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  • Consumption, income, balance of payments, distribution of income

Click to read the article below and then answer the questions:

China’s record trade gap a symptom of struggle to rebalance its economy

  • ‘China reported the largest monthly trade surplus in its history last Friday.’  Explain what is meant by a trade surplus

  • ‘Households receive a lower share of gross domestic product . . . which is why they also consume a lower share.’  Explain this statement with reference to the Keynesian consumption function

  • ‘Rising exports are usually a good thing.’  Using a diagram, analyse the benefits associated with rising exports

  • ‘They are symptoms of deep and persistent imbalances in the domestic distribution of income.’  Draw and explain the Lorenz curve

  • ‘Rising exports are usually a good thing, but for countries like China, rising trade surpluses are not.’  Explain this statement

Gavin Clarke, Emmanuel College

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