The Alleviation of Poverty

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The alleviation of poverty and the increment of growth within a nation, such as ours, are achieved through the dual use of fiscal and monetary policy. The essay will give a brief description of both policies as well as the manner in which they theoretically operate when attempting to achieve their goals. A look at the current policies currently being used in the country and their success will be assessed in comparison with the policy aims. Lastly, a look at whether the current fiscal and monetary policies being used are actually achieving their goals and the reasons for their success of failure.
According to the (Griffiths & Wall, 2005) the definition of the monetary policy is the governmental manipulation of the demand and supply of money with the intention of achieving specified government objectives. The government will go about this manipulation by altering the two main variables that affect the demand and supply of money, namely being the quantity of money in the market and the rate of interest. In the South African context the monetary policy objectives are sought by altering the rate of interest. In the (Roux, 2008) the monetary policy is further defined as a mechanism to “smooth fluctuations in the prices, the balance of payments and employment” through either expansionary or restrictive policies being followed monetary policy committee. It should be noted that there are many opposing views to the effectiveness of the monetary policy in the achieving of its goal of inflation target in South Africa and is seen through (Dr Mollentze, 2014). The monetary policy can be used in both the short term and long term in order to achieve steady growth in output, low inflation and achieve full employment as st...

... middle of paper ... that for the NDP to be successful, “the five common characteristics of high growth economies…” are necessary of which monetary policy could aid with the macroeconomic stability and the mustering of high rates of savings and investments. Thereby addressing the aggregate demand balanced equation of by simultaneously increasing: savings and investment; government expenditure and taxes, which would lead to growth of the economy and also alleviate poverty.
So a better implementation strategy and economic environment would result in the NDP being successful while incorporating NGP goals, the better economic environment would facilitate the expediency of the monetary transformation mechanism. Both of these requirements would also be aided by a more “credible and capable government” (Laubscher, 2014) being one of the characteristics required for a high growth economy.
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