QUESTION TWO [25] Read the extract below and answer the questions that follow: With its focus on understanding how resource allocation, human behaviour, institutional arrangements, and private and public policy jointly influence the evolution of the human condition, development economics is arguably the original and most fundamental field within the discipline of economics, at least as it relates to the social sciences and humanities more broadly. As the opening sentence of T.W. Schultzs 1979 Nobel Prize lecture declared, Most of the people in the world are poor, so if we knew the economics of being poor, we would know much of the economics that really matters. (Schultz 1980:639) Ultimately, virtually all-important work in development economics focuses on improving our knowledge of being or becoming poor and, more hopefully, about the processes by which people avoid or escape poverty and enjoy improved standards of living Source: Barrett CB (2007) Development Economics: Critical Concepts in Development Studies. Routledge.

In respect of the above extract: 2.1 Discuss the role of fiscal policy in South Africa and its consequences on development economics. (15)