As such even though the government expenditure increases there is an equivalent

As such even though the government expenditure

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these bonds, they are unable to use the money to fund their own investments. As such, even though the government expenditure increases, there is an equivalent fall in private sector spending and investment. Also, with increased government expenditure, pessimism grows amongst firms and consumers. They would have observed that the Chinese government has been spending more, a sign that past spending did not solve the existing economic problems. Due to the government's mounting debt that will cause interest rates to increase and investments to decrease, the fiscal policy might not work as well as predicted. Firms and consumers would turn pessimistic and choose not to spend instead. Conclusion In conclusion, implementation of expansionary fiscal policy by decreasing the tax levels of China can influence the macroeconomic problem of high unemployment rate in China. It would ease the situation as stated in the diagnostics analysis. Despite the potential trade off, the Chinese government need not be overly concerned as the economy can be left to deal with short-run fluctuations on its own. End of Part B 6
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ECON1016, 2019S2, Policy Brief References (In RMIT Harvard Style) Ganti, A 2019, Multiplier Effect , Investopedia, viewed 24 September 2019, < >. He, L 2019, China's economic slowdown is real, but it's not just about tariffs , CNN, viewed 25 September 2019, < - trade-war/index.html >. International Monetary Fund 2019, Gross debt position, viewed 23 September 2019, < >. Pettinger, T 2017, Impact of Expansionary Fiscal Policy , Economics Help, viewed 24 September 2019, < - expansionary-fiscal-policy/ >. Ross, S 2019, How Does Fiscal Policy Impact the Budget Deficit? , Investopedia, viewed 24 September 2019, < - policy-impact-budget-deficit.asp >. Si, C 2019, Record number of graduates face tough job market entry , Chinadaily, viewed 24 September 2019, < >. The World Bank Group 2019, GDP total, constant US$ , The World Bank, viewed 20 September 2019, < >. The World Bank Group 2019, Population total , The World Bank, viewed 24 September 2019, < >. The World Bank Group 2019, Unemployment total , The World Bank, viewed 20 September 2019, < ? end=2018&locations=CN&start=2014 > 7
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ECON1016, 2019S2, Policy Brief Part C: Micro-credential on Information Literacy End of Assignment 8
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