TOT 4 PPT Flashcards
How are ToT and trade balance related?
They have a positive correlation—a rise in ToT usually leads to a higher trade balance.
What happened in 2022 when Australia’s ToT reached record highs?
Australia recorded its highest trade surplus due to high export prices.
How does a rising ToT impact GDP and economic growth?
Higher export revenues boost national income and GDP.
What happens to employment when ToT increases?
More jobs in export industries like mining and agriculture.
How does an increase in ToT affect government revenue?
Higher company profits & incomes → higher tax revenue.
What happens to inflation when ToT increases?
Inflation may rise due to increased wages, demand, and costs.
What happens to the AUD when ToT increases?
AUD appreciates as demand for AUD rises with export prices.
What happens to the trade balance when ToT decreases?
Trade balance decreases as import values rise and export values fall.
How does a falling ToT impact GDP and economic growth?
Lower export revenues → slower GDP growth.
Q: What happens to employment when ToT decreases?
Higher unemployment as export demand weakens.
How does a decrease in ToT affect government revenue?
A: Lower company profits & incomes → lower tax revenue
What happens to inflation when ToT decreases?
Inflation falls as lower demand and wages reduce price pressures.
How do consumers benefit from an increase in ToT?
Imported goods become cheaper, increasing purchasing power.
What happens to the AUD when ToT decreases?
AUD depreciates as demand for AUD falls with lower export earnings.
How do producers benefit from an increase in ToT?
Higher export prices improve profits, especially in mining & agriculture.
How does an increase in ToT affect businesses that rely on imports?
Lower import costs reduce production costs, boosting profitability.
What are the macroeconomic effects of an increasing ToT?
Higher GDP, lower unemployment, higher tax revenue, and potential inflation
What factors can increase ToT?
Higher commodity prices
Lower global oil prices
Technological advancements reducing manufacturing costs
Drought increasing agricultural prices
What factors can decrease ToT?
Falling commodity prices
Higher global oil prices
Supply chain disruptions
Higher manufacturing costs
