• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

India's Economy: "Goldilocks tests the Vindaloo"

Extracts from this document...

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.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. The Nature of Macroeconomics

    Problems of Macroeconomics Deflationary & Inflationary Gaps * Total spending = AD or AE * AS function economy producing at maximum capacity * Below this point = output level where unemployed resources * Above = prices progressively higher but actual output is constant Pg 66 * e dg = unemployed

  2. Split Votes: A Nation Divided on the Marijuana/Drug Legalization Debate

    But by accepting a neoclassical market and legalizing drugs, the market will eliminate many of the inefficiencies and negative externalities, along with giving the government more tax revenues to put towards more effective policies. Drug prohibition and legalization are not a widely covered by economists.

  1. The Social Balance - The Mixed Economy.

    though it may hint on whether a particular economy has moved too much in one direction. Can we say more than this? Even if we cannot be precise about the ideal mix, it may be possible to set certain limits beyond which the mixed economy ceases to exist.

  2. Chinese economy sets for soft landing in 2005.

    In addition, China will continue to maintain its open-door policies and meet its international commitments, including its obligations under the World Trade Organization. In the face of critics who warned of an overheating economy, he said that government measures to rein in rampant fixed-asset investment are working.

  1. Retailing In India - A Government Policy Perspective

    We then drive towards developing a comprehensive prescription for strengthening the Indian FDI policy framework. The second section of the report begins with a summary of the findings of our study on the impact that FDI has had globally. Then we proceed ahead and critically analyze the issue of whether or not FDI should be permitted in retailing.

  2. Global Imbalances

    (Remarks by David Dodge Governor of the Bank of Canada) www.bis.org/review/r060404a.pdf My Understanding In the perspective of the global economy there is an increases amount of anxiety over the issue which is termed as Global imbalances. Those major imbalances that are exists are still unquestioned.

  1. Monetary policy of a globalised economy

    The scope has been limited due to the researchers lack sufficient knowledge on various concepts involved in the topic. However the focus has been to study and present the monetary policy in a simplified manner. RESARCH QUESTIONS The researcher has not framed any specific research question to study the topic has a whole.

  2. What is macroeconomics?

    = ? C / ? Y * Marginal propensity to save (MPS) = ? S / ? Y * MPC + MPS = 1 * Average propensity to consume (APC) = C / Y * Average propensity to save (APS) = S / Y * APC + APS = 1 Adding the financial sector Pg

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work