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GRADE 11

MACROECONOMICS

According to Examination Guidelines for 2023


ECONOMIC PURSUITS PAPER 1
Advise learners NOT TO FOCUS on essays only
since essay consist of 27% and section B 53% and
Section A 20 % per paper
Compiled by Noel M.Mashonga
Topic Page
NOVEMBER ESSAYS 2
ESSAY STRUCTURE(NEW) 3
MACROECONOMICS
1 FACTORS OF PRODUCTION 4-9
3 MIXED ECONOMY 10-15
4 ECONOMIC STRUCTURE OF SOUTH AFRICA 16-19

1
PAPER 1
QUESTION 5: QUESTION 6
MACROECONOMICS ECONOMIC PURSUITS
- Discuss in detail entrepreneurial skills ❖ Discuss in detail the different
as factor of production methods used to redistribute
- Compare and contrast the South income and wealth
African mixed economy with a centrally ❖ Discuss in detail the
planned economic system characteristics of developing
- Discussion in detail the economic countries
importance of the tertiary sector ❖ Discuss in detail the functions of
- Discuss in detail South Africa’s the South Africa’s Reserve Bank
infrastructure and its economic as a Central bank
importance

2
MARK
STRUCTURE OF ESSAY
ALLOCATION
Introduction
The introduction is a lower-order response. Max. 2
• A good starting point would be to define the main concept related to
the question topic.
• Do not include any part of the question in your introduction.
• Do not repeat any part of the introduction in the body.
• Avoid mentioning in the introduction what you are going to discuss
in the body.
Body
Main part: Discuss in detail/In-depth discussion/Examine/Critically Max. 26
discuss/ Analyse/Compare/Evaluate/Distinguish/Differentiate/Explain/Draw
a graph and explain/Use the graph given and explain/Complete the given
graph/Assess/Debate
A maximum of 8 marks may be allocated for headings/examples Max. 10
Additional part: Critically discuss/Evaluate/Critically evaluate/Debate/
Deduce/Compare/Distinguish/Interpret/How? /Suggest
A maximum of 2 marks may be allocated for mere listing facts.
Conclusion
Any higher-order conclusion should include: Max. 2
• A brief summary of what has been discussed without repeating facts
already mentioned
• Any opinion or value judgement on the facts discussed
• Additional support information to strengthen the discussion/analysis
• A contradictory viewpoint with motivation, if required
• Recommendations
TOTAL 40

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TOPIC 1: FACTORS OF PRODUCTION
QUESTION 5 MACROECONOMICS 40 MARKS 40 MINUTES

• Discuss in detail factors affecting rent of natural resources (26 marks)


• How is Black Economic Empowerment ensuring community
participation in South Africa? (10 marks)

INTRODUCTION

Natural resource refers to natural wealth and include water, arable land, mineral
deposits, and the environment. ✓✓
Rent is that portion of the produce of earth which is paid to the landlord for use of the
original and indestructible powers of the soil. ✓✓
(Accept any other correct relevant response)
Body:
Supply and demand✓
• This will increase the demand for the natural resources used in the production
of a good and the delivery of a service. ✓✓
• This, in turn, will increase the price i.e. the rent that the natural resource can
command in the market✓✓
• The rise of emerging markets has been the defining feature of the global
economy which have increased market areas for rental ✓✓
• Growing urbanisation is a related trend boosting demand for raw materials
because of increasing needs, due to construction, transport and
infrastructure. ✓✓

Climate ✓
• Land in the desert has very little value for agriculture ✓✓
• Useful agricultural land will, therefore, command a much higher rent than land
that is of little agricultural value. ✓✓
• In the tropical areas of the world, agricultural land can be used to produce a
variety of crops, such as fruit, coffee, and rubber. ✓✓
• Greater demand for areas with climate-resilient traits is already driving up
property prices and rent, whereas areas that are more exposed or less
protected against physical climate hazards could have discounted
valuations. ✓✓

Location ✓
• A fast-food outlet in the centre of the city will probably have a higher volume of
sales than the located on the outskirts of the city. ✓✓
• The rent paid by the food outlet in the centre of the city will, therefore be higher.
• Location also influences the cost of transportation. ✓✓
• The further away the resource is from the market, the higher the transport cost
will be and the lower the rent will be that can be charged. ✓✓

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• the natural resources we consume are in different areas of the world and not
everyone has the same access to them. This has led to the development of
trade; one country buys what it doesn't have and sells what it produces. ✓✓

Quality of resources✓
• This will influence the rent we are prepared to pay for the natural
resource. ✓✓
• The higher the quality of resources, the higher the quantity of goods and
services will be that we can produce with this resource. ✓✓
• We will, therefore, be willing to pay a higher rent to obtain this resource ✓✓

Technology ✓
• To extract natural resources and convert these into goods and services
requires appropriate technology. ✓✓
• New technology can help us to unlock new resources that are difficult to
extract. ✓✓
• It can also improve the quality of existing natural resources and help us to
create substitutes. ✓✓
• All these factors will impact on the rent that a natural resource can command.
✓✓

(Accept any other correct relevant response)


(Allocate a maximum of 8 marks for mere listing of facts and examples.)

ADDITIONAL PART
How is Black Economic Empowerment ensuring community participation in
South Africa?
BEE ensures community participation in South Africa by:
• aiming to distribute wealth as wide as possible throughout communities
through the economic empowerment of previously disadvantaged groups. ✓✓
• providing the small and medium enterprises some access to the markets. ✓✓
• involving black owners of businesses and public enterprises, as well as large
businesses, so that they are included in all decision-making. ✓✓
• supporting black businesses so that black people can play a larger role in the
economy. ✓✓
• allowing access and entrance to the stock exchange for black owner’s
people. ✓✓

(Accept any other correct relevant response.)


(Allocate a maximum of 2 marks for mere listing of facts and examples.)

CONCLUSION

Prices of agricultural goods will be high, and many poor people will suffer because of
poverty and hunger✓✓

(Accept any other correct relevant conclusion of higher order).

5
• Discuss the characteristics and importance of natural resources
(26 marks)
• Outline the effect of drought on the primary, secondary and tertiary
sectors of South Africa. (10 marks)
INTRODUCTION
Natural resources are the free gifts of nature that include elements above the earth,
sun, atmosphere, climate, weather. ✓✓On the surface of the earth, water, plants,
ground. Beneath the surface of the earth minerals, water, gas, steam, oil.
(Accept any relevant introduction.)
MAIN PART
1. Resources are fossil fuels or replenishable. ✓
- Natural resources must be used sparingly and effectively. ✓✓
- Natural resources should be managed in a sustainable way to ensure that the
needs of future generations will be met. ✓✓
2. Resources can be renewable or non-renewable. ✓
- Natural resources are divided into two types according to their ability to renew
themselves. ✓✓
Renewable
- Are those that are replaced by natural processes ✓✓
- Reproduce and replenish naturally without intervention within a short/
medium time span ✓✓e.g. weather, sunlight, rain, plants and animals✓
Non-renewable
- Cannot replenish itself or takes a very, very long time✓✓ • e.g. coal, oil,
minerals, gas✓
3. Resources are scarce. ✓
- We use more resources than the planet reproduces or can replenish in
time.✓✓
4. Resources are not spread fairly. ✓
- Some countries have more than others. ✓✓
5. Resources are needed to produce goods and services. ✓✓
- Resources are used as inputs in production of intermediate and final
goods. ✓✓
6. Natural resources have a price. ✓
- For people to use natural resources, they have to pay for them. ✓✓
- The payment for natural resources is rent. ✓✓
- The rent will be determined by the quality and quantity of the natural
resource. ✓✓
- If natural resources are scarce the rent will be higher, and if the quality is low,
then the rent will be lower. ✓✓

REMUNERATION FROM NATURAL RESOURCES


- Natural resources provide food and shelter. ✓✓

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- Natural resources are used as inputs for economical activities. ✓✓
- Natural resources create employment opportunities and allow for economic
development. ✓✓
- Natural resources lead to international trade as much importing and exporting
of commodities occurs. ✓✓ (MAX 26) (Max 8 marks for heading and
examples)
ADDITIONAL PART
❖ The drought will have the most impact on agricultural output in the primary
sector. ✓✓
❖ A decrease in output could cause some farmers to go out of business. ✓✓
❖ The decrease in output will cause job losses in the primary sector. ✓✓
❖ Drought will result in the loss of livestock✓✓
❖ This will place pressure on food prices, especially all foods from maize, grains
to meat, poultry and dairy products. ✓✓
❖ The secondary sector (manufacturing / production) activity will decrease and
people will lose their jobs. ✓✓
❖ South Africa will have to import agricultural products at a high cost. ✓✓
❖ Decreased output ✓✓
❖ Less agricultural exports -Low economic growth in the primary sector will
have a negative impact on SA’s economic growth. ✓✓
(Accept any relevant answer.) (Max 10)
CONCLUSION
Prices of agricultural goods will be high and many poor people will suffer as a result
of poverty and hunger. ✓✓ (2)

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• Discuss the economic importance of entrepreneurship (26 marks)
• How has the land redistribution programmes (policies) contributed
towards accommodating the marginalised in the economy? (10 marks)
INTRODUCTION
Economists often refer to the factors of production as inputs. The final product or
service that is the result of the inputs is then called an output. ✓✓
(Accept any other correct relevant introduction) (Max 2)
MAIN PART
ECONOMIC IMPORTANCE OF ENTREPRENEURSHIP
- Entrepreneurs play a very important role in contributing to growth and
progress in any economy ✓✓
- South Africa has a very high unemployment rate ✓✓
- The formal sector cannot provide employment to all of South Africa’s
population ✓✓
- Therefore entrepreneurs in the informal sector who start up small businesses,
play an important role in providing income and employment ✓✓
- According to Statistics South Africa, South Africa will need approximately 200
000 to 300 000 new entrepreneurs in the next few years to maintain the
current growth rate in the country ✓✓
- The role of black empowerment will play a significant role in achieving these
goals ✓✓
- The success of black people (who present more than 75 % of the population
of South Africa) as entrepreneurs in the economy, will eventually determine
the success of future economic growth ✓✓
- The Law on Black Economic Empowerment (BEE) makes specific provision
for the advancement of the black population through affirmative action in the
workplace ✓✓
- Provinces will have to channel more funds into small and medium enterprises
to encourage economic development ✓✓
- Apart from creating jobs, new entrepreneurs introduce new goods and
services into markets, ✓✓ increasing competition and reducing inflation ✓✓
- The tax revenue of the government increases as profits of entrepreneurs are
taxed ✓✓
- This happens at the same time that the state has to spend less on
unemployment payments and other social welfare services as wealth
becomes more evenly distributed ✓✓ (Max 10 marks)
(Accept any other correct relevant response) Max (26)
(Allocate a maximum of 8 marks for headings, sub-headings, examples.)
ADDITIONAL PART
The land redistribution programme has contributed to:
The land restitution programme: ✓

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❖ The Act on Land Restitution allows for those people whose land was disposed
of to legally claim their land back or be compensated. ✓✓
❖ In the case of urban claims the people are financially rewarded for their
losses. ✓✓
❖ In situations of rural claims some land is given back to the legal owners. ✓✓
The land redistribution programme: ✓
❖ Involves the availability of agricultural land for farming production or for living.
✓✓
❖ The emphasis was on the provisioning of land for the poor marginalised
people with land for small-scale farming to earn an income. ✓✓
The partnership programme (farming): ✓
❖ Farm workers are given certain shares (profit-sharing) options on farms. ✓✓
❖ The workers are also involved in joint decision-making at management level.
✓✓
❖ Workers also obtain permanent living rights after a certain number of years or
on retirement, as well as other fringe benefits. ✓✓
The RDP housing programme: ✓
❖ Citizens with low income levels can also apply for the subsidised RDP
housing scheme to provide shelter for families in need. ✓✓
❖ The government then subsidises the infrastructure costs, such as solar
power, pre-paid meters, etc. ✓✓
(Accept any other relevant correct answer) (Max. 10)
CONCLUSION
South Africa has an abundance of natural resources, and if utilised productively and
developed to its full potential our country could become a sustainable, thriving
economy✓✓

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TOPIC 3 : MIXED ECONOMY
• Compare and contrast characteristics of the South African mixed
economy with a centrally planned economic system. (26 marks)
• Evaluate the South African’s government efficiency in delivering socio-
economic services. (10 marks)
INTRODUCTION
A mixed economic system is a system that combines aspects of both capitalism and
socialism. A mixed economic system protects private property and allows a level of
economic freedom in the use of capital, but also allows for governments to interfere
in economic activities to achieve social aims. ✓✓
A centrally planned economy, also known as a command economy, is an economic
system where a government body makes economic decisions regarding the
production and distribution of goods. ✓✓
(Accept any other correct relevant response.)

BODY: MAIN PART


(Allocate a maximum of 8 marks for mere listing of FACTS/HEADINGS and
EXAMPLES.)
NB: To the marker learners’ responses will vary as the question was open.
See example below.

Compare and contract South Africa mixed economy with centrally planned economy:

➢ Characteristics 26 marks
➢ Advantages 26 marks
➢ Disadvantages 26 marks
Learners who respond to one side of the question will get a maximum of 13 marks.

Mixed economy Centrally planned


Characteristics
Ownership ✓
• Consumers, producers and • The government owns controls the
organization own most of the factors of production. Labour,
factors of production, the state however, is not owned but id
may, nevertheless, own a directed by the government. ✓✓
significant proportion. ✓✓ • There is no private property (land
• The South Africa, the state owns and capital) as it has been all
land and capital directly through nationalized, expropriated or
its enterprises such as Transnet, confiscated by the government ✓✓
Telkom, Post office, Eskom,
Denel, SABC and Rand Water
Board✓✓ (SAA is incorrect)
Motivation ✓
• In the private sector of mixed • The participants are assumed to be
economy, consumers and unselfish, and their motivation is to

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producers are assumed to be co-operate for the common good
motivated by self-interest. ✓✓ of the community. ✓✓
• The public sector, however, is • The system requires subordination,
assumed to be motivated by the obedience, and discipline on the
necessity to satisfy the social part of the individual for the benefit
needs of the community ✓✓ of the state and the community ✓✓
Planning ✓
• In a mixed economy we have a • A planning process is used to
central planning authority. ✓✓ allocate resources. ✓✓
• All sectors of the economy follow • The government, as the planning
the economic plan of the state to authority, directs producers on
achieve various targets and goals. what to produce, directs labour
The plan is not rigid but more of a into jobs and directs consumers
general guideline for economic on what to consume✓✓
growth and prosperity of the
nation✓✓
Business fluctuations ✓
• Booms and slumps in the business • Business fluctuations are controlled
cycle can be levelled and the by the government through its
government works towards control of investment and
creating a stable economy✓✓ consumer expenditure✓✓
Advantages
Full employment✓
• It ensures job security and • All workers, to use their labour, are
employment. ✓✓ employed, even if it may be
• The GEAR strategy was unprofitable because they may be
implemented by the government better suited to different
with the purpose to create a productive activities✓✓
climate conducive to employment
creation mainly by the private
sector. ✓✓
• The current rate of unemployment
is estimated at 34.6%.

Distribution of income✓
• Inequalities in income and wealth • It is more even and equitable for
can be corrected through the all✓✓
taxation system✓✓
Mass production✓
• Mixed economies typically maintain • The advantage of mass production
private ownership of most of the is secured because of the use of
means of production, with the monopoly enterprises. ✓✓
government intervening through • This results in economics of scale,
regulations. Mixed economies consumes all use different same

11
socialize select industries that are kinds of products from single
deemed essential or that produce producers, however quantities are
public goods✓✓ limited✓✓
Competition ✓
• A mixed economy permits private • Advertising is used to inform in the
participation in production, which planned economy rather simply to
in return allows healthy persuade or brainwash ✓✓
competition that can result in
profit. It also contributes to public
ownership in manufacturing, which
can address social welfare
needs. ✓✓
Cater for needs✓
• Negative externalities such as • Consumer goods and services,
pollution can be controlled through planning ensures that adequate
environmental tax, levy or permits resources are devoted to
✓✓ community, public and merit
goods✓✓
• E.g policing roads and education✓
Intentionally ✓
• The state provides goods and • The allocation of resources is not
services such as law and order, left to the unpredictable and
education and health services, incidental thrills of the
which might have been market. ✓✓
underprovided for, if left to the • If an unequal distribution of income
market✓✓ and wealth is desirable, it is
allowed for when palming what to
produce and rewarding the
producers✓✓
Disadvantages
Choice ✓
• they tend to lean more toward • Consumers have relatively little
government control and less choice. ✓✓
toward individual freedoms. ✓✓ • Workers may be allocated jobs in
particular occupations or
geographical areas. ✓✓
• There is no mechanism by which
enterprises compete to provide
different types of the same
good. ✓✓
• Queuing is the rule and what is
available for purchase in shops is
in most instances of poor quality
✓✓

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Motivation ✓
• Nationalizing companies such as • It is difficult to provide sufficient
SAA may demotivate workers to incentive for enterprise and
work hard as their hard work individual workers to produce
would not be recognized leading good quality products. ✓✓
to the workers being • Production targets are often set in
efficient. ✓✓ volume terms or value terms. ✓✓
• There is every incentive for
individuals to minimize the amount
of effort they put into their official
work✓✓
Economic growth ✓
• Because the public sector has • As economies grow, they become
control over the legislative more complex, and the more the
process, it may be tempted to use complex the economy is the more
it to provide excessive social and difficult it is to plan the allocation
welfare services. ✓✓ of resources efficiently ✓✓
• The scale of taxation and public
sector becomes extensive that
private business sector
businesses are crowed out and
this leads to decreases in
economic growth and employment
creation✓✓
Distribution of income✓
• By exploiting imperfect markets the • It is considerable that those in
private sector can rob consumers power have used the planning to
and thereby worsen the inequality their own advantage. ✓✓
of incomes and wealth. ✓✓ • Centrally planned economies in
• This results in huge increase of practice have strived for equality
poverty. ✓✓ of income✓✓
• Wealth is not equitably distributed
as there is a gap between the rich
and the poor. ✓✓
Risk ✓
• Excessive government spending • Centrally planned economies would
may result in inefficiency and in an endeavor to provide for their
overlarge bureaucracy✓✓ citizens according to their needs-
housing, employment, education,
healthcare and pensions. ✓✓
• It can be argued that removing risk
also removes the incentives to
work and to create wealth ✓✓
The environment ✓

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• Because the profit motive exists, • Individual producers base their
there will always be self-interest production decisions on private
and a lack of regard for the poor rather than social costs thus
and the environment✓✓ creating negative externalities
such as pollution. ✓✓
Human rights ✓
• Because the private sector has • Centrally planned economy leaves
control over land and capital it little room for individual
may be able and inclined to exploit freedom✓✓
workers✓✓ • Whether a pure command economy
could operate within a political
democracy is debatable ✓✓
• The governments of some centrally
planned economies use police or
military force to suppress their
citizens✓✓
(Accept any other correct relevant response.)

(Allocate a maximum of 8 marks for mere listing of facts and examples.)


ADDITIONAL PART

Evaluate the South African’s government efficiency in delivering socio-


economic services.

POSITIVES
• Provision of free basic education and making it a priority through its early
childhood development to ensure that all children get access to education. ✓✓
• Provision of free healthcare through its public health clinics and hospitals
which is accessible to all citizens. ✓✓
• Provision of social grant benefit to millions of poor South Africans. ✓✓
• Provision of nutritional meals to many public schools in the country. ✓✓
• Many households have electricity installed and access to clean water and
sanitation. ✓✓
• Houses have been built for millions of families. ✓✓
• Government has made considerable effort in creating employment through its
Expanded Public Works Programme (EPWP). ✓✓
• There has been efforts to boost agriculture and food security in rural areas
through different projects by the Department of Agriculture. ✓✓
NEGATIVES
• The number of people who are unemployed has increased in recent years
• Corruption has hindered service delivery in the country ✓✓
• The poor state of healthcare centres with dire shortages. ✓✓
• Increase in poverty levels as more people find themselves without jobs. ✓✓
(Accept any other correct relevant response.)
CONCLUSION

14
A mixed economy is the preferred economic system in most countries because
government intervention is necessary when the market fails. However, governments
face many challenges in the delivery of goods and services through corruption and
inefficiency. ✓✓
(Accept any other correct relevant conclusion of higher order).

15
TOPIC 4: ECONOMIC STRUCTURE OF SOUTH AFRICA
Question 1
Discuss the economic importance of the tertiary sector. (26 marks)
• FOR YOUR OWN INCONVENIENCE THIS ADDITIONAL PART WILL BE BLANK
(10 marks)
INTRODUCTION
Tertiary sector is the sector that is involved in facilitating the flow of goods and
services from producers to consumers. ✓✓
(Accept any other correct relevant introduction) (2)
BODY: MAIN PART
Contributes to GDP ✓
- It contributes 62% of the overall GDP of South Africa. ✓✓
- In the current technological environment it is predicted that the growth in the
tertiary sector will play an even bigger role in the GDP contribution in future.
- The actual numbers of the tertiary sector’s contribution to GDP may be
understated. ✓✓
- Many essential services are not included such as the service of homemakers
and services rendered by businesses for themselves in the primary and
secondary sector✓✓ e.g. computer services, bookkeeping and training. ✓
Contribution to employment ✓
- This sector dominates employment, accounting for 60% of total
employment. ✓✓
- Job opportunities are created for all levels of labour, including unskilled
labourers, ✓✓ for example cleaners, semi-skilled workers, such as machine
operators and highly skilled such as dentists and teachers. ✓
- Many South African entrepreneurs choose to start their own businesses in
the tertiary sector. ✓✓
Contribution to exports✓
- The tertiary sector exports a considerable number of services to foreign
countries ✓✓ in the form of freight, insurance, transport, travel, royalties,
licence fees and services such as communication. ✓✓
- Countries also export services. ✓✓
Contribution to economic growth✓
- The growth in the tertiary sector was much bigger than that of the primary
sector and of the secondary sector. ✓✓
- Over this period the tertiary sector was the engine of growth that pulled the
other sectors. ✓✓
Source of income for the state✓

16
- Companies must pay tax to the South African Receiver of Revenue
(SARS) ✓✓
- This money is used to provide basic services to South Africans ✓✓ for
example, infrastructure (roads, housing, public transport) and welfare
services✓
(Accept any other correct relevant response) (26 marks)
ADDITIONAL PART
FOR YOUR OWN INCONVENIENCE THIS ADDITIONAL PART WILL BE BLANK
(10 MARKS)
CONCLUSION
The tertiary sector is important for the economy because it includes all the services
provided by the government to communities as well as personal services provided by
business to individual consumers. ✓✓
(Accept any other correct relevant conclusion of higher order). (2)

17
• Discuss in detail economic importance of South Africa’s infrastructure.
(26 marks)
• FOR YOUR OWN INCONVENIENCE THIS ADDITIONAL PART WILL BE
BLANK (10 marks)

INTRODUCTION
Tertiary sector is the sector that is involved in facilitating the flow of goods and
services from producers to consumers. ✓✓
(Accept any other correct relevant introduction)
BODY: MAIN PART
Contributes to GDP ✓
- It contributes 62% of the overall GDP of South Africa. ✓✓
- In the current technological environment, it is predicted that the growth in the
tertiary sector will play an even bigger role in the GDP contribution in future.
- The actual numbers of the tertiary sector’s contribution to GDP may be
understated. ✓✓
- Many essential services are not included such as the service of homemakers
and services rendered by businesses for themselves in the primary and
secondary sector✓✓ e.g., computer services, bookkeeping and training. ✓
Contribution to employment ✓
- This sector dominates employment, accounting for 60% of total
employment. ✓✓
- Job opportunities are created for all levels of labour, including unskilled
labourers, ✓✓ for example cleaners, semi-skilled workers, such as machine
operators and highly skilled such as dentists and teachers. ✓
- Many South African entrepreneurs choose to start their own businesses in
the tertiary sector. ✓✓
Contribution to exports✓
- The tertiary sector exports a considerable number of services to foreign
countries ✓✓ in the form of freight, insurance, transport, travel, royalties,
licence fees and services such as communication. ✓✓
- Countries also export services. ✓✓
Contribution to economic growth✓
- The growth in the tertiary sector was much bigger than that of the primary
sector and of the secondary sector. ✓✓
- Over this period the tertiary sector was the engine of growth that pulled the
other sectors. ✓✓
Source of income for the state✓
- Companies must pay tax to the South African Receiver of Revenue
(SARS) ✓✓

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- This money is used to provide basic services to South Africans ✓✓ for
example, infrastructure (roads, housing, public transport) and welfare
services✓
(Accept any other correct relevant response) (26 marks)

ADDITIONAL PART

(Accept any other correct relevant response)


CONCLUSION
Increased investment in public transport and through resolving existing public
transport issues. Devolving transport management to local authorities. Providing
incentives for public transport use. ✓✓
(Accept any other correct relevant conclusion of higher order)

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