The President of Ghana launched the COVID-19 business alleviation program in

collaboration with the National Board for Small Scale Industries (NBSSI), Trade

Associations, and some selected banks. Under the program, the government is giving

funds without interest to selected financial institutions for onward lending to businesses

at a 3% interest. The program is aimed at helping beneficiaries to sustain their businesses during the Covid-19 pandemic. Use this information to answer the following

questions.

a. Explain the monetary policy tool being used by the

government under this program. (5 Marks)

b. If the government had pegged the interest rate under the program at the

monetary policy rate, will this have been a better way of setting the rate?

Explain the advantages and disadvantages of each scenario.(7.5Marks)

c. Explain the expected impact of the low-interest rate program on gross

domestic product (GDP), articulating the possible pathways.(7.5 Marks)