Monetary economics

essay question

3. ASSIGNMENT QUESTION Read the extract below and answer the question(s) that follow. Essay question: It is now clear that the Covid-19 outbreak will produce the worst economic downturn in a century. The SARB has responded flexibly, quickly and aggressively to the COVID-19 crisis. So far, these actions have improved market functioning and are supporting economic activity. However, the larger economic outlook remains uncertain. Furthermore, financial markets, such as the money, bond, equity and foreign exchange markets have seen extraordinary levels of volatility and extreme price movements. Among its functions, the SARB has the responsibility to ensure that its monetary policy decisions are effective and that these decisions have an impact, even if it is an indirect effect, on the cost of borrowing in the economy. In addition, the SARB has a responsibility to ensure that financial markets operate smoothly and efficiently. Owing to the volatility and the movement of many prices, the SARB has implemented several measures to provide liquidity into the market, to stabilise markets and to ensure their orderly functioning. The SARB is continuously monitoring data closely and is ready to act appropriately in accordance with the monetary policy mandate, together with other economic policies to minimise the effects of the pandemic. Source: https://www.wits.ac.zaews/sources/wsg-news/2020/monetary-policy-and-the-coronavirus.html3. The next Monetary Policy Committee meeting is taking place on 18-20 May 2021. The ongoing debate at the moment is that the SARB is not doing enough to help the government with its growing debt crisis, hence there has been recalls of the institution doing more than lowering the repo rate. Is this argument justified? How would you suggest the SARB proceed, taking into consideration the current fiscus issues? Provide a short monetary policy package in light of the above mentioned situation and use practical case studies to back up your