In 1980, a Chinese woman would choose point F on IC7 and have 1 child over her child bearing years. | In 1980, a Chinese woman would choose point A on IC1 and have 4 children over her child bearing years. | Without interference, as China experienced economic growth, the fertility rate would have declined to the point where population stopped growing. Without interference, as China experienced economic growth, the fertility rate would have remained the same Without interference, as China experienced economic growth,the fertility rate would have increased leading to a large increase in population The substitution effect from increasing wages is show as the movement from A to F | The substitution effect from increasing wages is show as the movement from G to D The substitution effect from increasing wages is show as the movement from G to F | The substitution effect from increasing wages is show as the movement from F to D | The substitution effect from increasing wages is show as the movement from A to G | The income effect from rising GDP is shown as the movement from A to D The income effect from rising GDP is shown as the movement from A to G | The income effect from rising GDP is shown as the movement from F to D The income effect from rising GDP is shown as the movement from G to D
In 1980, a Chinese woman would choose point F on IC7 and have 1 child over her child bearing years. | In 1980, a Chinese woman would choose point A on IC1 and have 4 children over her child bearing years. | Without interference, as China experienced economic growth, the fertility rate would have declined to the point where population stopped growing. Without interference, as China experienced economic growth, the fertility rate would have remained the same Without interference, as China experienced economic growth,the fertility rate would have increased leading to a large increase in population The substitution effect from increasing wages is show as the movement from A to F | The substitution effect from increasing wages is show as the movement from G to D The substitution effect from increasing wages is show as the movement from G to F | The substitution effect from increasing wages is show as the movement from F to D | The substitution effect from increasing wages is show as the movement from A to G | The income effect from rising GDP is shown as the movement from A to D The income effect from rising GDP is shown as the movement from A to G | The income effect from rising GDP is shown as the movement from F to D The income effect from rising GDP is shown as the movement from G to D
Chapter13: General Equilibrium And Welfare
Section: Chapter Questions
Problem 13.3P
Related questions
Question
Transcribed Image Text:The red budget line depicts China in 1980 before there was any Communist Party policy about the
number of children a Chinese woman could choose to have.
Between 1980 and 2020, Chinese wages and GDP per capita (income) increased due to the
abandonment of a Communist/Socialist economic system and a partial movement toward a free
market capitalist system. The rotation from the red to the blue budget line depicts higher wages and
the increased GDP per capita that resulted.
China's One Child Policy
All Other Goods
(Income)
15K
IC6
4K
IC,
2020
IC3
1980
8.
1
4
Children (Fertility Rate)
Transcribed Image Text:In 1980, a Chinese woman would choose point F on IC7 and have 1 child over her child bearing years.
In 1980, a Chinese woman would choose point A on IC1 and have 4 children over her child bearing years.
| Without interference, as China experienced economic growth, the fertility rate would have declined to the
point where population stopped growing.
Without interference, as China experienced economic growth, the fertility rate would have remained the same
| Without interference, as China experienced economic growth,the fertility rate would have increased leading
to a large increase in population
| The substitution effect from increasing wages is show as the movement from A to F
The substitution effect from increasing wages is show as the movement from G to D
| The substitution effect from increasing wages is show as the movement from G to F
The substitution effect from increasing wages is show as the movement from F to D
The substitution effect from increasing wages is show as the movement from A to G
The income effect from rising GDP is shown as the movement from A to D
O The income effect from rising GDP is shown as the movement from A to G
| The income effect from rising GDP is shown as the movement from F to D
The income effect from rising GDP is shown as the movement from G to D
| On the graph, children are a normal good
O On the graph, children are an inferior good
O On the graph, the substitution and income effects counteract each other and the overall effect of rising wages
and income is the result of which effect is larger
O On the graph, the substitution and income effects reinforce each other both causing an increase in the fertility
rate.
On the graph, the substitution and income effects reinforce each other both causing an decrease in the
fertility rate.
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