Business, 26.11.2020 22:10 DisneyGirl11

What is the effect on China's aggregate demand when the United States goes into recession, when Japanese and European firms establish new plants in China, or when the Chinese yuan strengthens against the U. S. dollar?

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When the United States goes into recession - China's aggregate demand suffers greatly, meaning that it is reduced. This is because China is an important exporter of goods to the United States, so the exports element of Aggregate Demand will fall, bringing down Aggregate Demand as a whole.

When Japanese and European firms establish new plants in China - Chinese aggregate demand increases because more private investment from abroad arrives in the country, not only benefiting the Japanese owners, but also Chinese workers in the form of wages, Chinese companies in the form of more domestic consumption, and the Chinese government in the form of more tax revenue.

when the Chinese yuan strengthens against the U.S. dollar? - Aggregate demand will probably fall because a stronger yuan will decrease Chinese exprots, and increase American imports to China, and imports are not part of the Aggregate Demand calculation.

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The business cycle is the periodic but irregular up-and-down movement in economic activity, measured by fluctuations in real gross domestic product (gdp) and other macroeconomic variables. a business cycle is typically characterized by four phases—recession, recovery, growth, and decline—that repeat themselves over time. economists note, however, that complete business cycles vary in length. the duration of business cycles can be anywhere from about two to twelve years, with most cycles averaging six years in length. some business analysts use the business cycle model and terminology to study and explain fluctuations in business inventory and other individual elements of corporate operations. but the term "business cycle" is still primarily associated with larger (industry-wide, regional, national, or even international) business trends.

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