Using the information in Fig. 1.1, describe how the contribution to real output growth from the different parts of aggregate demand in China changed between 2010 and 2017.
(i) What relationship would you expect to see between the rate of growth in real output and new car sales in an economy?
(ii) Assess whether the evidence in Fig. 1.1 and Table 1.1 supports this relationship.
State one protectionist measure that the US may use in a trade war with China and explain the effect this would have on consumers and producers in the US.
Discuss whether cuts in direct taxes would raise the demand for all kinds of consumer goods in China.
Discuss whether increasing domestic consumption is the best way for China to keep real output growth at the current rate ‘over the next few years’.