Global Wars and Their Impact on China's IS-LM Curve Analysis
School
Ms Ramaiah Institute Of Technology**We aren't endorsed by this school
Course
COMPUTER S 101
Subject
Economics
Date
Dec 11, 2024
Pages
8
Uploaded by ProfessorComputer9359
Impact of Global Wars on China's IS-LM Curve
The Russia-Ukraine War: Impacts on the IS CurvePositive ShiftsIncreased demand for Chinese exports as Russia sought alternatives to Western products.Negative ShiftsRising costs of energy and agricultural imports due to global supply chain disruptions, leading to inflation and reduced domestic consumption.
The Russia-Ukraine War: Impacts on the LM CurveInterest Rate ReductionThe People's Bank of China (PBoC) reduced interest rates to stimulate growth.Capital InflowsCapital inflows increased as investors sought stability, boosting the demand for the Chinese yuan.
The Israel-Hamas War: IS Curve ImpactsRising Oil PricesThe conflict has disrupted global trade and energy markets, leading to rising oil prices and increased China's import costs.Reduced Export DemandHeightened global uncertainty caused by the war has led to reduced global demand for Chinese exports.
The Israel-Hamas War: LM Curve Impacts1Inflationary PressureThe conflict has caused increased inflationary pressure due to higher energy costs.2Monetary EasingThe People's Bank of China (PBoC) has eased monetary policy to stabilize economic growth.3Yuan DepreciationCapital outflows due to global uncertainty have led to a depreciation of the Chinese yuan against the dollar.
South China Sea Tensions: IS Curve Impacts1Trade DisruptionsIncreased geopolitical risks lead to trade disruptions, affecting China's goods market equilibrium.2DiversificationPotential diversification of trade routes increases logistics costs, impacting the IS curve.3Resource AllocationInvestments in maritime infrastructure and military presence divert resources from other sectors.
South China Sea Tensions: LM Curve Impacts$230BDefense SpendingTensions lead to increased government spending on defense and maritime security.10%Capital OutflowsGeopolitical risks create foreign investment volatility, leading to increased capital outflows.