2.1 Answer the following questions - NSC Economics - Question 2 - 2021 - Paper 1
Question 2
2.1 Answer the following questions.
2.1.1 Name any TWO participants of the circular-flow model.
2.1.2 Why does public sector failure lead to social instability?
2... show full transcript
Worked Solution & Example Answer:2.1 Answer the following questions - NSC Economics - Question 2 - 2021 - Paper 1
Step 1
Name any TWO participants of the circular-flow model.
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Answer
Two participants of the circular-flow model are:
Households
Government
Step 2
Why does public sector failure lead to social instability?
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Answer
Public sector failure can lead to social instability because:
The lives of people are destabilised, compromising their human rights.
Community members may become disgruntled and start making their demands through protests.
Step 3
Identify the base year that the South African Reserve Bank uses to compile national accounts aggregates.
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Answer
The South African Reserve Bank uses 2015 as the base year for compiling national accounts aggregates.
Step 4
Give the alternative term used for gross value added in national accounts.
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Answer
The alternative term for gross value added in national accounts is 'gross domestic product (GDP)'.
Step 5
Briefly describe the term gross value added.
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Answer
Gross value added (GVA) represents the value of goods and services produced in a particular sector of the economy, less the value of goods and services used in production. It is an essential measure for understanding the economic productivity of different sectors.
Step 6
How are market prices converted to market prices?
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Market prices are converted to basic prices by excluding taxes on products and including subsidies. This conversion provides a clearer picture of the value added by production.
Step 7
Why would economists prefer constant prices to current prices when measuring economic growth?
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Economists prefer constant prices for the following reasons:
Constant prices eliminate the effects of inflation, allowing for a more accurate comparison of economic performance over time.
They provide a clearer view of real growth, as they reflect the true growth in production without the distortions caused by price level changes.
