Economics Literacy Paper

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Sierra Meisenbacher
Mr. Sible
AP Macroeconomics
29 May 2013
International Monetary Funds: Predicting Slow China's Growth The International Monetary Fund (IMF) is an organization of 188 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. They have monitored the economy of China and it had been noted that because of its “soaring income inequality and environmental degradation”, along with an alarming increase in credit, they are creating a slower projected growth pattern. With the combination of those three points, the idea of a slowing economy and how it is affected by them will be explored and explained. The economy is a system that needs to be balanced with consumption, investment, Government spending, and exports. When aspects of a country are affecting those core points of GDP and economic stability or growth, then the whole economy is thrown off. When income is unequally distributed, then it will effect consumption and investment mostly. When someone has less disposable income to spend on goods, then they will most likely be spending it on bills and such and would be more inclined to save than to spend or invest. As shown in the graph on the right, the GDP will lower if Aggregate Demand for goods were to decrease. Also, by destroying their environment, the Chinese are losing all of their non-renewable resources and their farm land for their people. In the more northern parts of China, there is a high concentration of farming families, of which are being heavily affected by the growing cities and suburban areas. They are moving into their land and surrounding areas and are contaminating their soil and many of these people have farmed for generations and by expanding these populations to the more rural areas, the Chinese government is hurting it’s farmers who produce food and their lively hood through their crops. The consumption and faith in the
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