Macroeconomics 11th Edition by Michael Parkin

Exercise 36

Use the following news clip to work Problem.
Consumer Growth Could Buoy China's Economy
Annual double-digit wage growth since 2000 has created a Chinese middle class ready to spend. And spend they have. Spending by China's consumers has grown at double-digit rates for a decade. Digital Luxury Group, a Geneva-based market researcher, reports that Chinese travelers made 70 million overseas trips in 2011 to places that include Bali, Dubai, Paris, London, Singapore, and Hong Kong. To cope with all this extra travel, China plans to build 56 new airports before the end of 2016. China's wealthy consumers in aggregate are poised to spend more on luxury goods than consumers in Japan and the United States.
Explain and draw a graph to illustrate the changes in autonomous expenditure and induced expenditure and the multiplier process at work in the above story.