Read the excerpt below and use it to answer the essay.“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.”[Adapted from article by Professor André Roux] • 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.• Explain the progress (recovery, stability and growth) of the South African economy and the impact on the fiscal policy since the start of the Covid-19 pandemic by reading through Chapter 1 of the Medium-Term Budget Policy21; 22 2022 © The Independent Institute of Education (Pty) Ltd 2022Page 8 of 10Statement (MTBPS) 2021. This document can be accessed (and downloaded) at:http://www.treasury.gov.za/documents/mtbps/2021/mtbps/FullMTBPS.pdf• Refer to Tables 3.4 (p.30) and 4.4 (p.41) in the MTBPS. Comment on the amendments to Gross Tax Revenue (Table 3.4) and the adjustments to Consolidated Expenditure (Table 4.4). Provide relevant information to support your comments.• Clearly distinguish between expansionary and contractionary fiscal policy.
Read the excerpt below and use it to answer the essay.“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
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
[Adapted from article by Professor André Roux]
• Define fiscal policy.
• Describe the role of the budget in fiscal policy.
• Discuss how the policy variables, government spending and
• Explain the progress (recovery, stability and growth) of the South African economy and the impact on the fiscal policy since the start of the Covid-19 pandemic by reading through Chapter 1 of the Medium-Term Budget Policy
21; 22 2022 © The Independent Institute of Education (Pty) Ltd 2022
Page 8 of 10
Statement (MTBPS) 2021. This document can be accessed (and downloaded) at:
http://www.treasury.gov.za/documents/mtbps/2021/mtbps/FullMTBPS.pdf
• Refer to Tables 3.4 (p.30) and 4.4 (p.41) in the MTBPS. Comment on the amendments to Gross Tax Revenue (Table 3.4) and the adjustments to Consolidated Expenditure (Table 4.4). Provide relevant information to support your comments.
• Clearly distinguish between expansionary and contractionary fiscal policy.
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