Freyan Posted October 12, 2019 Report Share Posted October 12, 2019 So I need to do a macroeconomics IA. I found this article on inflation.. I could definitely have a diagram about SRAS shifting to the left leading to inflation. A diagram of an inflationary spiral. And a diagram of the government's solution which is banning onion exports. My only issue is if this is considered more microeconomics than macroeconomics? They do say the supply shortages leads to 'inflation' and they're not just talking about onions, but the article transitions to talking about onions and high onion prices which is just one good. Mind you, the inflation is still regarding overall increase in prices of foods due to monsoon, but it does look into onions and i'm not sure if that's allowed. MOREOVER, the government solution is to ban onion exports. Now this is to decrease aggregate demand, but now I am thinking this is too microeconomics of an idea instead and thus i cant choose the article. What do you guys think? is it okay to use this article? Reply Link to post Share on other sites More sharing options...
Freyan Posted October 12, 2019 Author Report Share Posted October 12, 2019 ARTICLE: https://www.reuters.com/article/us-india-economy-poll/indias-inflation-surged-in-september-but-wont-bring-tears-to-rbi-reuters-poll-idUSKBN1WP0DKhttps://www.reuters.com/article/us-india-economy-poll/indias-inflation-surged-in-september-but-wont-bring-tears-to-rbi-reuters-poll-idUSKBN1WP0DK Reply Link to post Share on other sites More sharing options...
Vighnesh Posted October 12, 2019 Report Share Posted October 12, 2019 Yes I think you could use this article . The article mentions "retail inflation " , which likely indicates PPI (The producer price index to measure inflation). So you could likely have a paragraph about this. You could talk about interest rate cuts boosting inflation towards the RBI'S targets. These are just a few ideas, but confirm with your teacher if you could use this. Reply Link to post Share on other sites More sharing options...
Freyan Posted October 12, 2019 Author Report Share Posted October 12, 2019 (edited) 4 hours ago, Vighnesh said: Yes I think you could use this article . The article mentions "retail inflation " , which likely indicates PPI (The producer price index to measure inflation). So you could likely have a paragraph about this. You could talk about interest rate cuts boosting inflation towards the RBI'S targets. These are just a few ideas, but confirm with your teacher if you could use this. Could i still do a paragraph of the government banning onion experts and thus AD decreasing (to decrease inflation)? or is this not a mactoeconomics thing Edited October 12, 2019 by Freyan Reply Link to post Share on other sites More sharing options...
Freyan Posted October 15, 2019 Author Report Share Posted October 15, 2019 Hello? anyone? Reply Link to post Share on other sites More sharing options...
Freyan Posted October 15, 2019 Author Report Share Posted October 15, 2019 @Vighnesh Reply Link to post Share on other sites More sharing options...
Vighnesh Posted October 16, 2019 Report Share Posted October 16, 2019 On 10/12/2019 at 7:48 PM, Freyan said: Could i still do a paragraph of the government banning onion experts and thus AD decreasing (to decrease inflation)? or is this not a mactoeconomics thing No, it doesn't make any sense for the banning of the exports of just one good to affect AD as a whole. Maybe you could generalize this to the food basket an average Indian consumes?? Again, don't take my word for it. Ask your teacher Reply Link to post Share on other sites More sharing options...
Freyan Posted October 16, 2019 Author Report Share Posted October 16, 2019 (edited) 1 hour ago, Vighnesh said: No, it doesn't make any sense for the banning of the exports of just one good to affect AD as a whole. Maybe you could generalize this to the food basket an average Indian consumes?? Again, don't take my word for it. Ask your teacher @Vighnesh My teacher said that its possible indian onions are so important to the indian economy that they affect AD. Does that sound, right? They never said they banned other vegetables so i guess i cant speculate right? Also, if you read the article its weird they get cost push inflation, then ban exports of onions (decrease AD to stop inflation?), and then they decrease interest rate which prompts AD to increase so they cause inflation once again.. don't you think that's kind of weird that they get inflation, decrease inflation, and then increase inflation again (because the indian gov doesn't mind if the inflation is a certain amount...) The only reason for this might be that with cost inflation and decreasing AD with a ban of onion exports the real output has decreased a lot so the government realizes that they need to increase real output by promoting spending with a low interest rate and because they realize its okay to have a certain amount of inflation? Edited October 16, 2019 by Freyan Reply Link to post Share on other sites More sharing options...
Vighnesh Posted October 16, 2019 Report Share Posted October 16, 2019 You can speculate to an extent. I think that the govt is trying to reduce cost - push inflation and rather promote demand- pull inflation. Cost push inflation has more serious consequences for an economy (leads to recession, unemployment), whereas demand pull inflation expands total output. Also the article says that onion exports were banned "to keep the price surge (of onions) from spiraling out of control". So the main aim behind banning onion exports was to keep the price of onions from rising too high. Of course, you could still investigate the effect of this ban on AD. And yes , the RBI is trying to promote expenditure in the Indian economy by cutting interest rates. Think about the potential impacts this could have on the agricultural sector in India (accounts for the greatest percentage of India's GDP) Reply Link to post Share on other sites More sharing options...
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