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TMA01 DD209

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Question 1 a. The strongest economy is USA (GDP per capita, $PPP; 48,110), second strongest economy is UK (35,600), follow by Eurozone economy (35,280) and the weakest economy is China (8,400). For compare economies performances I used indicator of GDP per capita with $PPP (Purchasing power parity) because every economy have differences in population and in purchasing power parity. For example; China have higher population than USA and that mean more working people in economy (Reason for per capita). Also living cost and price of standard basket of goods and services is higher in USA than in China ( Reason for PPP). b. When I compared ranking of economies in table 1.(2011) and table 2. (2010) there is a difference in ranking. The …show more content…

Chine and other export countries are important surplus counterweights to the US deficits. The public sector of China have tendency more spending (build motorway, schools, bridge etc.), also saving to finance investment abroad. because they choose more taxes from their outputs in the current account surplus. The public sector of US is opposite to China. US have tendency more saving, because the choose less from their taxes and also they have higher tendency borrowing in a abroad or domestic financial markets. Households in China have tend to save probably more then they need, because they can not rely on social safety nets, such as healthcare and unemployment insurance etc. However, by expending the reach of social protection programmes on a durable basis, government would reduce their own saving and at the same time make for lower precautionary households saving. References: Santos C. with Higginson M., Himmelweit S., Howells P., Lowe J., Mackintosh M., Morgan W., Parris S., Simonetti R., Stone H. and Trigg A. (2013) Running the economy Heakal R., (2013) Balance of payment,

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