Economic Principles: 10 Basics To Know

Running head: PRINCIPLES OF ECONOMICS
PRINCIPLES OF ECONOMICS
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PRINCIPLES OF ECONOMICS
Table of Contents
Introduction................................................................................................................................2
Discussion..................................................................................................................................2
Conclusion..................................................................................................................................6
References..................................................................................................................................7

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PRINCIPLES OF ECONOMICS
Introduction
In India, Gold is considered as one of the precious metals, that has been used by the
individuals for the symbol of purity, royalty etc. From the year 1990, there is an increase in
the demand of the Gold in the Indian market, a strong economic growth and the prices are
favorable. Both the demand of monetary and non-monetary for gold is being increasing day
by day. Due to this there is a drastic increase in the prices of gold from the year 2001. In this
report, all the factors that affected the prices of the gold will be discussed and also presented
graphically so that it is very helpful to understand.
Discussion
Q1(a). The five factors that will affect the demand for gold in India are described below:
 Inflation: Most of the investor try to invest money on gold compared to the currency as it
is steady and does not fluctuate that much and it also hedge inflation. Thus, the inflation
for gold is high and as the demand increases.
 Global movement: As India is one of the largest importers of gold, at the time of
importing prices it changes due to the global movement (Bhalotra, Chakravarty and
Gulesci 2020) . There is a high chance that because of the various financial products and
for political upheaval gold is considered as one of the safest assets in which the investors
can rely on.
 Government Gold Reserves: In most of the countries, the Central Bank use to control
both the gold reserves and currency. Thus, when the gold reserves are being hold by the
Central Bank then the prices of gold are rising (Mishra et al. 2019). Two of the examples
of the two largest economies are Reserve Bank of United States and Reserve Bank of
India. Thus, the cash flow in the market increases and supply of gold tends to decrease.