IB Economics IA - Commentary 3 (Trade Slump - China)

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Economics Commentary:        #3

Title of Extract: China's exports fall again in December as global meltdown widens

Source of Extract:                CBC News

Date of Extract:                01/12/2009

Word Count:                        741 words

Date the commentary was written:        January 16, 2009

Date Submitted:                January 19, 2009

Section of syllabus to which the commentary relates:        International Trade and                                      Macroeconomics

                                                                        

Candidate Name:                Supreet Sahni

Candidate Number:                1003 - 235

Trade slump - contributing factor for factory closures and layoffs

The advantages and disadvantages of trade account for a significant amount of a country’s economy with specific reference to the domestic markets. Trading goods and services on an international scale improves the production possibility frontier (PPF) which leads to a better standard of living. The principles of trade have the ability to make all participating parties involved economically better off.

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Specific to this situation, a trade slump has initiated a sequence of acts which has caused “…exports falling 2.2 per cent and imports plunging 17.9 per cent.” The collapse in China’s trade growth has caused a significant decrease in the number of exports and imports which are a significant part of the GDP equation (X-M). These changes affect the trade balance – the difference between the monetary value of exports and imports made by China. Primarily, this change is beneficial in such way that there is a viable balance of payments and value for (X – M) becomes greater ...

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