1.2 / Real income must keep pace with ... / (1)
3.1.3 / The people of an area will ... as a last resort to express their dissatisfaction with bad service delivery. / (1)
3.1.4 / The unit of measurement for gold is ... . / (1)
3.1.5 / Pick 'n Pay is part of a ... chain in South Africa. / (1)
3.1.6 / Elected ... can influence the political decision in an area. / (1)
3.1.7 / Storms can cause millions of rand of damage to ... . / (1)
3.1.8 / The ... brought about a drastic technological change of how people can communicate, access information and transact. / (1)
3.1.9 / The CPI is an abbreviation for the ... . / (1)
3.1.10 / Mr Nortje earns R12 600 per month and spends R9 734 of that income. His disposable income will be ... . / (1)
[10]
3.2 / Indicate whether the following statements are TRUE or FALSE. Choose the answer and write only 'true' or 'false' next to the question number (3.2.1 - 3.2.10) on the attached ANSWER SHEET.
3.2.1 / The remuneration for capital is rent. / (2)
3.2.2 / Many businesses are lagging behind because managers fail to adopt the latest technological changes in production. / (2)
3.2.3 / If infrastructure is not regularly maintained it can be quite costly to repair or rebuild at a later stage. / (2)
3.2.4 / Mkhonza was fired without a hearing, this is a case for the Department of Social Welfare. / (2)
3.2.5 / War impoverishes a country and destroy its infrastructure. / (2)
3.2.6 / 2010 is not only about the Soccer World Cup but also job creation especially in the tourism industry. / (2)
3.2.7 / Ruth imports a Ferrari from Italy at a cost of R1 500 000. On arrival she must pay an extra R500 000 in import duties. This will have no effect on the landing costs of the car. / (2)
3.2.8 / Credit card is a means of payment for goods and services. / (2)
3.2.9 / Drought can have negative implications on an economy. / (2)
3.2.10 / Personal loans can be obtained to buy a house. / (2)
[20]

SECTION B

Answer any FOUR of the following questions in your ANSWER BOOK.

QUESTION 4: BASIC ECONOMICS & FINANCIAL MARKETS AND ECONOMIC

INDICATORS

Read the case study below and answer the questions that follow:
Cape Town's film boom has attracted 120 investments worth over R52-million to the region since July 2005, injecting over R2,6 billion into the Western Cape economy, says the Cape Film Commission.
2006 was a successful year for film in the Western Cape, with positive partnerships between the government and the film industry as well as significant investment in the province.
According to the commission, film activity during 2005/6 included 2 100 photography shooting days and the production of 687 films and TV commercials and feature films.
During the same period, the commission said, it had given assistance to just over 1 000 businesses and 400 empowerment firms, trained 974 people, established 55 new businesses, hosted 74 industry events and created over 2 000 new jobs.
[Taken from: Economics NCV Level 3 – Pearson]
4.1 / Identify the sector in which the film industry operates? / (2)
4.2 / From the case study name TWO stakeholders involved in the Film Industry? / (2)
4.3 / Which factor of production can the people of Cape Town offer to the film industry? / (1)
4.4 / Name TWO industries that will benefit the most from the cash injection made by the film industry. / (2)
4.5 / Do you think the government will support this investment? Supply THREE reasons why. / (4)
4.6 / The case study talks about 55 new businesses that have been created.
4.6.1
4.6.2 / Define the term 'entrepreneur'.
What is the remuneration for entrepreneurship? / (3)
(1)
4.7 / Financial institutions offer various services to these industries.
4.7.1 / What is the repayment term on a hire purchase instalment agreement on a car? / (1)
4.7.2 / Name an advantage of obtaining credit. / (1)
4.7.3 / Briefly explain what a discount house is. / (3)
4.8 / Some of these 55 new businesses that were established will need extra cash in future. One of their options would be to sell shares on the stock exchange.
4.8.1 / In your own words explain what is meant by shares. / (2)
4.8.2 / In what index of the Johannesburg Stock Exchange will you find banks listed. / (2)
4.8.3 / The share price of SANLAM last week was R21,50. After the announcement of an acquisition the share price rose to R24,50. Calculate the percentage increase in SANLAM's share price. / (4)
4.9 / Explain briefly the term dividend. / (2)
[30]

QUESTION 5: FINANCIAL MARKETS AND ECONOMIC INDICATORS & CURRENT

AFFAIRS RELATED TO A SPECIFIC BUSINESS SECTOR

Economic data like the gold price, exchange rates, wheat price etcetera, is made available daily.
% change
CURRENCIES / R/$ 7.101 / 1.36
R/£ 14.286 / 0.58
GOLD NY / $723.50 / 0.83
BRENT FUTURE (OIL) / $78.27 / 1.68
CPI / 6.48
[Economic data as per: Business Day, Wednesday, 19 September 2007]
5.1 / What is local economic indicators? / (2)
5.2 / Tanuja and her family want to go overseas. She needs pounds since they will be going to England. Calculate how much money in Rands she will need to afford a holiday costing £12 500. / (3)
5.3 / What will the price of a loaf of bread be today if it cost R5,00 last year? / (2)
5.4 / The price of oil has increased, what effect will this have on the economy? / (2)
5.5 / List THREE reasons why economic indicators are so important in an economy. / (6)
5.6 / Explain the concept 'foreign exchange reserves'. / (2)
5.7 / A drastic increase in the gold price since 2005, from $325 to $723 has occurred.
5.7.1 / Is this good or bad for the South African economy? Motivate. / (3)
5.8 / Africa has large quantities of minerals and metals. In some instances up to 75% of the world's needs are provided by Africa. However Africa is still one of the poorest continents in the world. Supply TWO reasons why this is the case. / (2)
5.9 / Natural disasters can adversely affect economic growth.
5.9.1 / Name TWO natural disasters common in Africa. / (2)
5.9.2 / Name TWO ways in which disasters could impact on an economy. / (2)
5.9.3 / Can these disasters be averted? Motivate. / (4)
[30]

QUESTION 6: CURRENT AFFAIRS RELATED TO A SPECIFIC BUSINESS SECTOR

On 11 of September 2001 a disaster of major proportion struck the United States of America. Around 2 500 people lost their lives. Such disasters impact negatively on our economies, for example infrastructure was destroyed.
6.1 / State the type of disaster mentioned above. / (1)
6.2 / Infrastructure forms an integral part of a country's economy.
6.2.1 / What infrastructure must the government provide to ensure the success of the World Cup in 2010? Name TWO. / (2)
6.2.2 / Why are these infrastructure so important for the governments to provide? / (2)
6.2.3 / What could happen if the government does not maintain its infrastructure? / (2)
6.3 / Inflation over the last year is 10%. Lucille Francis salary increased from
R5 000 to R 5 200. Is Lucille still taking home the same salary compared to last year in real terms. Motivate. / (3)
6.4 / Johnny was hurt at the workplace. His employer did not report the incident and Johnny now cannot work anymore because he had lost the use of his hand.
6.4.1 / Which Act covers the safety and injuries of workers in the work place? / (1)
6.4.2 / Did Johnny's employer act correctly by not reporting the accident? Motivate. / (3)
6.4.3 / Can Johnny still take up the issue with the Workmen's compensation? / (2)
6.5 / Sannie works as a domestic worker. She earns R200 per month, working 45 hours per week.
6.5.1 / Is Sannie being paid a fair wage? Who determines the basic wage of workers? / (2)
6.5.2 / According to the BCEA, what is the maximum number of hours that a worker can work per week? / (2)
6.6 / About 4 million Zimbabweans have settled in South Africa over the last few years.
6.6.1 / Why did they leave their country? / (2)
6.6.2 / What effect does such a situation have on the South African economy? / (3)
6.7 / Unemployment in South Africa is very high.
6.7.1 / Give TWO reasons why this is the case. / (2)
6.7.2 / What effect does unemployment have on an economy? / (3)
[30]

QUESTION 7: CURRENT AFFAIRS RELATED TO A SPECIFIC BUSINESS SECTOR &

INTERNATIONAL TRADE CALCULATIONS)

The information technology era has brought about drastic changes in the way businesses operate. Trading time has been cut from hours and days to within minutes.
7.1 / List TWO ways in which people can do their banking while sitting at home. / (2)
7.2 / List TWO ways in which information was collected in the days before internet. / (4)
7.3 / List TWO threats businesses and people are exposed to when doing business via the internet. / (4)
7.4 / The government is encouraging the use of technology especially internet amongst the masses of the country.
74.1 / Why do you think the government is driving this expansion? / (2)
7.4.2 / What barriers could hamper the roll-out of the internet to the masses? / (2)
7.5 / E-mail has also brought about vast changes in the business world.
7.5.1 / In your own words explain what e-mail is. / (2)
7.5.2 / Name THREE advantages of e-mail. / (3)
7.6 / Name THREE advantages of the internet. / (3)
7.7 / Calculate the following:
7.7.1 / 10 % of R12 300 / (2)
7.7.2 / Maxwell gave Lerato 45% of 200 marbles and took back 20% of what he has given her. How many marbles does Lerato have? / (4)
7.8 / Lerato spends R45 000 for rent and salaries from an income of R75 600 of her business. Did Lerato make a profit/loss? Show the calculations. / (2)
[30]

QUESTION 8: INTERNATIONAL TRADE CALCULATIONS

8.1 / Explain the concept interest. / (4)
8.2 / Richard buys a computer and borrows R6 000 from the bank at an interest rate of 17% p.a. He repays the loan over six months.
8.2.1 / Calculate the interest that Richard will pay on the loan. / (3)
8.2.2 / Calculate the total amount that Richard will repay on the loan. / (2)
8.2.3 / Calculate his monthly repayments. / (2)
8.3 / Tsakani imports a car from Italy. The car costs R2 000 000 before other charges are levied.
8.3.1 / Import duty is charged at 65%. Calculate the import duty on the car. / (3)
8.3.2 / Landing costs amount to 5% of the initial cost of the car, whereas insurance cost 2% of the initial cost. Calculate these costs. / (4)
8.3.3. / VAT is calculated on the car after import duty has been added. Calculate the VAT payable. / (4)
8.3.4 / Calculate the final landed price of the car. / (2)
8.4 / Calculate the break-even turnover if fixed costs is R7 500 and the average weighted gross profit percentage equals 42%. (round of to the nearest rand) / (4)
8.5 / In your own words describe what is meant by the term critical path analysis. / (2)
[30]
TOTAL: / 200

ANSWER SHEET / EXAMINATION NUMBER:

SECTION A

QUESTION 1

1.1 / 1.1.1 / A / B / C / D
1.1.2 / A / B / C / D
1.1.3 / A / B / C / D
1.1.4 / A / B / C / D
1.1.5 / A / B / C / D
1.1.6 / A / B / C / D
1.1.7 / A / B / C / D
1.1.8 / A / B / C / D
1.1.9 / A / B / C / D
1.1.10 / A / B / C / D
1.1.11 / A / B / C / D
1.1.12 / A / B / C / D
1.1.13 / A / B / C / D
1.1.14 / A / B / C / D
1.1.15 / A / B / C / D / (15 × 2) / (30)

QUESTION 2

2.1.1
2.1.2
2.1.3
2.1.4
2.1.5
2.1.6
2.1.7
2.1.8
2.1.9
2.1.10 / (10 × 2) / (20)

QUESTION 3

3.1.1
3.1.2
3.1.3
3.1.4
3.1.5
3.1.6
3.1.7
3.1.8
3.1.9
3.1.10 / (10 × 1) / (10)
3.2 / TRUE/FALSE
3.2.1
3.2.2
3.2.3
3.2.4
3.2.5
3.2.6
3.2.7
3.2.8
3.2.9
3.2.10 / (10 × 2) / (20)