Answer to Question #93569 in Macroeconomics for Bhollah Vijayalakshmi

Question

The core elements of the Growth Employment and redistribution (Gear) strategy of the South African Government in 1996, under the leadership of the then finance minister Trevor Manuel were amongst other things:
°budget reform to strengthen the redistributihe thrust of expenditure
°monetary policy to prevent a resurgence of inflation
°a reduction in tariffs to contain input prices and facilitate industrial restructuring, compensating partially for the exchange rate depreciation.

1.1 with reference to the above, identify the macroeconomic objectives in these elements
1.2 identify and define the macroeconomic variables that can be used to measure whether the strategy was successful or not
1.3 with each tool in 1.2 provide a detailed explanation on how it can be measured.

Answer 1

1.budget reform to strengthen the redistributihe thrust of expenditure

macroeconomic objective:high level of employment; high standard of living

macroeconomic variables:level of employment, minimum living wage

how it can be measured:the ratio of the employed population of a certain age group to the total population

2. monetary policy to prevent a resurgence of inflation

macroeconomic objective:stable price level;

macroeconomic variables:inflation rate, general price level

how it can be measured:the value of the consumer basket of goods in current prices, divided by the value in prices of the previous period

3.a reduction in tariffs to contain input prices and facilitate industrial restructuring, compensating partially for the exchange rate depreciation. 

macroeconomic objective:stable growth in national output

macroeconomic variables:GDP

how it can be measured: GDP = C + I + G + (X − M).