1
Trial exam Notes
Economics
Grade 12
By Lwazi Mkatshana
Lwazi Mkatshana Economics Trial Exams
, 2
Table of Contents
The Circular Flow ........................................................................................................................ 3
National Accounts ..................................................................................................................... 7
The Multiplier ......................................................................................................................... 13
Business cycles......................................................................................................................... 16
Reasons for Trade ................................................................................................................... 24
Balance of Payments ............................................................................................................... 25
Foreign exchange Markets ...................................................................................................... 29
Protectionism vs Free Trade ................................................................................................... 32
The Five Macroeconomic goals ............................................................................................... 33
Perfect and Imperfect Markets ............................................................................................... 33
Cost Production and Revenue ................................................................................................... 35
Market Failure ........................................................................................................................ 37
Demand and Supply graphs .................................................................................................... 41
Elasticities ............................................................................................................................... 42
Inflation ................................................................................................................................... 50
Economic Growth and Development in South Africa ............................................................. 63
Socio-economic indicators ....................................................................................................... 63
Labour economics ................................................................................................................... 57
General Knowledge ................................................................................................................. 63
Lwazi Mkatshana Economics Trial Exams
, 3
The Circular Flow
Definition of Economics
• It is the study of the ways in which individuals, business, authorities and other
organizations choose to apply scarce resources in order to satisfy their unlimited
needs and wants in such a way that is effective and fair
Definition Circular flow
• The circular flow of income is an economic device that illustrates the perpetual nature
of savings investments and spending.
• circular flow is originally intended for an entire macro economy the circular flow of
income can be applied to individual firms well (i.e. firms can see where the leakages
and injection are with income)
• The relationship between expenditures, revenues, profits, re-investment and
dividends can be analyzed to help investors make informed decisions.
Closed economy
• Is a flow without a Foreign sector
• No Exports and Imports
Open economy
• Is a flow that has a Foreign sector
• Therefore, Involves Imports and Exports
Two Markets
• Factor Market
Real Flow
• Goods Market
• Market for foreign exchange
• Financial Market
Two flows
• Monetary
• Real
§ production
§ Income
§ expenditure
Lwazi Mkatshana Economics Trial Exams
, 4
Participants in the economy
1.Households: all individual buyers of finished goods and services own all factors of
production
i.e. Labour/ entrepreneurial skills / Raw materials / Land / Capital
2. Business: Buy FOPS from households and process these into goods and services
open
economy i.e. to make money
3. Government: responsible for the well being of the country and provide goods and
services not produced by business
i.e. achieved via taxes
4.Foreign Sector: involved in importing and exporting of goods and services
all participants and interdependent on each other otherwise and economy cannot function .
and this interdependence is illustrated through Circular Flow.
closed economy – no private sector
Lwazi Mkatshana Economics Trial Exams
Trial exam Notes
Economics
Grade 12
By Lwazi Mkatshana
Lwazi Mkatshana Economics Trial Exams
, 2
Table of Contents
The Circular Flow ........................................................................................................................ 3
National Accounts ..................................................................................................................... 7
The Multiplier ......................................................................................................................... 13
Business cycles......................................................................................................................... 16
Reasons for Trade ................................................................................................................... 24
Balance of Payments ............................................................................................................... 25
Foreign exchange Markets ...................................................................................................... 29
Protectionism vs Free Trade ................................................................................................... 32
The Five Macroeconomic goals ............................................................................................... 33
Perfect and Imperfect Markets ............................................................................................... 33
Cost Production and Revenue ................................................................................................... 35
Market Failure ........................................................................................................................ 37
Demand and Supply graphs .................................................................................................... 41
Elasticities ............................................................................................................................... 42
Inflation ................................................................................................................................... 50
Economic Growth and Development in South Africa ............................................................. 63
Socio-economic indicators ....................................................................................................... 63
Labour economics ................................................................................................................... 57
General Knowledge ................................................................................................................. 63
Lwazi Mkatshana Economics Trial Exams
, 3
The Circular Flow
Definition of Economics
• It is the study of the ways in which individuals, business, authorities and other
organizations choose to apply scarce resources in order to satisfy their unlimited
needs and wants in such a way that is effective and fair
Definition Circular flow
• The circular flow of income is an economic device that illustrates the perpetual nature
of savings investments and spending.
• circular flow is originally intended for an entire macro economy the circular flow of
income can be applied to individual firms well (i.e. firms can see where the leakages
and injection are with income)
• The relationship between expenditures, revenues, profits, re-investment and
dividends can be analyzed to help investors make informed decisions.
Closed economy
• Is a flow without a Foreign sector
• No Exports and Imports
Open economy
• Is a flow that has a Foreign sector
• Therefore, Involves Imports and Exports
Two Markets
• Factor Market
Real Flow
• Goods Market
• Market for foreign exchange
• Financial Market
Two flows
• Monetary
• Real
§ production
§ Income
§ expenditure
Lwazi Mkatshana Economics Trial Exams
, 4
Participants in the economy
1.Households: all individual buyers of finished goods and services own all factors of
production
i.e. Labour/ entrepreneurial skills / Raw materials / Land / Capital
2. Business: Buy FOPS from households and process these into goods and services
open
economy i.e. to make money
3. Government: responsible for the well being of the country and provide goods and
services not produced by business
i.e. achieved via taxes
4.Foreign Sector: involved in importing and exporting of goods and services
all participants and interdependent on each other otherwise and economy cannot function .
and this interdependence is illustrated through Circular Flow.
closed economy – no private sector
Lwazi Mkatshana Economics Trial Exams
