Everything IDK Flashcards
KAFTA
- Since late 2014
- 4th largest trading partner
- Tariff-free exports rising from 84% to 99% in the next 20 years
- Two-way trade has increased more than 50% in 3 yrs
- KAFTA will boost Australia’s economic output by $5 billion by 2030
CHAFTA
- Since 2015
- Currently, 86% of Australian exports are tariff-free
AANZFTA
- 2009
- Free Trade agreement between 12 member nations
- Complementary economies
- 20% of Australia’s trade in goods and services
- By 2020 96% will be tariff-free
What is the Trend in CAD
Pre-GFC = 6%
Post-GFC = 3%
2007-08 - CAD improved because of cyclical factors —> a global boom in minerals & energy exports
Plus decreased global interest rates & increased savings domestically + decreased domestic growth
What are the Cyclical Factors affecting Balance on Goods and Services
Exchange Rate
Terms of Trade
Domestic Growth
International Business Cycle
What are the Structural Factors affecting Balance on Goods and Services
Narrow Export Base
International Competitiveness
What are the Cyclical Factors affecting the Net Primary Income
Exchange Rate/Valuation Effect
Domestic & Global Interest Rates
Domestic Business Cycle/Company Profits
What are the Structural Factors affecting the Net Primary Income
Savings-Investment Gap
Fiscal Consolidation
What factors affect international competitiveness
- Low inflation
- Increased productivity
- Appreciation of the AUD
What are the effects of a fall in international competitiveness
Australia export less and import more, worsening the CAD
As production sinks, real wages will fall and unemployment will rise
Why has Australia’s Terms of Trade deteriorated in recent times
Australia’s ER has fallen in recent times from a high of $1.11 US in Sept 2011 to around $0.67US at present. Consequently, imports are more expensive to purchase leading to an increase in the Import Price Index.
What are the indicators of globalisation
- Trade in Goods and Services
- Financial Flows
- Investment and TNCs
- Technology, Transport, Communication
- International Division of Labour and Migration
Asia-Pacific Economic Cooperation (APEC) Forum
- Formed in 1989 in response to EU and NAFTA
- 41% of the world’s population
- 54% of world GDP
- 44% of world trade
- Not a secluded trading bloc
- Contributed to tariff levels falling
- Created 500,000 Australian jobs between 1989-2010
- APEC is 75% of Australian trade
What are the factors that strengthen the international business cycle
- trade flows
- investment flows
- TNCs
- financial flows
- technology
- global interest rates
- commodity prices
- international organisations
Factors that weaken the international business cycle
- domestic interest rates
- government fiscal policies
- other domestic economic policies
- exchange rates
- structural factors
- regional factors
What are the global factors for differences between nations
- Global Trade System
- Global Finance Architecture
- Global Aid and Assistance
- Global Technology Flows
What are the domestic factors for differences between nations
- Natural Resource Endowment
- Labour Supply and Quality
- Institutional Factors
What are the main factors causing an appreciation of the Australian Dollar
- An increase in Australian interest rates or decrease in overseas interest rates
- Improved investment opportunities in Australia or deterioration in foreign investment opportunities
- A rise in commodity prices and an improvement in Australia’s Terms of Trade
- An improvement in Australia’s IC
- Lower inflation in Australia
- Increased demand for Australia’s exported goods and services
- Expectations of a currency appreciation based on forecasts of one of the above factors
What are the main factors causing a depreciation of the Australian Dollar
- An decrease in Australian interest rates or increase in overseas interest rates
- Deterioration in investment opportunities in Australia or improvement in foreign investment opportunities
- A fall in commodity prices and an deterioration in Australia’s Terms of Trade
- A deterioration in Australia’s IC
- Higher inflation in Australia
- Increased demand for Australia’s imported goods and services
- Expectations of a currency depreciation based on forecasts of one of the above factors
What factors cause a change is AS
- Population growth
- Discovery of new resources
- Workers acquiring new skills
- Increased capital
- New technology
- Improved efficiency
- Govt. Policies - Microeconomic
What are the factors causing unemployment?
- Deficiency in AD
- Contractionary macroeconomic policy
- Constraints on EG
- Rising PR
- Structural Change
- Technological Change
- Productivity
- Inadequate levels of training and investment
- Labour costs
- Labour market inflexibility
What are the negative economic consequences unemployment?
- Opportunity cost of lost output and income
As the economy’s resources are not being used to their full capacity, real GDP is lower than what it could potentially be and national income is reduced and frim achieve fewer profits, lowering investment - Lower living standards
- Loss of human capital (Hysteresis)
-Costs to the government - Lower wage growth
What are the negative social consequences of unemployment?
- Income Inequality
- Personal and Social Problems
- Unemployment for particular groups
What is the Transmission Mechanism
Explains how changes in the stance of monetary policy pass through the economy to influence economic objectives such as inflation and EG
1) saving and investment channel
2) cash-flow channel
3) asset prices and wealth channel
4) exchange rate channel
