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Article published: Sep 8, 2019
IB Economics syllabus: Macroeconomics (expansionary monetary and fiscal policy)
China is desperate to keep economic growth above 6% and it is having a hard time doing so mostly due to the ongoing trade war with the U.S. It has tried a fiscal stimulus (expansionary fiscal policy) through a tax cut for firms and households, and more recently, monetary easing (expansionary monetary policy) by reducing the reserve ratio that banks have to hold onto. Thereby, the liquidity in the markets was increased (higher money supply) but there are not many signs indicating that these policies would actually help the government reach its goal of keeping economic growth up.
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