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Economics > Trade/BoP > Flashcards

Trade/BoP Flashcards

1
Q

How many jobs in Australia are export related?

A

⅕

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2
Q

What is the Australian economy ranked?

A

12th largest

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3
Q

What does Australia specialise in?

A

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

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4
Q

Why did specialisation develop?

A

Different natural resource endowments around the world

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5
Q

Why does Australia specialise in what it does?

A

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

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6
Q

Endowment of natural resources

A

The resources possessed by a region

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7
Q

When will a country export or import?

A

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

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8
Q

Are imports or exports more important?

A

Neither; equal importance

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9
Q

Why is trade worth it if one group loses?

A

Gains exceed the losses

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10
Q

Why do imports increase economic welfare?

A

Consumer gain outweighs producer loss, overall welfare increases

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11
Q

How can countries consume outside their PPF?

A

Specialisation and trade

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12
Q

What are Australia’s 3 largest trading partners?

A

USA, Japan, China

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13
Q

Australia’s largest export partners

A

Japan, China, Korea

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14
Q

Australia’s largest import partners

A

China, US, Japan

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15
Q

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

A

43%

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16
Q

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

A

62%

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17
Q

What factors affect trading partners?

A

Geography, political/historical links,

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18
Q

What is Australia’s 4th largest export?

A

Education

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19
Q

Largest imports

A

Personal travel, petroleum, passenger vehicles

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20
Q

What does trade do to an economy?

A

Boost economic development/growth, raise living standards

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21
Q

Trade surplus

A

Exports exceed imports

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22
Q

Trade deficit

A

Imports exceed exports, negative net exports

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23
Q

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

A

2

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24
Q

Which side do exports benefit?

A

Production

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25
Q

Which side do imports benefit?

A

Consumption

26
Q

Balance of goods

A

Record of all transactions between Australia and the world

27
Q

Which parts of the balance of payments must be equal?

A

Credit & debit, current & capital/financial

28
Q

What do exports depend on?

A

Relative competitiveness, conditions in other countries

29
Q

Exchange rates

A

Price of one currency in terms of another

30
Q

How is the value of a currency determined?

A

Demand/supply

31
Q

How is the demand for a currency determined?

A

Demand for exports/foreign investment inflows

32
Q

How is the supply for a currency determined?

A

Demand for imports, investment outflows

33
Q

Why is natural gas becoming increasingly more popular than coal?

A

Cleaner, less negative externalities

34
Q

Parity with the greenback

A

Equal to the USD

35
Q

Why is it a “balance”?

A

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

36
Q

Trade balance

A

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

37
Q

Primary income

A

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

38
Q

Categories of primary income

A

Compensation of employees, investment income

39
Q

Categories of investment income

A

Dividends, reinvested earnings, interest

40
Q

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

A

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

41
Q

Secondary income

A

One-sided, nothing of economic value received in return

42
Q

Balance on current account

A

Goods and services + net income (primary + secondary)

43
Q

Capital account

A

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

44
Q

Financial account

A

Financial assets, liabilities

45
Q

Liabilities

A

Money owed; debt

46
Q

Direct investment

A

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

47
Q

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

A

Excess savings

48
Q

Cyclical factors

A

Related to business cycle

49
Q

Examples of cyclical factors

A

Domestic/world business cycles, exchange rate, commodity prices

50
Q

Structural factors

A

Setup of the economy

51
Q

Examples of structural factors

A

S-I gap, foreign investment/debt

52
Q

How are commodity prices set?

A

Internationally

53
Q

What changes the CAB?

A

Response to world economy

54
Q

Function of BOP

A

Summarise economic transactions between domestic/foreign entities

55
Q

How is it recorded?

A

Double entry booking system

56
Q

Ceteris paribus

A

All other factors held constant

57
Q

Investment

A

Importing foreign savings

58
Q

Current account balance =

A

Savings - investment

59
Q

When does a current account deficit occur?

A

Imports and debits exceed exports and credits

60
Q

Trade balance

A

Goods + services

61
Q

Transfers

A

Unrequited

62
Q

BoP

A

A country’s record of overseas economic transactions

Economics (19 decks)

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