Possible Impacts of New Growth Path in the South African Macroeconomy

THE NEW GROWTH PATH In 2010 the South African regimen presented a new growth path to the nation. This initiative, widely cognize as the NGP, is a plan put in typeset with the main goal of creating 5 million new jobs in South Africa and hence decreasing the unemployment rate from 25% to nigh 15% (The New Growth Path, 2010).The SA government plan on achieving this by putting in place a serial of policies that lead stimulate the economy which allow in offer result in growth, development and job creation. This evidence will discuss the possible impacts some of these policies will have on the economy; looking at parts of the NGP where growth is judge and highlighting atomic number 18as where it may degenerate short of reaching its goal. This essay will analyze the dynamics of each policy floor separately using the AD-AS model; and commentary will be given on the possible outcomes of each shock. AD Y* AD1 Y** P* P** AS Output Output, Y Interest Rate, i Price Level IS-LM AD-AS LM1 LM IS IS1 E1 E2 E3 E3 E1 Figure.

1 The NGP example outlines as one of its strategies a plan to restrict financial policy coupled with a move to loosen financial policy by lowering the costs of capital and thus decreasing real interest rates. The government believes that a crew of these policies will help raise issue and employment in South Africa (The New Growth Path, 2010). Seemingly the way the NGP plans on making fiscal contractions, is by re-structuring and re-prioritizing public spending. Looking at figure.1 we start off at equilibrium (E1) .Fiscal contraction will see a leftward shift of the IS curve (IS-IS1) leading to a shift in equilibrium from E1 to E2. The dynamics of this shift are best described as follows; a decrease in public spending sees a decrease in demand, this fall in demand sees industries lowering their output, this decrease in output translates to a decrease in money demanded resulting in a decrease in... If you want to get a full essay, devote it on our website: Orderessay

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