"In financial markets, the sustained global bull market in equities and corporate bonds also ended dramatically last week, with extensive and deep repricing. Prices for emerging market sovereign debt and other risky assets also fell sharply. This will have repercussions for household wealth and income, impacting further on global growth" - South African Reserve Bank (SARB) MPC statement (March 2020).

1. Taking the above statement into consideration, analyze how the fall in asset prices and consequently wealth and income has affected consumption, aggregate demand, employment, and output in South Africa. (use relevant diagram to answer this question). 2. In your role as an economist at the South African Reserve Bank, you are required to present to the monetary policy committee on how the fall in household wealth will affect the economy in both the short- and mediumrun, as well as how the bank should respond to these changes. [Hint: use clearly labelled diagrams to illustrate your answer] (20 marks)