The Balassa-Samuelson Forecast Applied to China During 2000-04

question 104

Multiple Choice

The Balassa-Samuelson forecast applied to China during 2000-04:

• A) failed to predict the slow rise in the exchange rate that actually occurred.
• B) failed to predict the Chinese inflation that actually occurred.
• C) failed to predict the rise in Chinese real GDP that actually occurred.
• D) predicted correctly that the slow appreciation of the Chinese exchange rate would result in higher inflation of the Chinese yuan.

---

Definitions:

Surpluses

Situations in which the quantity of a product or service supplied exceeds the quantity demanded, or when revenues exceed expenditures in a budget.

Tax Expenditures

Governmental financial benefits conferred through tax policies, allowing individuals or corporations to reduce their tax liabilities through deductions, exemptions, or credits.

Means-tested Benefit

Government assistance programs that provide benefits based on the recipient's income and assets, ensuring aid goes to those in financial need.

Entitlement

A government program guaranteeing access to benefits by members of a specific group and based on established rights or by legislation.