3.1 Answer the following questions - NSC Economics - Question 3 - 2022 - Paper 2

Households benefit from tourism in several ways:

• Direct Earnings: Many families find employment directly in tourism-related jobs, such as tour guides and hotel workers.
• Indirect Benefits: Households may also see increased income through local businesses that thrive due to tourism.
• Infrastructure Improvement: Tourism can lead to infrastructural development, benefiting locals by enhancing roads, healthcare, and recreation facilities.

The base year in the table is 2018, as indicated by the Consumer Price Index of 100.

The institution responsible for controlling inflation in South Africa is the South African Reserve Bank (SARB).

Hyperinflation is an extremely high and typically accelerating inflation rate, often exceeding 50% per month. It results in the rapid erosion of the real value of the local currency, leading to a loss of confidence and causing individuals to seek alternative currencies for transactions.

Measuring inflation is crucial for several reasons:

• Policy Decisions: It helps policymakers make informed decisions regarding monetary policy to maintain economic stability.
• Cost of Living: It provides insight into the cost of living, which is essential for collective bargaining in wage negotiations.

To calculate the inflation rate from 2020 to 2021:

1. Data from the table:

   • CPI in 2020: 107
   • CPI in 2021: 109.5

2. Inflation Rate Calculation:

   $ext{Inflation Rate} = \frac{\text{CPI in 2021} - \text{CPI in 2020}}{\text{CPI in 2020}} \times 100$

   Substituting the numbers:

   $= \frac{109.5 - 107}{107} \times 100 \approx 2.33\%$

A type of tourism that allows for experiencing traditions in a community is Cultural Tourism.

One World Heritage Site in South Africa is Robben Island.

Tourism refers to the act of traveling to and staying in places outside one's usual environment for leisure, business, or other purposes, often for a limited duration. It encompasses a range of activities including sightseeing, recreation, and cultural exchange.

Tourism growth is significant for the government because:

• Economic Expansion: It broadens the tax base and increases government revenue.
• Job Creation: Expands employment opportunities in various sectors directly and indirectly linked to tourism.
• International Relations: It enhances the country’s global image and international ties.

Crime can severely impact the tourism sector by:

• Negative Perception: High crime rates generate a negative image of the country, discouraging tourists.
• Reduced Travel: Tourists may avoid traveling to regions perceived as unsafe, leading to economic downturns in those areas.
• Decreased Investment: Increased crime can deter potential investors in the tourism industry.

The tourism industry in South Africa has seen growth due to various factors:

• Disposable Income: Increased disposable income allows more people to spend on tourism activities.
• Increased Awareness: South Africans are becoming more aware of local and international travel opportunities.
• Transport Improvements: Enhanced transport, communication, and accommodation facilities make it easier for travelers.
• Marketing Efforts: Effective advertising and promotion have made potential tourists aware of the various attractions.

An increase in the prices of imported key inputs like oil can negatively impact the domestic economy in the following ways:

• Higher Production Costs: Business costs will rise, leading to higher prices of goods and services.
• Inflationary Pressure: Increased costs can contribute to broader inflation within the economy.
• Decreased Exports: Higher local prices may reduce competitiveness in international markets, decreasing exports.