India's GDP growth slows sharply - May. 31, 2012 - 2 views
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sharply
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Fuyuka Nakamura on 06 Jun 12AD/AS changed in time fast
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In the first quarter, the country's manufacturing sector contracted and its agricultural sector slowed substantially
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due primarily to weakness in its manufacturing and agricultural sectors
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Spending by both consumers and the government decelerated slightly.
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tighter monetary policy
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interest rates high for three years to battle rapid inflation
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As interest rates are high, the sectors will not want to borrow money, as they will be losing out on money. Consumers will also save their money rather than spend it, which then affects the aggregate demand curve. Which then affects the economic growth.
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Contrationary Monetary Policy, as the Gov is trying to fight the inflation. In other words they want to lower the price levels. They do this by rising the interest rate to decrease the supply of money.
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lower that rate slightly to try to stimulate economic growth.
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lower rates further
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economic growth