Macro

Business cycles

Leading indicators move before the economy turns, coincident indicators move with it, and lagging indicators move after it.

CAPS

Grade 12 · Economics · Macro

Economics wants the concept, then the diagram or the data, then the consequence.

The papers
Paper 1 is macroeconomics and economic pursuits. Paper 2 is microeconomics and contemporary economic issues. Each paper is 150 marks.
How to write it
Define the term as CAPS uses it. If a graph is asked for, label both axes, the curves, and the equilibrium or the shift. Then say what happens to price, quantity, growth, inflation or unemployment. A curve with no labels does not explain.
How a marker reads it
A common mix-up is treating the unemployment queue as an early warning, when jobs are often cut only after sales and production have already fallen.

Essays are marked on the introduction, a body that applies the theory, and a conclusion that answers the question. A list of definitions is not an argument.

Worked theory

Worked theory. New car sales and applications for building plans start falling while shopping centres still look busy. Those early falls are leading indicators, and they suggest a downswing is on the way. Months later, factories shorten shifts, and production moving together with the slowdown is coincident. Only after that do retrenchments lengthen the unemployment queue. The queue is lagging. It confirms the downturn and it did not predict it. This is the kind of sequence seen around real downturns such as 2008-09, without quoting a GDP number.

More worked examples

Rosslyn order book
A component factory in Rosslyn sees its order book for the next quarter shrink while this month's shifts are still full. The thinner order book is leading, while this month's output is coincident and has not fallen yet. If the orders stay thin, overtime is cut later, and only then are some contracts not renewed. The later job losses lag the order book. Watching only the full shift this week would miss the warning already on the page.
Bloemfontein till
A supermarket in Bloemfontein takes in less money this month than last month across most aisles. That current sales figure moves with the economy now, so it is coincident. Last year's decision to extend the building, already finished, was based on older plans and does not describe this month. A rise in benefit applications that appears next season would lag this quieter till. Timing, not importance, is what the three labels measure.

In ordinary words

A leading indicator warns of a turn that has not fully arrived, such as new car sales or building plans falling while factories are still busy. A coincident indicator tracks the present, such as current production or retail sales. A lagging indicator confirms a turn after it has happened. Unemployment is usually lagging, because firms often cut jobs only once output has already fallen, and a lagging indicator used as a warning is late while a leading indicator used as proof of today's output is early.

In South Africa

A car showroom and a municipal planning counter go quiet before the labour-office queue grows.

Part 1 / 4

What it is

Leading indicators move before the economy turns, coincident indicators move with it, and lagging indicators move after it.

More worked examples

Board walkthroughs on this topic. Open one, copy the working, then try the next.

Example 1 / 20

Explain the difference between exogenous and endogenous causes of business cycles.

How we got there

Read this like a teacher at the board. We go slowly, name every number, and say why we take each step.

Explain in another language · 11

1. What is the question asking?

Read the question twice. Circle the unknown. Underline every number and unit. The paper is asking: Explain the difference between exogenous and endogenous causes of business cycles.

In other words — as if you have never seen this before

If you have never seen this before: External vs internal. We will name a method in words, write the formula with no numbers, then substitute one line at a time.

2. What do we already know?

Cycle theories.

3. Which method — and why this one?

External vs internal.

4. Step-by-step working

01 / 07
Step A — Read the question twice
Slow down. Circle the word that names the unknown. Underline every number and its unit. Do not grab a formula yet — first decide what the paper is actually asking.
Why this step: If you can say the method in a sentence, you will pick the right formula. First-timers skip this and grab the first equation they remember.
02 / 07
Step B — Write the given in a column
Cycle theories.
Why this step: A column with units stops you mixing cm with m, or minutes with seconds. Markers can also see you started correctly.
03 / 07
Step C — Name the method in words
External vs internal.
Why this step: If you can say the method in a sentence, you will pick the right formula. First-timers skip this and grab the first equation they remember.
04 / 07
Explain
Exogenous: outside the market system (weather, wars, pandemics). Endogenous: within the system (changes in demand, investment, interest rates).
Why this step: We only do one job per line so a marker can follow the marks — and so you can find a slip without starting over.
05 / 07
Step G — Sense-check the size
Ask: is this the kind of number a Grade 10–12 paper would want? A speed of 3 000 ms for a learner walking, or a probability bigger than 1, means a unit or algebra slip. Estimate first: round the numbers and do the sum in your head.
Why this step: Markers write ‘unrealistic’ in the margin when the method is right but the size is wild. A 10-second head check often finds a missing 10² or a unit that never changed.
06 / 07
Step F — Box the answer with its unit
External shocks vs internal market forces.
Why this step: A number without a unit is half a mark on a Physics paper, and a marker can miss a Maths answer that is buried in working.
07 / 07
Step H — What the marker is looking for
On an NSC memo you usually earn: (1) a method mark for naming the right formula or idea in words, (2) an accuracy mark for substituting the given numbers with units, (3) an accuracy mark for the boxed answer with its unit. Write those three lines even if you are unsure of the arithmetic — blank pages score zero.
Why this step: First-timers chase the final number and leave the method blank. The memo still pays out for the idea and the substitution even when the last line is wrong.

5. The answer

External shocks vs internal market forces.

Copy onto your answer sheet — in this order

Answer: External shocks vs internal market forces.

6. Check it like a marker

Keynesians emphasise endogenous causes.

7. A trap first-timers fall into

First-timers often grab the first formula they remember, mix units (cm with m, minutes with seconds), or drop a minus sign. Write the formula in words first: “this equals that, because…”

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