South African Budget to Reduce the Budget Deficit - Essay Writing - Finance Assignment Help

Assignment Task

ESSAY TOPIC:
Is the decision in the 2021/22 South African Budget to reduce the Budget deficit appropriate at a time when the economy has contracted dramatically as a result of
Covid-19? Justify your answer.
In answering this question, you should:
-Start by looking at the textbook theory of why GDP (Y=C+I+G+X-Z) rises and falls in the short term (the business cycle).
-You should then examine the evidence to explain which of these components caused the Covid-19 contraction and what has happened to these components most recently.
-Based on theory, will a contraction in the deficit worsen or improve the situation?
-Finally, explain why SA is reducing the deficit at a time when countries like the US are embarking upon large fiscal stimulation (increased government spending). Do
you support this decision, or is it a mistake?

There are a huge number of possible references in the popular media. You should look especially for interviews where Minister Mboweni was asked to explain the decision to reduce the deficit. You must also look at the Budget Review (link below).
For evidence of what is causing the weakness of GDP you can look at the Budget Review and the Quarterly Economic Review in the Reserve Bank’s Quarterly Bulletin. You should also look for statistical evidence in the Reserve Bank Quarterly Bulletin statistical tables
specifically Tables S-115 & S-154.

Some reminders for the structure of your essay (due on Wednesday)
You must start with the theory of what might caused a business cycle slowdown
Then move to the evidence. Which components of GDP did actually contract in nd quarter last year? (Use the Reserve Bank quarterly Bulleting for this evidence) i.e. C
initially contracted by x% or I contracted y% or X fell w%. But there has been a bit of a recovery in the second half of the year. How much and which components?
What does theory tell you reducing the deficit is likely to do?
Why then is SA trying to reduce the deficit?
You must reference properly in-text and in your reference list, must have an Introduction and Conclusion and a cover page with title and abstract. 20% of marks are for these technical aspects so it is worth spending time getting them correct. See the Course Outline for guidance.

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