Introduction
Economic policies are aimed at finding satisfactory solutions to various problems that emerge from time to time in any economic system. In most instances, the so called problems present themselves in the form of inflation, unsatisfactory or poor economic growth and unemployment. It is not always simple and straight forward to solve such dilemmas, especially because their impact, implications and importance changes from time to time. (Roux, 2008).
Making use of the monetary policy and the fiscal policy, the South African government has made efforts to address growth and poverty in the country. The National Development Plan (NDP) and the National Growth Plan (NGP) are two strategies that have been designed by the government as vehicles to address the problems that South Africa faces.
What is the Fiscal policy?
‘Fiscal policy’ is the name given to government policies which seek to influence government revenue (taxation) and government expenditure (Griffiths & Wall, 2005, p. 370). Increasing or decreasing tax or government income will have an impact on the national income. When the equilibrium national income level changes, output (supply) also changes. Employment as well as inflation will be directly affected. When there is less activity in the market, the result is an increase in unemployment. In such a case the government must use and expansionary fiscal approach to counter this. Government spending and the reduction of taxes will mean that there is more money circulating in the economy and the implications of borrowing money will have been reduced. This translates into households willing to spend money, and businesses willing to borrow money to increase output.
In a bid to increase growth and reduce the level o...
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...yment will not come from big business, but as a result of entrepreneurial activity in the small and medium enterprise sector” (Laubscher, n.d.) The state needs the private sector to join in the party. The private sector will provide jobs that require skilled workers, and private schools will be required to play an integral part in producing such workers. The early child development in terms of nutrition and education will still rely heavily on no government establishments contributing to the welfare of young, future contributors to the economy.
It is clear that the NGP is inconsistent in making it seem as though the state can achieve its goals in isolation.
The South African economy cannot control what happens on the international markets so the NDP must be mindful not to place too much reliance on imports, lest the same fate as GEAR befalls the government again.
Fiscal Policy Lags Management of the National Economy In the United States there are only a few avenues available to the government for management of the economy. These opportunities fall under the broad headings of monetary and fiscal policy. Monetary policy is under the primary control of the Federal Reserve Board. Its tools include interest rates and the supply of money. Fiscal policy, on the other hand, is open to the purview of the legislative and executive branches of government. It
Level 2 Economics Achievement Standard 91227 Analyse how government policies and contemporary economic issues interact An introduction that describes what sustainable economic growth is and why it is desirable for households, firms and government Sustainable economic growth is a rate of growth that can be maintained by the economy without causing any major economic problems. Economic growth occurs when changes in 3 determinants occur including real GDP/ income increasing, Productive capacity increasing
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