Write a three to four (3-4) page paper in which you: 1. Identify at least four (

Question

Write a three to four (3-4) page paper in which you:

1. Identify at least four (4) key points of a relevant economic article from either the Strayer Library or a newspaper. The article must deal with any course concepts covered in Weeks 1-8.

2. Apply one (1) of the following economic concepts (supply, demand, market structures, elasticity, costs of production, GDP, Unemployment, inflation, aggregate demand, and aggregate supply) to the key points that you highlighted in Question 1.

3. Explain how the concept that you identified in Question 2 could affect the U.S. economy.

4. In your concluding paragraph, state whether you agree or disagree with the economic article identified in Question 1. Provide a rationale for the response.

5. Use at least three (3) quality resources in this assignment with one (1) being your article.

Your assignment must follow these formatting requirements: Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format.

Explanation / Answer

The topic of my article will be the recent phenomenon of China’s Economic Growth in 2015 Is Slowest in 25 Years which still continues in 2016. This was published in the Wall Street Journal. In China, GDP grew by 6.9% in 2015 which is the slowest growth in the 25 years that the second largest economy has seen. The Chinese leaders have been trying to move the economy from heavy industries to increase in consumption and investment of the ordinary people. Chinese company are now worried about high debt. There is also the problem of over capacity which results in the factories to close down and heavy job losses. Thus unused capacity and job losses are the major factors. Prices for commodities has fallen. This follows the theory of downward sloping relationship between inflation and unemployment. Here high unemployment means that the prices are low. Chinese demand for many metals and oil has gone down. The four key points here are

·         The GDP growth rate of China has slowed down and there is a pronounced deceleration in growth rate and there occurs weaking in economic momentum from 2015 onwards.

·         This slowdown affect the global markets

·         This also shows the lack of economic competence in economic management by the government. They are trying atleast to stabilize short term growth

·         Debt is increasing over time and the stock market has also slowed down. Moreover the tools that are traditionally use to revive growth like infrastructure spending, easy credit and encouraging exports are also becoming ineffective. This indicates that the policy impact is not sustainable.

·         China is in dilemma: if the government cuts interest rates, more capital flees while if it raises interest rates, more debt-plagued companies risk going bust, fueling joblessness.

The link to the article is http://www.wsj.com/articles/china-economic-growth-slows-to-6-9-on-year-in-2015-1453169398 which is written by Mark Magnier.

Here the economic concept that I want to highlight is the rise in unemployment. Unemployment occurs when a person is vigorously looking for employment but fails to find one. Unemployment is used as a measure for the health of the economy. Various school of thought have different definitions and causes for unemployment. Keynesian economics suggests that there is always a natural rate of employment as the skills of the people and the positions offered have to be matched. The neoclassical economics proposes that the labour market is efficient if it is left to the market forces but a variety of interventions like minimum wages or unionization put supply and demand out of balance. Here it happens that with the decline in investment and high debt, there is excess capacity and the production is facing a declining trend. There is also lack of demand for the commodities. People started shifting their investment from China to other counties. All these factors lead to the situation that the Chinese economy is facing a slump in the production and excess capacity. All these results in the increase in the unemployment which is a major concern for the economy. Following the philiphs curve concepts it can also be said that this high unemployment will keep inflation and hence prices down due to their negative relationship. Thus the key economic concept discussed here is the increase in unemployment which is a major concern for the Chinese people.

If there is a rise in the unemployment rate in China, then Chinese people will migrate to other countries in search for jobs. This will create all the problems realated to migration. The Chinese people will be ready to work for lower salaries in the US. Now given the profit motive of the firms operating in US, they will hier the Chinese people. This will have negative impact for the citizens of US. Moreover the inflow of Chinese people will affect the social and economic life of the people. This will cause increase in population which means that this requires increase in government spending for producing adequate facilities. Moreover having workers willing to work for relatively low pay may allow employers to ignore productivity, training and innovation. This will also put pressure on public services. Unemployment may rise if there are unrestricted numbers of incomers. There may also be difficulties regarding integration and can occur frictions with the local people. Thus the citizens of US will be worse off. Moreover easiness of mobility may make easy organised crime and people trafficking. Thus it is evident that increase in unemployment rate in China will have a negative impact on the citizens of US and may also increase the unemployment rate in US.

I totally agree with the article. The slowdown of the growth of China was evident. There was faster-than-expected slowdown in imports and exports, in part due to weaker investment and manufacturing activity. These developments, together with market concerns about the future performance of the Chinese economy, have caused spillovers to other economies through trade linkage and low commodity prices, as well as through retreating assurance and growing volatility in financial markets. Manufacturing activity and trade had remained weak globally which reflects not only developments in China, but also subdued global demand and investment more broadly—notably a decline in investment in extractive industries. In addition, the dramatic decline in imports in a number of emerging market and developing economies in economic distress is also weighing heavily on global trade. Thus I totally agree with the proposition of slowdown of GDP growth. Even if there are various controversies regarding the numbers, the declining trend is significant and clear.

References

WORLD ECONOMIC OUTLOOK (WEO) UPDATE,Subdued Demand, Diminished Prospects.http://www.imf.org/external/pubs/ft/weo/2016/update/01/

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.