4.1 Identify and explain the policy framework implemented by the South Africa Reserve Bank

(SARB). (2 Marks)

4.2 Use the AD/AS model to illustrate and explain how the policy framework identified in 4.1

can impact the South African economy in the long term. (8 Marks)

4.3 The repo rate - which is the benchmark interest rate at which the Reserve Bank lends

money to other banks - is now at 3.5%. Illustrate and explain how the 3.5 % repo rate

affects the quantity of money supply in the South African economy. (7 Marks)