4- Measured in current US dollars China’s GDP is smaller than that of the US; but...

4- Measured in current US dollars China’s GDP is smaller than that of the US; but the total investment expenditures in China, measured in US dollars, is much higher in China. Why is that?

Expert Solution

GDP includes all the economic activities that take place within the territory of nation and the residents of individuals. It is nothing but the value of economy as a whole. Both US and China are the world most powerful economies . US is calculated as the world most powerful or largest economy with highest GDP and following this is the economy of China.

Although the calculated values of total GDP favours US but the investment expenditure is higher for China. This is understood by the fact that china is the nation which extracts it's GDP majorly through capital investments. The reason for this is because high number of population makes it an attractive location for capitalist developments like technological sectors , healthcare sectors etc. The low cost labour is the major attractions. Hence China attracts high total investment expenditure , which is the majority of its GDP development, which is not the case with US.

Rahul Sunny answered 2 years ago

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