The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse,a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is TRUE of the Chinese experience?
A)The worldwide decline in demand led to a collapse of Chinese exports.
B)Instead of relying solely on the economy's self-correcting mechanism,much more aggressive fiscal expansions than those of the U.S. (in addition to a substantial monetary easing)served to shift the AD curve back to general equilibrium relatively quickly.
C)The Chinese economy was better able than the U.S. economy to weather the financial crisis with output growth starting to grow earlier and more quickly than that of the U.S.
D)All of the above.
E)None of the above.

Question

Quizplus · Accepted Answer

The correct answer is D because all the statements accurately describe aspects of the Chinese experience during the period mentioned. A) The global demand decline did impact Chinese exports significantly. B) China implemented aggressive fiscal and monetary policies to counteract the economic downturn, which helped in recovering its economy. C) The Chinese economy did indeed start to recover more quickly than the U.S. economy, partly due to these aggressive policies.

The Price of a Barrel of Oil Doubled Between 2007