Answer to Question #93678 in Macroeconomics for Phindile Gumede

Question

The core elements of the 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 redistributive 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 (3 marks)
1.2 Identify and define the macroeconomic variables that can be used to measure whether the strategy was successful or not.(6 marks)
1.3 With each tool in 1.2 , provide a detailed explanation on how it can be measured.(11 marks)

Answer 1

1.budget reform to strengthen the redistributihe thrust of expenditure

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

1.2 macroeconomic variables:level of employment, minimum living wage

1.3 how it can be measured:the ratio of the employed population of a certain age group to the total population. Also you can calculate the share of the poor, it is calculated by dividing the population living below the official minimum subsistence level for the entire population.

2. monetary policy to prevent a resurgence of inflation

1.1 macroeconomic objective:stable price level;

1.2 macroeconomic variables:inflation rate, general price level

1.3 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. 

1.1 macroeconomic objective:stable growth in national output

1.2 macroeconomic variables:GDP

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

To calculate all this you need reliable statistics.

https://www.investopedia.com/ask/answers/032515/what-are-best-measurements-economic-growth.asp

https://www.encyclopedia.com/social-sciences-and-law/economics-business-and-labor/economics-terms-and-concepts/macroeconomics