Finance

Foreign exchange

A tourist's rand does not stop at the first till: the multiplier effect is the way that spend becomes income for other people nearby. The exchange rate changes how many rand a foreign guest has, and how many rand a South African needs when they travel the other way.

CAPS

Grade 12 · Tourism · Finance

Tourism is one paper that mixes planning, money, people and place.

The paper
One NSC paper of 200 marks. It covers tourism sectors, map work and tour planning, foreign exchange, attractions, heritage and culture, marketing, communication and customer care, and sustainable and responsible tourism.
Calculations and service
Foreign exchange must show the currency, the rate, and whether you multiply or divide. A tour plan must fit the time and the map. Customer-care answers name what the tourist needed and what the staff member should have done.
How a marker reads it
A common mix-up is to think the restaurant keeps the whole R2 000, or that a weaker rand helps every South African who is travelling overseas.

The paper is 3 hours. A slogan with no link to the attraction, or a rand amount with no rate, does not score the application marks.

Worked theory

Worked theory. A German guest changes euros and, on 12 April, spends R2 000 at a restaurant in Stellenbosch. The waiter is paid from that bill, the farmer who sold the vegetables is paid by the kitchen, and the winery that sold the wine is paid as well. One tourist spend has become income in more than one place. If the rand weakens, the same euro buys more rand and the guest can spend more than R2 000 next time, while a South African traveller going to Europe that week pays more rand for the same euro.

More worked examples

A carving at the Waterfront
A visitor spends R800 at a wood stall at the V&A Waterfront. The carver uses part of that money to buy leather from a workshop in Mitchells Plain, and the workshop buys thread from a nearby shop. Three households have income from one purchase. If the carver had imported a finished carving and only kept a fee, the local chain would have been shorter. The multiplier is the local payments, not the size of the first till on its own.
A family paying euros in Lisbon
A family from Johannesburg pays for a hotel room in Lisbon that is priced in euros. Say the euro costs them more rand this month than it did last month, even though the hotel did not change its euro price. The same room takes more of their savings. The inbound guest in South Africa can gain spending power when the rand weakens. This family, travelling the other way, pays more.

In ordinary words

The first business pays wages and suppliers, and those people spend again, so one bill can feed several households. Not every cent stays, because some is saved, taxed or spent on goods from outside the town. If the rand weakens, one unit of foreign currency buys more rand, so the inbound guest can spend more, while a South African buying that foreign currency pays more. The rate and the multiplier are one story about where the money goes.

In South Africa

A Stellenbosch restaurant, a nearby farm and a winery can all be paid from one guest's bill in the same week.

Part 1 / 4

What it is

More worked examples

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

Example 1 / 20

Big Mac costs R55 in SA and $5,80 in the US. Calculate the implied PPP exchange rate.

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: Big Mac costs R55 in SA and $5,80 in the US. Calculate the implied PPP exchange rate.

Before any working — hunt first

Given

Numbers and units already in the sentence: R55 in · 5,80 in. Copy each one into a column. A name without a number is not given.

Missing

After you copy the given, the letter that still has no number is missing. The paper is pointing at: the implied PPP exchange rate. Circle that word — that is the missing variable.

Find

We are required to find: the implied PPP exchange rate. Write that as a symbol on the left, with a question mark, before you touch a formula.

Calculate

What we need to calculate: Divide. Then substitute the given, one line at a time, to get the implied PPP exchange rate.

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

If you have never seen this before: Divide. 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?

R55, $5,80.

3. Which method — and why this one?

Divide.

4. Step-by-step working

01 / 08
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 / 08
Step A2 — Hunt: Given, Missing, Find, Calculate
Given: Numbers and units already in the sentence: R55 in · 5,80 in. Copy each one into a column. A name without a number is not given. Missing: After you copy the given, the letter that still has no number is missing. The paper is pointing at: the implied PPP exchange rate. Circle that word — that is the missing variable. Find: We are required to find: the implied PPP exchange rate. Write that as a symbol on the left, with a question mark, before you touch a formula. Calculate: What we need to calculate: Divide. Then substitute the given, one line at a time, to get the implied PPP exchange rate.
Why this step: Do not name the letters yet. First hunt: what already has a number (Given), what has no number (Missing), the word the paper wants (Find), and which formula still contains the missing letter (Calculate).
03 / 08
Step B — Write the given in a column
R55, $5,80.
Why this step: A column with units stops you mixing cm with m, or minutes with seconds. Markers can also see you started correctly.
04 / 08
Step C — Name the method in words
Divide.
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.
05 / 08
Divide
555,80 ≈ R9,48 per $.
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.
06 / 08
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.
07 / 08
Step F — Box the answer with its unit
R9,48 per $.
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.
08 / 08
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

R9,48 per $.

Copy onto your answer sheet — in this order

Answer: R9,48 per $.

6. Check it like a marker

Actual rate higher → rand undervalued.

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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Sustainable and responsible tourism

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