Ib Economics Comentary

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IB ECONOMICS – INTERNAL ASSESSMENT
FRONT COVER
School code: Luanda International School

* Candidate Name: Noel Castellanos
* Candidate Number:
* Teacher: Sebastian Sanogueira
* Title of the article: China's inflation falls to 1.8 per cent, giving Beijing more room to stimulate slowing economy

* Source of the article: Canadian Businesses
http://www.canadianbusiness.com/article/94646--china-s-inflation-falls-to-1-8-per-cent-giving-beijing-more-room-to-stimulate-slowing-economy (accessed on: 27/08/2012)

* Date the article was published: 09/08/2012

* Date the commentary was written: 01/09/2012

* Word Count: 774

* Section of the syllabus the article relates to: Macroeconomics

When talking about macroeconomics, two of the main goals of the government are to keep inflation low and constant and keep the economy growth high and stable. Inflation can be define as a persistent, substantial rise in the general level of process related to an increase in the volume of money and resulting in the loss of value of currency and economic growth can be defined as a steady growth in the productive capacity of the economy. These two goals go hand on hand, as in many ways they depend on each other. The last few years China has experienced a high rate of inflation mainly due to a 2.4% rise in food prices, which has provoked a slowdown in the economic growth of the country. This was caused because the aggregate supply of the country decreased. Aggregate supply is defined as the total supply of goods and services produced within an economy at a given overall price level in a given time period. The decrease of the aggregate supply caused a shift in the short run aggregate supply curve to the left, and consequently increased prices and decreased the real output of the economy, slowing the economic growth, as shown in the graph below.

The decrease of the real output would...
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