The President of Ghana launched the COVID-19 business alleviation program in collaboration with the National Board for Small Scale Industries (NBSSI), Trade Associations, and some selected banks. Under the program, the government is giving funds without interest to selected financial institutions for onward lending to businesses at a 3% interest. The program is aimed at helping beneficiaries to sustain their businesses during the Covid-19 pandemic. Use this information to answer the following questions. a. Explain in your own words, the monetary policy tool being used by the government under this program. b. If the government had pegged the interest rate under the program at the monetary policy rate, will this have been a better way of setting the rate? Explain the advantages and disadvantages of each scenario.
The President of Ghana launched the COVID-19 business alleviation program in
collaboration with the National Board for Small Scale Industries (NBSSI), Trade
Associations, and some selected banks. Under the program, the government is giving
funds without interest to selected financial institutions for onward lending to businesses
at a 3% interest. The program is aimed at helping beneficiaries to sustain their businesses during the Covid-19 pandemic. Use this information to answer the following
questions.
a. Explain in your own words, the
government under this program.
b. If the government had pegged the interest rate under the program at the monetary policy rate, will this have been a better way of setting the rate?
Explain the advantages and disadvantages of each scenario.
c. Explain the expected impact of the low-interest rate program on
domestic product
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