1)Why is it important to have macroeconomic policies in place, in South Africa?

2)How can one use macroeconomics to accurately model the global economy?

3)What do we often misunderstand about the definitions of national debt, deficit spending, inflation, and recession? What do we not understand about these macroeconomic concepts and their impact on individuals and business?

1)Macroeconomic policies are essential tools for creating an established economic environment which is conducive for sustainable growth of economics, which improved living standard and creation of job rely on. They help the government in making key decision, such as the distribution of resources, government expenditure and regulation of prices. They have been of great importance in South Africa as they have led to:

• Poverty eradication. Through government expenditures, job opportunities have been created in South Africa which have led to an increase in employment levels. The living standard of many individuals has been raised through these jobs reducing the poverty levels in South Africa. Additionally, the government of South Africa has invested in the provision of free public goods and services. This also has helped in the reduction of poverty in South Africa.
• Economic stabilization. Macroeconomic policies, in the situation of high demand and low supply, have seen South Africa regulate the prices of commodities which protect the consumer from being exploited. South Africa has also been able to regulate the prices of its currency resulting in it being competitive in the foreign markets, which have resulted in economic stability.

2)Macroeconomics variables can be used to accurately model the global economy, which are as follows:

Inflation: Inflation rate is also a determinant of macroeconomics which can b used to determine global economy. Inflation charts of countries can be compared and studied to have an image of inflation prevailing globally.

Interest rate: if the interest rate of the country is high then it will attract foreign investment because investors only invest in profitable projects. So, interest rate will determine the capability of a country to attract foreign investment and therefore, contribute to the global economy.

Exchange rate: with the rise in the world trade on account of globalisation exchange rate has become the most vital determinant of a country's relative economic health. Stable exchange rate indicates sound economic management and flow of trade between the countries. But of the exchange rate is unstable it will hinder the trade flow and thus global economy will be affected.

Many other factors such as monetary policies, fiscal policies, capital investment, resources also affect the global economy thus, should be taken into consideration to model the complexities of the global economy.

3)

The National Debt is the amount of money that the government borrowed from its creditors, domestic or foreign. Deficit spending is when government spending exceeds government revenues, and is often financed by borrowing. These two are often misunderstood by the public due to the negative connotation attached to debt. However, national debt and deficit spending, provided it is kept within what is reasonable and manageable helps the economy grow. Government spending contributes to economic growth with a portion of it being financed by debt. It is, however, important to note that these are paid by tax payers (present and future tax payers) money.

Inflation is the general increase in the prices of commodities. It is an average rate of increase which means that some commodities may see a higher rate of price increase than the others. Inflation is also often misunderstood due to the negative perception attached to higher prices. However, inflation often comes with economic growth and when kept within target, is simply a sign of a healthy economy. Individuals and businesses usually feel inflation in relation to their purchases of commodities and their income.

Recession is a series of contraction in the economy. Specifically, an economic contraction that lasts for two periods (quarters) or more is called a recession. A single period contraction is often misunderstood as a recession. Recession affects individuals and businesses as it usually indicates a decline in income and higher unemployment.