Economics class: China’s record trade gap a symptom of struggle to rebalance its economy
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Consumption, income, balance of payments, distribution of income
Click to read the article below and then answer the questions:
‘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