ECON211 Policy

Question 2:(20)Financing the government's support package is a contentious issue. Part of it is to come from reprioritisation of spending, part from an IMF loan and part from new debt issued in the local bond market. Some have suggested that the Reserve Bank should simply print the money. Apply the augmented Philips curve policy lesson to the suggestion that the SARB prints the money. Make use of graphs and explain what the impact might be on output and inflation.