The following quote could be interpreted as either good news or bad news for the economy being described. Please briefly explain good news interpretations and bad news interpretations (at least 1 piece for each, preferrably 2). Try to connect the answer to the concepts and models of macroeconomics.
“China’s exports suffered an unexpectedly sharp decline in September amid weak global demand but imports grew. ‘China’s dependence on external demand weakened,” said Zheng Yuesheng, deputy director-general of the customs agency’s statistics department. “This shows China’s economic development has transformed from being driven by external demand to domestic demand.”
Bad news interpretation: In the given quote, there is decrease in the level of exports of Chinese products. This has led to decrease in the level of employment and output of the export industry because of decrease in level of aggregate demand and increase in aggregate supply.
Good news interpretation: The people of China have increased their dependence on domestic products and have reduced their dependence on goods from external market. This means that the demand for domestic products have increased. The result of this is increase in the level of employment opportunities for the domestic labour. Also the increase in level of aggregate demand for domestic products will lead to utilisation of resources in an optimum way. This will increase the level of GDP of China.
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