Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
0Activity
0 of .
Results for:
No results containing your search query
P. 1
Impact of Monetary Policy on Indian Industry

Impact of Monetary Policy on Indian Industry

Ratings: (0)|Views: 1 |Likes:
Published by Naeem Haider
mpact of Monetary Policy
mpact of Monetary Policy

More info:

Published by: Naeem Haider on Jul 04, 2014
Copyright:Traditional Copyright: All rights reserved

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as DOCX, PDF, TXT or read online from Scribd
See more
See less

07/04/2014

pdf

text

original

 
 BUSINESS ENVIRONMENT
TERM PAPER BUSSINESS ENVIRONMENT TOPIC IMPACT OF MONETORY POLICY ON INDIAN INDUSTRY
 
 BUSINESS ENVIRONMENT
CONTENTS
 
ACKNOWLEDGEMENT
 
INTRODUCTION
 
MONETARY POLICY
 
HOW IT DOES WORK  
 
OBJECTIVE OF STUDY
 
REVIEW OF LITRATURE
 
METHODOLOGY
 
 
ANALYSIS
 
CONCLUSION
 
BIBLIOGRAPHY ACKNOWLEDGEMENT
 
 BUSINESS ENVIRONMENT
INTRODUCTION
 
The RBI makes use of instruments to regulate money supply and bank credit so as to influence the level of aggregate demand for goods and services. The availability and cost of credit are regulated to influence the level and nature of economic activities.
 
The monetary policy has to reconcile the objectives of  economic growth and price stability.
 
Economic growth requires expansion in the supply of  money so that no legitimate  productive activity suffers due to finance shortage. Price stability requires restraint on the expansion of credit so that money supply does not become excessive to cause inflation.
 
Changes in the monetary policy can be made anytime during the year. The Central Bank may adopt an expansionary or contractionary policy depending on the general economic policy of the Government and conditions in the economy.
 
Monetary policy may also be used to influence the exchange rate of the
country’s
currency
HOW IT DOES WORK
Consider that an economy is growing too fast. This is also referred to as overheating of the economy: a situation that typically happens in the boom phase when GDP (gross domestic product) growth exceeds the long-term growth potential of the economy. The  producers of goods are not able to make enough goods to meet the rising demand. The resultant demand-supply mismatch creates inflationary pressures in the economy. This situation is regarded as unsustainable, as the high growth translates into higher inflation. In this situation, the RBI raises interest rates to depress spending and reduce the pressure on inflation.

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->