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India's Economy: "Goldilocks tests the Vindaloo"

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Introduction

Bearing in mind that this article is comprehensive, coherent and fluent, the written account is inclusive and demonstrates an apparent connection with Section 3 Macroeconomics and sets up a close relation with the two sections in particular; aggregate demand1 along with supply2 and the demand and supply side policies , which in this case proposes a debatable analysis on whether India has finally achieved the "Goldilocks Economy" (neither too hot or too cold), or continues to have a loose-fitting monetary policy. This article is effective for the internal assessment because it does not dive into the economic theory, but introduces many notions that can easily be absorbed into economic presumptions and then be analysed. The extract portrays an effectual debate questioning the unpredictable growth sustainability of the recently meteoric rising Asian economy of India and its unfastened, lax monetary policy. Monetary policy is the use of interest rates and money supply changes to manage the overall level of demand in the economy and therefore help achieve the economic objectives3 of controlling inflation, helping produce economic growth, keeping employment as high as possible, and maintain a satisfactory balance of payments. ...read more.

Middle

Illustrated on Figure 1.1 on the previous page, this is branded as an "imported cycle"; so if the rest of the world is growing in cycles, then this will affect in this case, India. India's agricultural industry started to oscillate, as the aggregate demand changed as did the economic growth of the nation. The second economic conception ultimately resolving the indecision on whether the Indian economy should or shouldn't tighten its monetary policy is the increase in fixed capital spending. On Figure 1.2, displayed on the previous page, shows the outcome on the "increase in fixed capital spending from 23% of GDP in 2001 to 29.5% in 2007"5. Figure 1.2 shows an increase in long run aggregate supply will shift the long-run aggregate supply curve to the right. This denotes an increase in India's productive potential of the economy. In this case, fixed capital investment by India, shows an increase in the quantity of factors of production perhaps due to an increase in the working population, discovery of new raw materials or an increase in net investment in the nation's capital stock. ...read more.

Conclusion

This of course, shows that many alterations need to be undertaken for the Indian economy in sustaining economic growth. In the end, it can be seen that suitable monetary tightening would eradicate the dazzling expansion of the Indian Economy. In actual fact, expansion is far more expected to finish impulsively if inflation gets out of control and imbalances broaden, hoisting the risk of the Indian economy, landing hard. Meanwhile, India will have to battle the endless possibilities of slower economic growth to keep inflation in check. 1 Aggregate demand is the total expenditure on the national output at different values of the price level over a given period of time. 2 Aggregate Supply is the total output of goods and services, which all firms in the economy are willing and able to supply at different price levels over a period of time. 3 http://textbooks.triplealearning.co.uk/file.php/75/mod3_notes/page_32.htm 4 Supply-side shocks are negative downturns in an economy, as business and economic planners like stability and certainty, so any 'surprise' event can cause calculations to go awry. 5 www.economist.com/opinion/displaystory.cfm?story_id=9302709 ?? ?? ?? ?? ...read more.

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