Produce a report on India to inform a government policymaker about how changes in the central bank’s policy rate can affect the economy during the Covid-19 crisis.

TASK:

Produce a report on India to inform a government policymaker about how changes in the central bank’s policy rate can affect the economy during the Covid-19 crisis.

Your report should provide:

(1) An analysis of reasons why central bankers decided to cut down their policy rates, and how aggregate demand, output levels, unemployment and inflation would respond to such a drop.

(2) An explanation of how these variables in (1), namely aggregate demand, output levels, unemployment and inflation would behave if the central banker decides to rise their interest rates in 2021 due to a fear of rising inflation once the economy begins to recover.

Your report should be 1300-1500 words in length and follow the further guidance section below. The main report should be accessible to a general audience with no prior knowledge of economics.

It should be supplemented with a technical appendix, which discusses the economic model(s) related to your narrative in (1) and (2) in a way which is suitable for a specialist audience.

FURTHER GUIDANCE

All section titles and word counts given in this section are for guidance only. You can write more or less for each section if you feel it better suits your argument but the report as a whole should fit within the 1300 to 1500 word limit.

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