Macroeconomics 101-Issues
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- Date Submitted: 05/05/2011 05:50 PM
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Macroeconomics 101-Issues
Part 1: I actually found three related articles pertaining to China’s latest five-year plan. The Chinese plan is to move away from the current economy model that is based on exports and public works projects and move towards a model that will enhance and encourage consumer spending.
One part of the plan is to build affordable housing - 10 million homes this year and a total of 36 million over the five year plan. Chinese consumers will not have to save for high cost housing and will have more spending money.
Another part of this plan is to try to lower inflation. The Chinese had the highest inflation increase last year since 10/08. To try to get inflation under control, the government has ordered banks to raise interest rates and curtail lending.
The Chinese plan seems to have good intentions-raising personal income, building affordable housing, contributing money to health and welfare programs. However, as China is the second largest economy in the world, a plan to reduce their trade surpluses will have long reaching affects on nations that rely of their exports.
Part 2: The whole plan that China is moving forward with is a Macroeconomic issue. These plans affect the whole Chinese economy and will affect many other nations’ economies. If China choses to reduce its trade surpluses, other nations must find other resources for products currently being imported from China.
If this plan is effective, the Chinese people will realize an increase in personal income, a reduction in housing costs, better healthcare and welfare programs. Their whole way of life has the potential for improvement. This could produce long term affects by giving consumers the ability to save more for future consumption. The Chinese economy could “level out”, making it more feasible for the economy to continue to grow-not peak and come crashing down, unable to contain or sustain itself.
Part 3: This article covers several Macroeconomic...
Part 1: I actually found three related articles pertaining to China’s latest five-year plan. The Chinese plan is to move away from the current economy model that is based on exports and public works projects and move towards a model that will enhance and encourage consumer spending.
One part of the plan is to build affordable housing - 10 million homes this year and a total of 36 million over the five year plan. Chinese consumers will not have to save for high cost housing and will have more spending money.
Another part of this plan is to try to lower inflation. The Chinese had the highest inflation increase last year since 10/08. To try to get inflation under control, the government has ordered banks to raise interest rates and curtail lending.
The Chinese plan seems to have good intentions-raising personal income, building affordable housing, contributing money to health and welfare programs. However, as China is the second largest economy in the world, a plan to reduce their trade surpluses will have long reaching affects on nations that rely of their exports.
Part 2: The whole plan that China is moving forward with is a Macroeconomic issue. These plans affect the whole Chinese economy and will affect many other nations’ economies. If China choses to reduce its trade surpluses, other nations must find other resources for products currently being imported from China.
If this plan is effective, the Chinese people will realize an increase in personal income, a reduction in housing costs, better healthcare and welfare programs. Their whole way of life has the potential for improvement. This could produce long term affects by giving consumers the ability to save more for future consumption. The Chinese economy could “level out”, making it more feasible for the economy to continue to grow-not peak and come crashing down, unable to contain or sustain itself.
Part 3: This article covers several Macroeconomic...