Question

Which one of the following should not form part of a strategy to combat unemployment in south africa. A) An artificially overvalued currency. B) Birth control programmes. C) Skills development programmes D) Special employment programmes.

Answer 1

An artificially overvalued currency should not form part of a strategy to combat unemployment in South Africa. Because the appreciation of the domestic currency makes the import cheaper and export less competitive. This will promote imports because when domestic currency is appreciated, the imports become more profitable than that of producing domestically. So the local fails to compete with the lower price of imported goods. This will destroy the domestic industrial sector of a country and will worsen the unemployment problem.

On the other hand, when the currency is appreciated, the domestic goods become more expensive to the international buyers and the export market become less competitive. So the demand for exports will fall and destroys the domestic export market of the country and this will fuel the problem of unemployment.