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Data response (2)


Read the article China's capital spending could soon be bigger than America's (you can do this in the web window below or follow the previous link to open the article in a new web window) and then answer the questions below.


Question 1

Define the terms:

  • consumption
  • investment
  • government spending

Question 2

Analyse the effect of the Chinese government increasing the amount of public sector investment on the level of aggregate demand, output, employment and income in the short run.

Question 3

Examine the effect of the increase in Chinese public sector investment on long run aggregate supply.

Question 4

Explain how the multiplier and accelerator principles are connected and influence the level of economic activity.