Question

The President of Ghana launched the COVID-19 business alleviation program in collaboration with the National Board for Small scale industries, Trade associations and some banks. Under the programme the government is giving funds without interest to selected financial institutions for onward lending t businesses at a 3% interest. The program is aimed at helping beneficiaries to sustain their businesses during the COVID-19 pandemic.

a) Explain the expected impact of the low interest rate program on gross domestic product(GDP) articulating the possible pathways.

Answer 1

Answer

The decision made in this pandemic situation of COVID 19  by the President of Ghana is very appreciable as it is for the survival of businessmen who are having small scale industries .This program will not only provide with sustaining the business but also it will help in the economy of the country.Basically when we deal with low interest rate program ,we see that lower interest rate lowers the inflation and it make the demand to increase which ultimately had a positive effect on GDP of the country .Therefore with this lower interest rate program of giving fund at 3% through commercial bank to individua or business will increase the GDP and natioal saving also . On the other hand if the interest rate is high it will slow down the growth because of fewer investment by the people leading to high inflation particuclalry for short term .

HAVE A GOOD DAY !