1. Many people say that Chinas economic growth was export led. We know that on the demand side, a
countrys s GDP consists of:
Y C I G ( X M )
Consumption as a percentage of GDP
Investmentas a percentage of GDP
Trade Balanceas a percentage
its original position and it will be back on its feet. So, the solution was to spend money
from the public exchequer and push purchasing power into the hands of the public.
People often argue against the effectiveness of government and the need for
Demand: It constitutes of thea. Ability to pay (purchasing power)
b. Willingness to purchase
We have unlimited ends that have to be met with limited resources.
Probably the single most important macroeconomic relationship is the Phillips curve. These are the
words of economist George Akerlof from the lecture he gave when he received the Nobel Prize in 2001.
The Phillips curve is the short-run rela