Answer to Question #123678 in Macroeconomics for Lizanne

Question

The Covid-19 pandemic and the lockdown that followed have served as multiple shocks to the South
African economy. The initial 5-week lockdown limited mobility of people and the availability of goods
and services, leading to contractions in aggregate demand and supply. Policymakers have responded
with expansionary fiscal and monetary policy. The government has implemented a R500bn support
package and the Reserve Bank has reduced the repo rate and extended liquidity in the bond market.
Apply any, or all, of the models that you have learned and explain the impact of the crisis and the
policy reaction on the level of output, the interest rate and the price level in South Africa.
Make use of graphs and explain the chain reactions and impacts in your own words.

Answer 1

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