Grade 12
Case study
QUESTION 1
1.1 Read the following scenario and answer the questions that follow.
August 2022
SOUTH AFRICAN RESERVE BANK'S REACTION TO A DECLINING ECONOMY
Inflation was recorded at 6,5% in May 2022, up from 5,9% in April 2022. This is the
highest reading since January 2017 when the rate was 6,6%, with inflation now higher
than the upper limit of the South African Reserve Banks's monetary policy target range of
6%, pointing to further interest rate hikes in July.
Source: adapted from https://businesstech.co.za
1.1.1 Name the monetary instrument the SARB uses to curb inflation.
1.1.2 Name one economic indicator used to determine inflation
1.1.3 What is the primary goal of the monetary policy?
1.1.4 Briefly describe the term prime lending rate.
1.1.5 What is contributing to the rise of prices currently in South Africa?
1.1.6 What will be the consequences of high inflation expectations?
1.1.7 Briefly discuss open market transaction and moral suasion in
promoting growth and development in South Africa.
1.1.8 How does foreign direct investment influence inflation in the
economy?
1.1.9
How can taxes be used to combat inflation?
1.1.10 Analyse the negative impact of administered prices on the
economy.
TOTAL [50]
(1)
(1)
(2)
(2)
(2x2) (4)
(2x2) (4)
(2x4) (8)
(4x2) (8)
(5x2) (10)
(5x2) (10)