MINISTRY OF EDUCATION

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1 MINISTRY OF EDUCATION NAMIBIA SENIOR SECONDARY CERTIFICATE ECONOMICS SPECIMEN PAPERS 1 AND MARK SCHEME ORDINARY LEVEL GRADES 11 1 THESE PAPERS AND MARK SCHEMES SERVE TO EXEMPLIFY THE SPECIFICATIONS IN THE LOCALISED NSSC ECONOMICS ORDINARY LEVEL SYLLABUS 006

2 Ministry of Education National Institute for Educational Development Private Bag 034 Okahandja Namibia Copyright NIED, Ministry of Education, 005 NSSCO Economics Specimen Paper Booklet Grades 11-1 ISBN: Printed by NIED Publication date: 005

3 TABLE OF CONTENTS Paper 1 Specimen Paper...1 Paper 1 Mark Scheme...9 Paper Specimen Paper...17 Paper Mark Scheme...1

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5 MINISTRY OF EDUCATION Namibia Senior Secondary Certificate (NSSC) ECONOMICS: ORDINARY LEVEL PAPER 1 SPECIMEN PAPER (Short-answered questions and questions testing enquiry skills) TIME: hours 30 minutes INSTRUCTIONS TO CANDIDATES Write your name, Centre number and candidate number in the spaces at the top of this page and on all separate answer paper used. Answer all questions. Section A Write your answers in the spaces provided on the question paper. Section B Write your answer on the separate answer paper provide. At the end of the examination, fasten the separate answer paper securely to the question paper. INFORMATION FOR CANDIDATES The number of marks is given in brackets [ ] at the end of each question or part question. FOR EAMINER S USE Section A Section B TOTAL 1

6 Section A Answer all questions in this section. Write your answer in the space provided. 1. Your pocket-money forces you to choose - either a ticket for a local pop concert or some CD s. How does this illustrate opportunity cost? []. Describe labour as a factor of production. [1] 3. Resources are allocated by government directives for production. To which economic system does the above statement relate? [1] 4. State one advantage and one disadvantage of specialisation. [] 5. Define a trade union. [1] 6. Explain any one quality of money. [] 7. Describe two functions of the Bank of Namibia. [] 8. When is a market said to be in equilibrium? [1] 9. Identify two reasons that cause the demand curve to shift. []

7 10. Explain any one characteristic of a monopoly. [] 11. Give one factor, other than the wage rate, which will affect an individuals choice of occupation. [1] 1. Give one reason why workers in the same occupation are paid different wages. [1] 13. Describe the differences between labour- and capital production industries. [] 14. Define the term economies of scale. [1] 15. Give one reason why small firms may be successful. [1] 16. What type of unemployment exists when there is a fall in the demand for most goods and services in an economy? [1] 17. Give one example of an indirect tax in Namibia. [1] 18. Country X had the following figures for its balance of trade in a given year: Visible exports 000 Visible imports Invisible imports Invisible exports Calculate the current account balance. (Show your calculation.) [] 3

8 19. Interest rates in Namibia were increased three times in 00. (January, March and June). Give one advantage of an increase in interest rates. [1] 0. What monetary measure of economic policy does the government use to influence economic growth? [1] 1. Price Quantity Explain what would happen to demand and supply if the government sets the price of a good at P. []. What is meant by Retail Price Index? [1] 3. What is meant by Gross Domestic Product? [1] 4

9 4. The exchange rate is defined as the price of one country s currency in terms of another country s currency. Suppose the exchange rate between the Namibian dollar and the US dollar is US$ 1 = N$ 10. How much will a car costing US$ cost in Namibian dollars? (Show your calculation.) [] 5. Explain why you think Namibia is a developing country. [] 6. The Namibian Population and Housing Census was conducted in 001. The statistics produced indicate that the Namibian population has grown to million. Give two problems that may arise due to the growth in population in Namibia. [] 7. A government sometimes prevents certain economic activities due to the social cost of such activities. Explain one example of social costs created by a manufacturing firm. [] [Total: 40] 5

10 Section B Answer all questions in this section. Write your answer on the separate answer paper provide. QUESTION 1 The figures below shows income and expenditure for country X in Africa, in 001 in N$. Country X s income and expenditure, 001. (N$ m) INCOME EXPENDITURE Income from property 00 Interest on public debt Indirect taxes Consumption expenditure Direct taxes Subsidies Transfer from: Transfer to: Households 00 Households Businesses 150 Rest of the world 50 Rest of the world 10 Current income Deficit (a) What is meant by (i) consumption expenditure? [] (ii) subsidies? [] (b) Explain what is meant by direct and indirect taxes. [3] (c) Why do you think a government imposes taxes? [4] (d) Country X s income and expenditure are found in the budget statement. (i) The above budget shows a deficit. What does a deficit mean? [] (ii) Explain why a government may wish to deliberately budget for a deficit. [5] (e) The government wishes to raise more money to finance public expenditure. What way would you advise the government to do this? [8] [6] 6

11 QUESTION Shell Profits The price of crude oil has varied wildly since 1991, but the profits of the oil companies have continuously increased. Petrol (gasoline) is produced by refining crude oil. In the UK three big petrol operators, Shell, Esso and BP, make enormous profits each year. Motorists are punished by high petrol prices while the directors of the petrol companies are paid fat salaries of up to 1.3 billion in Despite the enormous profits and large salaries of the directors, Shell, Esso and BP are allowed to take the oil from the North Sea free. A critic from the pressure group Corporate Watch said The amazing thing is that the oil companies do not have to pay for the oil they take from the sea. In every other country royalties have to be paid to the government. In other words the UK government has chosen to tax the consumer instead of the oil companies. A spokesperson from Shell said there was no direct relationship between the price of crude oil and the company s huge profits. The price of a barrel of oil is only a small part of the price of a litre of petrol. Profits are made by the manufacturing process and it should be remembered that Shell needs profits to re-invest in searching for new reserves as oil is nonrenewable. (The Sun p.6) (a) Describe what happened between 1991 and 1997 to: (i) the price of petrol, [] (ii) the profits of Shell. [] (b) According to the article, what special advantage do oil companies have when operating in the UK? [] 7

12 (c) The article says that the petrol companies make enormous profits each year. If you were asked to find out whether the profits were unreasonable what would you need to know? [6] (d) What reason is given in the article to justify the level of profits of the company? [] [14] [Total: 40] 8

13 MINISTRY OF EDUCATION Namibia Senior Secondary Certificate (NSSC) ECONOMICS: ORDINARY LEVEL PAPER 1 MARK SCHEME MAXIMUM MARK: 80 SECTION A 1. 1 mark for the sacrifice because of limited pocket money 1 mark for one chosen to the other. 1 mark for the human effort of all types 1 mark for manual an non-manual 1 mark for skilled and unskilled mark for Command economy 1 mark for Planned economy mark for an advantage and 1 mark for an disadvantage Advantages work can be done with great speed and dexterity each worker has his/her own set of tools, no time is wasted by the movement of workers it makes it possible to mechanise the production process it becomes possible to use a whole range of power tools and machines it has enable workers to enjoy a shorter working week workers work according to their particular abilities Disadvantages boredom and frustration loss of skills identical articles difficult to find another job, specialised in one job when strikes occur the production is disrupted 5. 1 mark for trade unions are associations of workers formed 1 mark for the improving the pay and working conditions of their members 1 9

14 6. 1 mark for durability 1 mark for portability 1 mark for divisibility 1 mark for limited in supply any 1 explained 7. 1 mark for receives the government s income from taxation and other sources and makes payments on its behalf 1 mark for settle debts between central bank and other banks 1 mark for responsible for managing he national debt 1 mark for it is the sole not issuing authority for Namibia 1 mark for it come to aid of other banks if there is a shortage of cash in the banking system 1 mark for it influence the amount of bank lending and percentage interest charged on bank loans 1 mark for it holds the official stock of foreign currency any 8. 1 mark for when at a current market place, the amount which buyers want to buy just equals the amount which the sellers want to sell 1 mark for demand = supply mark for changes in income 1 mark for changes in the price of other goods e.g. substitutes or complementary goods 1 mark for changes in taste and fashion 1 mark for advertising 1 mark for hire purchase any mark for in theory there is only one supplier of a particular good or service 1 mark for there is no other competitor 1 mark for the monopoly can set the price of the product of the quantity it wishes to sell, or both 1 mark for monopoly can control the quantity supplied to the market, and therefore it can influence the price 1 mark for monopoly can only exist if other firms are prevented from entering the market any 1 explained mark for good opportunities for promotion 1 mark for a high degree of job security 1 mark for varied and satisfying work 1 mark for pleasant working conditions 1 mark for various payments in kind, such as subsidised housing 1 10

15 1. 1 mark for productivity differences 1 mark for seniority 1 mark for profit sharing 1 mark for regional differences 1 mark for woman s wages mark for labour intensive: making use of a high proportion of labour to other factors of production 1 mark for capital intensive: making use of a large amount of capital rather than labour e.g. car assembly mark for it refers to a situation where an increase in the size of the firm s output leads to a falling average cost mark for size of market is restricted 1 mark for they act as specialist producers of parts and components for large manufacturers 1 mark for they distribute, and provide after-sales service on, the products of large manufacturers 1 mark for they co-operate to obtain economies of scale 1 mark for no great technical economies of scale can be achieved mark for cyclical 1 mark for general mark for VAT 1 mark for Customs and Excise duties mark for visible and invisible trade 1 mark for Calculation Visible trade 500 Invisible trade Current account balance mark for the rate of inflation can decrease as well as the level of imports into the country can also be reduced mark for interest rate 1 mark for banks ability to lend money 1 1 mark for controlling credit 1. 1 mark for excess demand 1 mark for shortage of supply NOTE: the learner can also answer it on the graph. 1 mark for a retail price index is the index used to measure the rate of price change 1 mark for it shows what is happening to the value of the money spent by the average household over a period of time 1 mark for it is used as a measure of inflation 1 11

16 3. 1 mark for it is the total value of goods and services produced by citizens within a country mark for the calculation 1 mark for N$ Calculation: US$ x NS 10 = N$ mark for low income levels especially in rural areas 1 mark for poor infrastructure in rural areas 1 mark for population is mainly below 15 years of age 1 mark for high proportion of unskilled labour 1 marks for high employment any 1 explained 6. 1 mark for scarcity of resources e.g. land 1 mark for more government spending on social services 1 mark for congestion in towns due to urbanisation any 7. 1 mark for pollution 1 mark for loss of land to the community any 1 explained [Total: 40] 1

17 SECTION B QUESTION ONE (a) (i) marks for household spending on goods and services (ii) marks for the monies paid by the government to producers, e.g. farmers or to public services, e.g. transport (b) Direct taxes: placed on income, person responsible for paying bears the burden Indirect taxes: levied on spending burden of the tax is shifted e.g. VAT 3 (c) 1 mark for provide government with income 1 mark for control amount of spending in economy 1 mark for reduce inequalities of income in the economy 1 mark for protect industries from foreign competition 1 mark for to discourage consumption of a commodity (tobacco) any 4 (d) (i) marks for when the government s expenditure exceeds its income/revenue (ii) - to reduce unemployment by increasing the demand for goods and services as more jobs are created - to encourage economic growth as production output increase - injecting the economy by investing into the country to increase the National Income 5 (e) - tax increase - income average afford - borrowing overseas, long term e.g. MF - borrowing local, short term e.g. treasury bills - projects to generate income e.g. Michelle McLean Children Fund - shares of government earning dividends - sell shares to obtain income 8 [6] 13

18 QUESTION TWO (a) (i) the price of petrol rose, but should comment on the differing rate of increase during the period, with the largest increase between 1996 and (ii) The profits of the company rose, but should comment on the differing rate of increase during the period, rising most rapidly in 1994 and 1996 but at a much slower rate in (b) (c) (d) They do not have to pay for the oil, unlike in other countries where royalties have to be paid to the government, with the government deciding to tax the consumer rather than the producer. Comment on the level of profits, comparable profits of other large companies in the U.K. and in other countries, the relative value of the profits compared with the value of the assets and the risks of development of oil fields. 6 The company needs a high level of profits to re-invest in searching for new reserves, emphasising that oil is a non-renewable resource. [14] [Total: 40] 14

19 ASSESSMENT OBJECTIVES GRID QUESTION PAPER: NSSCO ECONOMICS PAPER 1 SECTION A Question Topic Syllabus Reference Marks Total Skill A B C D Basic economic problem Economic systems & resources Economic systems & resources Specialisation & division of labour Trade unions Financial institutions Financial institutions Market forces Market forces Policies Occupational choices Earnings Productivity Economies & diseconomies of scale Economies & diseconomies of scale Employment Government economic policies Output Government economic policies Government economic policies Market forces Prices Output International trade Living standards Population Conflicts T1.1 T1. T1. T1.3 T. T.3 T.3 T3. T3. T3.5 T4.1 T4. T5. T5.4 T5.4 T7. T6. T7.3 T6. T6. T3. T7.1 T7.3 T7.4 T8. T8.1 T Weighting of Assessment Objectives as prescribed: Weighting syllabus Marks A - 60 % 4 B - 40 % 16 C - 0 % D - 0 % 15

20 ASSESSMENT OBJECTIVES GRID QUESTION PAPER: NSSCO ECONOMICS - PAPER 1 SECTION B Question Topic Syllabus Reference Marks Total Skill A B C D 1 Government Income and Expenditure Private firm as producer and employer T T Weighting of Assessment Objectives as prescribed: Weighting syllabus Marks A 0 % 8 B 0 % 8 C 0 % 8 D 40 % % 40 16

21 MINISTRY OF EDUCATION Namibia Senior Secondary Certificate (NSSC) ECONOMICS: ORDINARY LEVEL PAPER SPECIMEN PAPER TIME: hours INSTRUCTIONS TO CANDIDATES Write your name, Centre number and candidate number in the spaces provided on the answer paper/answer booklet. Answer any four questions INFORMATION FOR CANDIDATES The number of marks given in brackets [ ] at the end of each question or part question. 17

22 1. Zimbabwe's government has diverted $18 million (US) originally intended to support businesses struggling in the harsh economy to buy imports of grain to help feed millions of people. (a) (i) Define opportunity cost. [] (ii) What might be the opportunity cost of the reallocation of funds to buy emergency food relief? [] (iii) Describe the relationship, if any, between opportunity cost and free goods. [4] (b) (c) Explain how the government's decision might affect Zimbabwe's balance of payments. [7] Assess whether you consider the decision to reallocate funds by the Zimbabwean government to be wise? [5] [Total: 0]. The government of Namibia plans to put a tariff on all vegetable imports to assist local growers. It is hoped that this will promote local high quality production for export. The Agronomic Board says that price rises would not be dramatic and that the scheme would serve almost half the local market. (a) (b) (c) (d) Explain two methods a government can use to discourage the import of products. [6] Assess whether the demand for a product such as vegetables is price elastic or price in-elastic. [] Draw a demand and supply diagram and discuss what might happen to the price of vegetables in Namibia as a result of the tariff. [6] Tariffs are a form of protection. Outline the negative effects which a policy of protectionism might have on the economy of a country. [6] 18

23 3. It has been reported that the Zambian government sold 57 state-owned enterprises to private companies. Already some of these have stopped production. About jobs have been lost. (Adapted from The Republikein, August 00) (a) (b) (c) (d) (e) Describe the economic system you would expect to find in a country where most enterprises are government owned. [3] Justify whether or not some enterprises should be controlled by the government. [5] Why do you think so many workers lost their jobs when the industries were sold to the private sector in Zambia? [] List the advantages and disadvantages for a country of a free-market economy. [6] Explain how the types of goods and services which are produced are likely to change when central planning is reduced? [4] [Total: 0] 4. The picture below shows an advertisement of Adidas shoes, and give some information on net profit. Adidas is a multinational company. Look at the picture and answer the following questions. (Adapted from The Namibian, August 8, 00, pa. 16) (a) Define advertising. [] (b) Describe the purposes of advertising. [4] (c) Does advertising have any disadvantages? Explain your answer. [4] (d) Suggest how an advertising campaign might affect a company like Adidas. [] (e) Explain what is meant by a multinational company and give an example of a multinational company operating in Namibia. [3] 19

24 (f) Despite the existence of multinational companies, there are still many small businesses. Discuss the reasons for the existence of small businesses. [5] [Total: 0] 5. "Bankers look for answers to economic growth". The dream of rapid economic growth in Namibia was the theme of a conference of economic experts that took place in Windhoek organised by the Bank of Namibia. The main focus was to discuss how to reduce inflation (a) Explain economic growth. [3] (b) Consider the economic importance of economic growth for a country. [] (c) List the functions of the Central Bank of Namibia in the country's economy. [6] (d) (e) Explain what policies the Central Bank might use to improve economic growth. [4] Evaluate, with reference to the current economic situation, whether a reduction in inflation was achieved. [5] [Total: 0] 6. The Central Statistics Office reported that Zambia's overall year on year inflation declined from 17,1 per cent in 000 to 16,8 per cent in 001. (a) (i) Define inflation. [3] (ii) List the causes of inflation. [3] (b) Explain how the inflation rate of a country is calculated? [6] (c) Discuss why the government would try to achieve price stability? [6] (d) Assess whether an increase in wages/salaries in Namibia, leads to a rise or fall in inflation. [] [Total: 0] 0

25 MINISTRY OF EDUCATION Namibia Senior Secondary Certificate (NSSC) ECONOMICS: ORDINARY LEVEL PAPER MARK SCHEME QUESTION 1 1. (a) (i) Opportunity cost is the sacrifice of the next best alternative; or opportunity cost is the next most desired alternative forgone; or the sacrifice of the next most desired thing. [] (ii) Funds could be used to finance other government projects such as schools and health services. Funds could also be used for other types of government spending, such as defence and infrastructure. [] (iii) No relationship exists. Opportunity cost involves the making of choices between limited resources. Free goods involve no choices as all goods are in abundant supply and no prices are to be paid, e.g. oxygen in the air. [4] (b) (c) Imports increased, deficit on current account, exports decrease because firms have less funds to finance projects for exporting commodities. Reduce foreign investment-little disposable income for consumption. Decrease in economic activity. [7] Yes or No. Answer should be motivated with relevant facts. Short-term gains, but longer term losses to the economy of Zimbabwe should be explained. [5] [Total: 0] 1

26 QUESTION. (a) Tariffs - tax on imports exchange control - limits on foreign currency used for imports health and safety standards subsidies government contracts (any two well explained ) [6] (b) Price elastic because not all people eat vegetables. For vegetarians it might be price in-elastic (no substitutes) Expect some explanation of price elasticity of demand [] (c) labelling (1) equilibrium price () Shifts (1) Increase or decrease in price - give proper motivation [6] (d) Restrict the supply and choice available to consumers - prices will be higher than with free trade. The danger of retaliation. The general lowering of world trade. Less efficient home industries because of lack of competition. Lack of specialization -countries tend to import products they do not produce. [6] [Total: 0]

27 QUESTION 3 3. (a) Planned or communistic system. Public ownership; Planned production; Price fixing by the government; no production for profit; [3] (b) (c) (d) Yes or No. Yes. To avoid wasteful duplication and competition - some industries like telephone and electricity companies needs a lot of capital for infra-structure - government can provide these. Essential industries; political arguments - reduce inequalities; economies of scale; managing the economy ; No; Government inefficient; lack of competition; no fear of bankruptcy; poorly managed; poor quality; [5] Government enterprises do not have profit motive, and therefore employ many inefficient workers.; private firms are more efficient - profit motive; private firms cut production costs - reduce labour costs. [] Advantages of free-market economies - private property - freedom of choice - self-interest - competition (price mechanism) - very limited role for government (Any 3 advantages) Disadvantages of free-market economies - no government-provided goods or services(health and education) - no government planning over economy(uncontrolled booms and recessions) - limited choice for consumers(monopolies are encouraged) [6] (e) As private enterprises are now responsible for the production of goods and services, consumers will have more choice to buy as a greater variety of goods and services will now be available at better quality, but at higher prices. [4] [Total: 0] 3

28 QUESTION 4 4. (a) Advertising is the process to inform and persuade customers in order to increase demand. [] (b) (c) (d) (e) (f) The main purpose of advertising is clearly to influence demand for a good or a service. Advertising aims to increase demand, that is, to move the demand curve to the right. [4] Yes. High costs; misleading; harmful products like cigarettes; overspending; leads to dissatisfaction. [4] Positively because of the increase in sales; increase in demand; workers get better salaries - workers more satisfied; higher profits. Negatively - unsuccessful campaign will increase costs - must be covered by increase in prices. [] A Multinational company is a firm that controls and owns enterprises in several countries, e.g. Ramatex. [3] The size of the market; individuality such as jewellery repairs which can not be standardised personal services by doctors and lawyers; geographical factors - isolated communities; small markets for expensive goods. [5] [Total: 0] 4

29 QUESTION 5 5. (a) Economic growth refers to an increase in a countries annual output of goods and services. [3] (b) (c) (d) (e) It improves living standards of the population attracts investors - increase per capita income; Better social services - government gets more taxes and can spend more money on capital ; national prestige; more military power; easier equal distribution of wealth. [] The functions of the central bank is a state owned bank with the following functions: it s the government's bank; the banker's bank; manage national debt; sole note issuing authority; lender of last resort; implement government policies on banking - bank lending and interest rates; hold official stocks of foreign currencies; operate in the foreign exchange market to influence exchange rates. [6] Monetary policy - interest rates; reduce interest rates; more and cheaper money available for investment and credit; capital; labour; land; higher output of production. [4] Either Yes or No. However, the Yes or No answer must be clear from the evaluation and be based on the current economic situation. [5] [Total: 0] 5

30 QUESTION 6 6. (a) (i) Inflation describes the situation when there is a persistent rising in the average price level - fall in the value of money. [3] (ii) Causes of inflation - Demand-pull inflation - Cost push inflation - Money supply [3] (b) (c) (d) Typical basket of goods is taken; weights given to each item; base year of one hundred; new price compare to base year; difference express as a percentage; subtracted or added to base year; total weighted index divided by weights to get new index. [6] To prevent acceleration - anticipate future changes; affects distribution of wealth because members of trade unions have more bargaining power; people with fixed income - income decrease; borrowers gain at the expense of lenders; affects the balance of payments - exports become more expensive; inflation can get out of control hyperinflation; price stability attracts foreign investors. [6] When wages/salaries rise faster than productivity, labour costs will increase and so will prices(and thus inflation). Wages/salaries are the single largest element in total cost. [] [Total: 0] Any 4 questions answered (4 x 0) = [80] 6

31 ASSESSMENT OBJECTIVES GRID QUESTION PAPER: NSSCO ECONOMICS PAPER Question Topic Syllabus Reference Marks Total Skill A B C D 1 Opportunity cost Balance of payments Government spending Price elasticity International trade Demand and supply 3 Economic systems Business organisations 4 Multinationals Marketing 5 Economic growth Financial institutions T1 T7 T6 T3 T7 T3 T1 T T T3 T6 T Government policies T The weighting of the Assessment Objectives as prescribed: By the syllabus: Marks per Question A - 30 % 6 B - 35 % 7 C - 5 % 5 D - 10 % 100 % 0 x 4 = 80 (Total of Question paper ) 7

32 The National Institute for Educational Development P/Bag 034 Okahandja NAMIBIA Telephone: Facsimile: info@nied.edu.na Website: NIED 005