Economics class: China’s record $2.6tn rise in savings fuels ‘revenge spending’ hopes
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
This article picked by a teacher with suggested questions is part of the Financial Times free schools access programme. Details/registration here.
Specification:
Aggregate demand
Click to read the article below and then answer the questions:
China’s record $2.6tn rise in savings fuels ‘revenge spending’ hopes
Identify the components of aggregate demand (AD)
With reference to chart 2, ‘China’s economy is less driven by consumption than its global peers’, compare the relative importance of consumption expenditure in China with its global peers
‘China needs a strong force to drag the economy out from the vicious circle of weak demand and low expectation of income growth . . . If that can’t come from exports in 2023, then fiscal stimulus such as strong government spending should step up and be that force’
i) Explain what is meant by an export-led growth strategy;
ii) Suggest why China’s exports sales may be lacklustre during 2023;
iii) Using a diagram, analyse the effects of fiscal expansion on the real economy; and
iv) Discuss the trade-offs that may arise because of such a fiscal expansion
Gavin Clarke, Emmanuel College
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