Answered: In some ways the state of the world…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

In some ways the state of the world economy is less hostile today than when (then) finance minister Tito Mboweni read his Budget Speech a year ago. Global economic growth rebounded significantly in 2021, after the decimation brought about by the Covid-19 induced recession in 2020.
One of the outcomes of this was a sharp recovery in commodity prices, which has resulted in much higher-than-expected mining tax revenue in South Africa. This, in turn, has provided some welcome – albeit limited – breathing space on the fiscal front.
The local economy is thought to have grown by more than 4.5 percent in 2021 – the highest annual increase in more than a decade. On balance, the finance minister should be able to meet spending demands (including the extension of the Sassa payments) for the year ahead, without widening the Budget deficit or resorting to punitive upwards adjustments to tax rates.”

Define fiscal policy
Describe the role of the budget in fiscal policy.
Discuss how the policy variables, government spending and taxation, are used to influence economic activity.

Definition Definition Increase in the amount of goods and services produced by a country in a given period of time compared to an earlier period. Economic growth is generally coupled with a rise in national income or the purchasing power of individuals. It is often measured in terms of the increase in a country's gross domestic product (GDP), or the overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period.

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