Trade/BoP

Question 1

How many jobs in Australia are export related?

Answer 1

⅕

Question 2

What is the Australian economy ranked?

Answer 2

12th largest

Question 3

What does Australia specialise in?

Answer 3

Primary goods/natural resources (agriculture/minerals: coal, iron ore,natural gas)

Question 4

Why did specialisation develop?

Answer 4

Different natural resource endowments around the world

Question 5

Why does Australia specialise in what it does?

Answer 5

Vast mineral deposits/energy resources, large areas of arable land for crops/livestock

Question 6

Endowment of natural resources

Answer 6

The resources possessed by a region

Question 7

When will a country export or import?

Answer 7

Import if world price is cheaper than domestic, export if domestic price is cheaper than world.

Question 8

Are imports or exports more important?

Answer 8

Neither; equal importance

Question 9

Why is trade worth it if one group loses?

Answer 9

Gains exceed the losses

Question 10

Why do imports increase economic welfare?

Answer 10

Consumer gain outweighs producer loss, overall welfare increases

Question 11

How can countries consume outside their PPF?

Answer 11

Specialisation and trade

Question 12

What are Australia’s 3 largest trading partners?

Answer 12

USA, Japan, China

Question 13

Australia’s largest export partners

Answer 13

Japan, China, Korea

Question 14

Australia’s largest import partners

Answer 14

China, US, Japan

Question 15

How much of 2-way trade do the 3 largest trade partners account for?

Answer 15

43%

Question 16

How much of exports do the 5 largest partners account for?

Answer 16

62%

Question 17

What factors affect trading partners?

Answer 17

Geography, political/historical links,

Question 18

What is Australia’s 4th largest export?

Answer 18

Education

Question 19

Largest imports

Answer 19

Personal travel, petroleum, passenger vehicles

Question 20

What does trade do to an economy?

Answer 20

Boost economic development/growth, raise living standards

Question 21

Trade surplus

Answer 21

Exports exceed imports

Question 22

Trade deficit

Answer 22

Imports exceed exports, negative net exports

Question 23

In the past 10 years, how many recorded a trade surplus?

Answer 23

2

Question 24

Which side do exports benefit?

Answer 24

Production

Question 25

Which side do imports benefit?

Answer 25

Consumption

Question 26

Balance of goods

Answer 26

Record of all transactions between Australia and the world

Question 27

Which parts of the balance of payments must be equal?

Answer 27

Credit & debit, current & capital/financial

Question 28

What do exports depend on?

Answer 28

Relative competitiveness, conditions in other countries

Question 29

Exchange rates

Answer 29

Price of one currency in terms of another

Question 30

How is the value of a currency determined?

Answer 30

Demand/supply

Question 31

How is the demand for a currency determined?

Answer 31

Demand for exports/foreign investment inflows

Question 32

How is the supply for a currency determined?

Answer 32

Demand for imports, investment outflows

Question 33

Why is natural gas becoming increasingly more popular than coal?

Answer 33

Cleaner, less negative externalities

Question 34

Parity with the greenback

Answer 34

Equal to the USD

Question 35

Why is it a "balance"?

Answer 35

Credits offset debits, current offsets financial/capital, =0

Question 36

Trade balance

Answer 36

Difference between goods and services exports and imports (net exports)

Question 37

Primary income

Answer 37

Income earned by residents from non-residents/paid to overseas residents

Question 38

Categories of primary income

Answer 38

Compensation of employees, investment income

Question 39

Categories of investment income

Answer 39

Dividends, reinvested earnings, interest

Question 40

Why is Australia an attractive economy to the rest of the world?

Answer 40

Stable political environment, skilled/educated workforce, vast natural resources, close to fast growing east Asia

Question 41

Secondary income

Answer 41

One-sided, nothing of economic value received in return

Question 42

Balance on current account

Answer 42

Goods and services + net income (primary + secondary)

Question 43

Capital account

Answer 43

Records non-produced, non-financial assets, flows of migrants' assets, intangible asset exchange

Question 44

Financial account

Answer 44

Financial assets, liabilities

Question 45

Liabilities

Answer 45

Money owed; debt

Question 46

Direct investment

Answer 46

Share of 10%+ of foreign enterprise owned, significant shareholding

Question 47

Why does Japan record a current account surplus and financial account deficit?

Answer 47

Excess savings

Question 48

Cyclical factors

Answer 48

Related to business cycle

Question 49

Examples of cyclical factors

Answer 49

Domestic/world business cycles, exchange rate, commodity prices

Question 50

Structural factors

Answer 50

Setup of the economy

Question 51

Examples of structural factors

Answer 51

S-I gap, foreign investment/debt

Question 52

How are commodity prices set?

Answer 52

Internationally

Question 53

What changes the CAB?

Answer 53

Response to world economy

Question 54

Function of BOP

Answer 54

Summarise economic transactions between domestic/foreign entities

Question 55

How is it recorded?

Answer 55

Double entry booking system

Question 56

Ceteris paribus

Answer 56

All other factors held constant

Question 57

Investment

Answer 57

Importing foreign savings

Question 58

Current account balance =

Answer 58

Savings - investment

Question 59

When does a current account deficit occur?

Answer 59

Imports and debits exceed exports and credits

Question 60

Trade balance

Answer 60

Goods + services

Question 61

Transfers

Answer 61

Unrequited

Question 62

BoP

Answer 62

A country's record of overseas economic transactions