Hu Tells Leaders China Growth Will Help World Economy
Chinese President Hu Jintao told world leaders that his country "has taken an active part in the international cooperation to deal with the financial crisis'' by providing a "$586 billion economic sti focused on building low- rent housing, roads, railways and airports. The package also allows tax deductions for fixed assets such as machinery to stimulate investment. Farmers will also benefit fro subsidies."
Hu stated that "China is in itself an important contribution to international financial stability an economic growth.''
Which of the following will occur if China's spending generates economic growth in real GDP per p
i. There will be an upward shift in China's aggregate production function.
ii. There will be a rightward shift in China's labor demand curve.
iii. There will be an increase in the real wage.

Question

Quizplus · Accepted Answer

If China's spending generates economic growth in real GDP per person, it will lead to an upward shift in China's aggregate production function (i), a rightward shift in China's labor demand curve (ii), and an increase in the real wage (iii). This is because an increase in real GDP per person indicates an increase in productivity, leading to more demand for labor and higher wages.