Question

In 2002 the corporate tax rate was reduced from 28% to 27%. This decision forms part of South Africa's:

a) Fiscal policy
b) Monetary policy
c) Social policy
d) Economic policy

Answer 1

The reduction of South Africa's corporate tax rate from 28% to 27% in 2002 is an example of fiscal policy, which includes changes in government spending and taxation to influence the economy.

Step-by-step explanation:

In 2002, the corporate tax rate was reduced from 28% to 27% in South Africa. This financial decision is an example of fiscal policy, which involves changes to government spending and taxation to influence the national economy. Fiscal policy can be used to stimulate or cool down the economy, as seen in various historical contexts, by altering tax rates or government expenditures.

The key aim of these policies is to manage economic cycles, combat recession, or curb excessive growth. In contrast, monetary policy relates to the control of the money supply and interest rates, typically managed by a country's central bank.