Explain the difference between simple and compound interest.
About this question
Question 2.8 of Consumer Studies Grade 12, NSC Preparatory Examination (Eastern Cape DoE, September 2025). It tests the Term 1 ATP topic The consumer: consumer protection.
- TermTerm 1
- ATP topicThe consumer: consumer protection
- PaperNSC September 2025 (Eastern Cape)
- Marks4 marks: 2 points, 1 mark each
Herbalife sells nutrition, weight management and wellness products through independent distributors. Distributors buy products at a discount and sell them for a profit. They also recruit others to become distributors and earn commission on their recruits' sales.
The difference between simple and compound interest can be explained in four points:
- Simple interest is calculated only on the original amount (principal) of the loan or investment.
- No interest is earned on interest in simple interest, and it is mainly used for short-term loans.
- Compound interest is calculated on the principal plus the interest that has already been added.
- With compound interest the consumer earns or pays interest on interest, and it can be added monthly, quarterly, half-yearly or yearly.
More Questions On The consumer: consumer protection
Phishing can be explained in these three points:
- It is a fake e-mail, message or call that pretends to come from a bank or other trusted institution.
- It asks the person to click a link or give personal details, and the link leads to a fake website that looks real.
- The criminals use the personal and financial information that is captured to steal money from the person's account.
Import duty.
It is the duty charged on clothing brought into the country.
C: Stokvel
In a stokvel members pay into a common pool and take turns to receive the money.
F: Payable on property after a citizen's death
This describes estate duty.