23) Hu Tells Leaders China Growth Will Help World Economy

Chinese President Hu Jintao told world leaders that his country "has taken an active part in the international cooperation to deal with the financial crisis'' by providing a "$586 billion economic stimulus, focused on building low-rent housing, roads, railways and airports. The package also allows tax deductions for fixed assets such as machinery to stimulate investment. Farmers will also benefit from more subsidies."

Hu stated that "China is in itself an important contribution to international financial stability and world economic growth.''

www.bloomberg.com 11/15/2008

Which of the following will occur if China's spending generates economic growth in real GDP per person?

i. There will be an upward shift in China's aggregate production function.

ii. There will be a rightward shift in China's labor demand curve.

iii.There will be an increase in the real wage.

A) i and ii only.

B) i, ii and iii.

C) i and iii only.

D) ii and iii only.