Question

1.1 Considering five microeconomics objectives. Develop the recovery plan for the South Africa economy. What is that the government can do to boost the economy in relation to employment, inflation, economics growth, balance of payment and income distribution.

Three pages

Referencing

Answer 1

Answer:- To boost the economy, the govt. can undertake following actions:-

1. In terms of employment:- Increased employment opportunities in the economy would lead to increased earnings of the workforce and there will be increased consumer spending. This will benefit the overall economy as a whole through increased demand and supply and products.
2. In terms of inflation:- Inflation refers to rise in prices of commodities. So, in the situation of high inflation govt. can step in and can reduce its effect by lowering the money supply in the market. One way of doing this can be increasing the reserve requirement of the banks or by increased interest rates.
3. In terms of balance of payment:- BOP refers to country's transactions with the rest of the world, which involves flow of money inside or outside the country. It consists of imports and exports of goods and services. The govt. should take such measure that promote export of goods and services and reduce imports.
4. In terms of Income distribution:- Government shoud try to adopt measures in which the income is distributed equally to all sections of the society through tax and benefit system for the overall development of the economy.