Some of the policies used by the Chinese government result in investment being 50 percent of GDP. As a result
A)China's recent growth may be at the expense of the long term health of the economy.
B)China is very well positioned to grow in the long term.
C)China has sacrificed short term economic activity for long term growth.
D)Consumer spending drives economic growth.
E)Many state run firms that are more productive than private firms in other countries.

Question

Quizplus · Accepted Answer

A high investment-to-GDP ratio can indicate that the government is prioritizing investment over consumption, which can result in short-term growth but come at the expense of long-term economic health. This is because investments may not always lead to productivity gains or efficient allocation of resources, and a dependence on investment can lead to overcapacity, debt, and inefficiencies in state-owned enterprises. Therefore, while China's high investment level has contributed to its recent growth, it could also be a source of future instability and imbalances.

Some of the Policies Used by the Chinese Government Result