(a)
- With Fig. 1.1, in what way does the US balance of trade in goods in Q1 2018 differ from Q1 2010? [2]
- Explain how China’s 25% tariffs on cars from the US may have helped to cause the change you have identified. [2]
(b)
- Using Fig. 1.2, how has the value of the yuan against the US dollar altered between April and July 2018? [1]
- Identify and explain one factor that will decide the effect of this exchange rate change on China’s balance of trade in goods. [3]
(c)[6]
Explain how each of ‘a healthy US economy, a large US fiscal deficit and a strong US dollar’ could add to a US trade deficit.
(d)[6]
With reference to economic theory, discuss whether the US economy is likely to benefit overall from the trade war with China.