ECONOMICS – Daily Answer Writing Challenge, June 26, 2014
1.Inflation is not purely a monetary phenomenon in India and hence scope of monetary policy of RBI to contain it is limited. Discuss (300 words)
2. Explain the relationship between the effectiveness of monetary policy and the interest elasticity of investment. Will the monetary policy be more or less effective the higher the interest elasticity of investment demand? Explain also the relationship between the fiscal policy and the interest elasticity of money demand. Why do the two relationship differ? (300 words)
