Term 3: International Trade (Slides 7)

Question 1

What is the DFAT?

Answer 1

Department of Foreign Affairs and Trade.

Question 2

What are Exports?

Answer 2

Exports are goods and services that are sold to both consumers and producers overseas.

Question 3

How do exports stimulate Australia’s economy?

Answer 3

Exports stimulate Australia’s economic activity by:
- employment
- business profits
- larger customer base

Question 4

What are Australia’s top 3 exports?

Answer 4

• minerals & fuel (e.g. coal)
• services (e.g. tertiary education)
• rural (e.g. meat)

Question 5

What is an import?

Answer 5

Imports are goods and services purchased by consumers and business from other countries.

Question 6

Why are imports brought into the country?

Answer 6

• some products cannot be made as
  efficiently in Australia.
• specialised nature of machinery.
• competition makes prices cheaper
  for consumers.

Question 7

What are Australia’s top 3 imports?

Answer 7

• Intermediate and other (raw materials)
• consumption goods (e.g. computers)
• services (e.g. personal travel)

Question 8

What is balance of trade?

Answer 8

The difference between a country’s imports and exports over a specific period of time.

Question 9

What is the balance of trade formula?

Answer 9

Balance of trade formula =
Exports - Imports = X - M

Question 10

What are some positive effects imports have on our economy?

Answer 10

• Large range of goods and services
  for consumers.
• Importing goods encourages
  countries to buy goods from us.
• More trade between countries
  encourages peaceful relationships.

Question 11

What are some negative effects imports have on our economy?

Answer 11

• Australian jobs may be lost to
  countries with cheaper labour costs.
• Money leaves the Australian
  economy, affecting the exchange
  rate of the Australian dollar.
• Imported resources may lower
  employment opportunities in
  Australia.

Question 12

What are international trade agreements?

Answer 12

A trade agreement is an agreement between countries that

Question 13

How can governments control the impact of trade on an economy?

Answer 13

• adopting a trade policy
  
  • free trade (minimal trading
    barriers)
  • protectionism
• establish trade agreements
  
  • bilateral trade agreements
  • multilateral trade agreements

Question 14

What is free trade?

Answer 14

Minimal barriers to trade (trade liberalisation).

Question 15

What is protectionism

Answer 15

Protection of local business through tariffs, quotas and subsidies.

Question 16

What are bilateral trade agreements?

Answer 16

Trade agreements involving 2 nations.

Question 17

What are multilateral trade agreements?

Answer 17

Trade agreements involving 3 or more nations.

Question 18

What are some benefits of trade agreements?

Answer 18

• increased production.
• improved economic activity.
• surplus resources are converted to
  profit.
• goods are cheaper for consumers.
• easy access to goods and services
  from other countries.
• technology exchanges.
• cultural exchanges.

Question 19

What does the DFAT do?

Answer 19

The DFAT manages trade agreements and interacts with the WTO (World Trade Organisation)

Question 20

What does the WTO do?

Answer 20

The WTO helps to facilitate agreements that adhere to global standards regarding:
- agricultural protection
- minimum labour standards
- environmental protection

Question 21

What are some multilateral trade agreements?

Answer 21

• World Trade Organisation (WTO)
• European Union (EU)
• Trans Pacific Partnership (TPP)
• North American Free Trade
  Agreement (NAFTA)