Question
Question 6 (25 marks) Either 6a: Recent weakness of the Rand exchange rate is a reminder of a persistent pattern since 1994 in which the
Question 6 (25 marks) Either 6a: Recent weakness of the Rand exchange rate is a reminder of a persistent pattern since 1994 in which the Rand has repeatedly been negatively impacted by changes in global circumstances. With reference to the exchange rate "crises" of 1998, 2001 and 2008 explain why the Rand is so vulnerable to global events. What lessons have been learnt from past policy responses? What might be done to reduce the Rand's vulnerability to such events in future?
Or 6b Behind the persistent calls to "nationalise" the Reserve Bank lie the belief that monetary policy in South Africa has negatively impacted economic growth. Discuss the reasons why South Africa adopted inflation targeting in 2000 and whether such criticisms of the conduct of monetary policy are valid.
Question 7 (25 marks) Luiz (2015) warns of a middle-income growth trap in which countries "... become marooned in a middle-income zone that has seen their growth rates decline and ... struggling to make a transition to high-income status."
Compare Luiz's (2015) explanation of South Africa's current economic stagnation with that of Nattrass (2011) who argues that economic policy in South Africa since 1994 has favoured government, business and organised labour at the expense of the unemployed and at the cost of faster growth.
Question 3 (25 marks) The 2018 draft Integrated Resource Plan (IRP) projections of future electricity demand and supply in South Africa have changed substantially from those put forward in the 2010 IRP. Discuss these revised projections of both demand and supply and the economic reasons for the changes.
Question 4 (25 marks) Discuss the usefulness of Kuznets' and Piketty's theories of inequality in explaining the phenomenon of rising inequality across much of the world in recent years. What lessons do they provide for dealing with very high inequality in South Africa?
Question 5 (25 marks) Explain why fiscal policy after 1994 focused on reducing the budget deficit. What was a reduction in the deficit supposed to achieve? What lessons are there for fiscal policy today?
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