Living standards, including education, have improved for most people in South Africa in recent years. Most households have more money and the government has more tax revenue. There is, however, considerable income inequality. In 2020, 36% of the population were living in poverty. An increase in unemployment benefit payments might reduce this poverty.

Mark scheme

Marking points from the official mark scheme (May/June 2023). The mark or mark type is shown in brackets.

1. [2] Two from: Medium of exchange; Unit of account / measure of value; Store of value; Standard of deferred payments
2. [4] Logical explanation which might include: It may reduce demand for cigarettes (1) people may be better informed about harmful effects / cigarettes are a demerit good (1). It may increase demand for fresh fruit (1) people may be better informed about beneficial effects / fresh fruit is a merit good / may gain better paid jobs and so able to afford fresh food (1).
3. [6] Coherent analysis which might include: Tax revenue is government income / part of government fiscal policy (1) which can be spent on government objectives e.g. education (1) Increase in employment (1) increase in income (1) More convenient (1) easier to pay (1) and collect the tax (1) higher income tax revenue (1) Increase in spending (1) higher indirect tax revenue (1) Increase in profits (1) higher corporation tax (1) Increase in population (1) more people to pay taxes (1) Change in tax rates (1) higher tax rates can increase revenue without a change in income / spending / profits (1) lower tax rates may reduce tax avoidance / evasion (1) increase incentives (1) Greater efficiency in tax collection (1) reduction in corruption / simpler forms (1) Wider tax base (1) more products / more people taxed (1) Increase in imports (1) higher revenue from tariffs (1).
4. [8] Why it might: raise incomes of those on low incomes; may enable them to buy more basic necessities; may reduce absolute poverty; may increase total demand; higher total demand may reduce unemployment; Also enable them to seek education / become more employable. Why it might not: may be a disincentive to find employment; people may become dependent on benefits; will not help all those on low incomes e.g. the retired and the sick; may not reduce relative poverty; some of the unemployed may not claim benefits; opportunity cost – government could spend on e.g. education which might be more effective; Size of unemployment benefit may be small and may be less than inflation.