Answer to Question #93784 in Macroeconomics for Taahir

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 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

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

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 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 variables:GDP

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

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