MEMORANDUM/MARKING GUIDELINES

QUESTION 1

1.1

1.1.1. Stagflation. 
[02]

1.1.2. Monetary Policy Committee (MPC).

[02]

1.1.3. Consumer Price Index. 

[02]

1.1.4. Weighting. 
[02]

1.1.5. Producer Price Index. 

[02]

[10]

QUESTION 2

2.1

2.1.1. Inflation is a sustained and a significant increase in the general prices of goods and services
over a period of time.  [02]

2.1.2. Apply monetary policies (repo rate) and fiscal policies (tax increases). [04]

Any relevant answer is correct

2.1.3 Stats SAand the SARB [02]

2.1.4. Yes, According to Stats SA in Q1 of 2024 the inflation rate was 5.3% Inflation target
between 3- 6% [04]

Any relevant answer is correct.

2.1.5. Stagflation

 A low growth rate, high unemployment and high inflation rate. [02]

Hyperinflation

 Inflation rate is above 50% and people lose confidence in the value of money and they start
to barter goods and services. [02]

Demand pull inflation

 Occurs when the aggregate demand for goods and services exceeds aggregate supply of
goods and services. [02]
Any relevant answer is correct
 [16]

QUESTION 3

3.1. FISCAL MEASURES

 Increase indirect taxation(VAT)

 A loan levy is introduced
 Impose surcharges on imported goods [06]
Any 3 relevant answers are correct

3.2. Consequences

 Debtors/Creditors
Debtors are favoured at the cost of creditors.
 Salary and wage earners
People with fixed income will be able to purchase less as pricing are rising.
 Investors and savers
People who lend money will be affected by high inflation and people with who invests in
negotiable shares often benefit from inflation.
 Tax payers
In South Africa income is taxed on a progressive system. [08]
Any relevant answer is correct

3.3. Depreciation of currency

Increased cost of living

Reduced purchasing power [06]

3.4. Increased consumption by households

Investment spending [04]

Any 2 relevant answer is correct

[24]