NATIONAL SENIOR CERTIFICATE GRADE 12

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Economics 4 DoE/Feb. – March 2010 NSC – Memorandum SECTION B QUESTION 2 2.1 2.1.1 2.1.2 2.1.3 2.1.4 Money Trough Laffer Extrapolation (4 x 2) 2.2 • Provides government with additional funds. • Broadens the tax base which increases government revenue. • Improves the efficiency of the economy. • Attracts foreign investment. • Decreases pressure on the government budget. • Promotes black economic empowerment. • Reduction of personal income tax and public debt. Any (3 x 2) 2.3 2.3.1 The multiplier shows how an increase in spending (injection) produces a more than proportional increase in national income (3) 2.3.2 Household Business (4) 2.3.3 Indicates all points where income = expenditure / 45º line / Keynesian equilibrium (2) 2.3.4 20 bn (2) 2.3.5 M = 1 = 1 = 2.5 mps 0.4 2.5 x 10 bn = 25 bn. (6) 2.3.6 The larger the MPC the bigger the multiplier and visa versa (3) Copyright reserved Please turn over (8) (6)
Economics 5 DoE/Feb. – March 2010 NSC – Memorandum 2.4 • Inefficiency means that goods and services are not provided in the desired quantity and quality • Public goods are efficiently provided if Pareto-Efficiency is achieved i.e. it is impossible to make somebody better off without making the other worse off • Objectives like housing, health, employment etc are not always possible because of limited resources and serious structural weakness in the economy The following aspects contribute to inefficiency: 2.4.1 BUREAUCRACY • There is too much rules and procedures (red tape). • Officials focus on following rules such that they are indifferent to the quality of service. • Sometimes they are insensitive to the needs of the client. • Policies take a long time to implement. 2.4.2 INCOMPETENCE • There is a lack of skills or ability to do a task successfully • A reason for this could be improper qualifications, lack of training and experience etc. 2.4.3 CORRUPTION • Government officials are guilty of sometimes taking bribes, commit fraud, resort to nepotism • Politicians sometimes promote policies, which might involve an inefficient allocation of resources in order to secure votes • Sometimes trade unions and business influence government to distribute resources so that they benefit at the country's expense (Accept any other relevant facts) (Any 8 x 2) Copyright reserved Please turn over (16) [50]
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NATIONAL SENIOR CERTIFICATE GRADE 12

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