QUESTION 2 (20 Marks)

Define the following economic terms:

2.1 Consumer Price Index (CPI)

2.2 Seasonal Unemployment

2.3 Induced Consumption

2.4 Nominal Wage

2.5 Floating Exchange Rate

2.6 Gross National Product (GNP)

2.7 Economic Growth

2.8 Fiscal Policy

2.9 Frictional Employment

2.10 Foreign Exchange Market

QUESTION 1 (20 Marks)

State whether the following statements are True or False. Write down the question number and the word True or

False next to it. E.g. 2.11 True

1.1 Macroeconomics is concerned with the economy as a whole.

1.2 The Lorenz curve illustrates the degree of inequality in the distribution of income.

1.3 One of the problems associated with GDP is that GDP measures the output of a country.

1.4 If 2019 is the base year for real GDP calculations, we know for certain that Nominal GDP equals Real GDP in

2019.

1.5 When all factors of production are in full use, this is called full employment.

1.6 GNP refers to the production resulting from the employment of foreign residents of South Africa.

1.7 Free Marketers are capitalists.

1.8 Classical economies is a theory of total spending in the economy and its effect on output and inflation.

1.9 If government spending is higher than current government revenue, this is known as ''the budget deficit''.

1.10 If inflation was 9% in 2019, and you received a 7% increase in income during the same year, then over the year

your nominal income decreases but real income increases.

QUESTION 3 (20 Marks)

3.1 Discuss what market failure is. (4 marks)

3.2 Explain in detail how the following factors cause market failure:

3.2.1 Monopoly and imperfect competition. (2 marks)

3.2.2 Public goods. (2 marks)

3.2.3 Externalities. (2 marks)

3.2.4 Asymmetric information. (2 marks)

3.2.5 Common property resources (2 marks)

3.2.6 Income distribution. (2 marks)

3.2.7 Merit goods. (2 marks)

3.2.8 Macroeconomic growth and stability. (2 marks)

QUESTION 4 (20 Marks)

4.1 Distinguish between economic growth and economic development (5 marks)

4.2 Explain ANY THREE (3) sources of economic growth. (6 marks)

4.3 Discuss the arguments for and against economic growth. (9 marks)

QUESTION 5 (20 Marks)

5.1 Explain the macroeconomic concept of nationalization in detail. (2 marks)

5.2 Discuss SIX (6) advantages of implementing privatization in the South African economy. (12 marks)

5.3 Discuss TWO (2) arguments against implementing privatization in the South African economy. (4 marks)

5.4 Discuss what Commercialization is