U3 AOS3 - Australia and the World Economy Flashcards
What is the primary focus of Unit 3 Area of Study 3 in VCE Economics?
The primary focus is on Australia’s economic relationships with the global economy.
True or False: Australia is a net exporter of goods and services.
True
Fill in the blank: The _____ measures the value of all goods and services produced in Australia over a specific period.
Gross Domestic Product (GDP)
What does the term ‘trade balance’ refer to?
The difference between the value of a country’s exports and imports.
Which sector contributes the most to Australia’s GDP?
The services sector.
What is the main benefit of international trade for Australia?
Access to a wider variety of goods and services and potential economic growth.
Multiple Choice: Which of the following is a major trading partner of Australia? A) Brazil B) China C) Canada
B) China
True or False: A trade surplus occurs when a country imports more than it exports.
False
What is the impact of a high Australian dollar on exports?
It makes exports more expensive for foreign buyers, potentially reducing demand.
Fill in the blank: Australia’s economy is heavily influenced by its _____ with Asia.
trade relationships
What is the significance of foreign direct investment (FDI) for Australia?
It brings capital, technology, and jobs into the economy.
Multiple Choice: Which of the following is NOT a factor affecting Australia’s trade? A) Exchange rates B) Global demand C) Weather patterns
C) Weather patterns
What does the term ‘globalization’ mean?
The process of increased interconnectedness among countries, particularly in trade and investment.
True or False: Tariffs are taxes imposed on imported goods.
True
What is one consequence of economic downturns in major trading partners for Australia?
A decrease in demand for Australian exports.
Multiple Choice: Which sector is most affected by fluctuations in global commodity prices? A) Agriculture B) Retail C) Healthcare
A) Agriculture
What does the term ‘current account’ refer to?
A component of a country’s balance of payments that records trade in goods and services, income, and current transfers.
True or False: Economic growth can lead to increased imports.
True
What is the impact of exchange rate depreciation on exports?
It makes exports cheaper for foreign buyers, potentially increasing demand.
Fill in the blank: The _____ is a measure of the total value of all goods and services produced by a nation over a specific time period.
Gross National Product (GNP)
What role do multinational corporations play in the Australian economy?
They contribute to investment, employment, and technology transfer.
Multiple Choice: Which of the following is a consequence of trade liberalization? A) Increased prices B) Greater competition C) Reduced economic growth
B) Greater competition
What is the relationship between inflation and interest rates?
Generally, higher inflation leads to higher interest rates.
True or False: Australia has a trade deficit with most of its trading partners.
False
What is one of the challenges Australia faces in the global economy?
Dependence on a limited number of trading partners and commodities.
Fill in the blank: The _____ index measures the performance of the Australian stock market.
ASX 200
What is the effect of high unemployment on the economy?
It can lead to reduced consumer spending and economic growth.
Multiple Choice: Which of the following is a key component of Australia’s trade policy? A) Protectionism B) Free trade C) Isolationism
B) Free trade
What does the term ‘balance of payments’ encompass?
All economic transactions between residents of a country and the rest of the world.
True or False: The Australian government has no influence on international trade.
False
What is a significant effect of globalization on Australian workers?
Increased competition from overseas labor markets.
Fill in the blank: The _____ sector includes industries such as mining, agriculture, and manufacturing.
Goods-producing
What is the role of trade agreements in the global economy?
To facilitate trade by reducing tariffs and other barriers.
Multiple Choice: Which of the following is a primary export of Australia? A) Oil B) Wheat C) Electronics
B) Wheat
True or False: An increase in global demand typically benefits Australia’s economy.
True
What is the impact of a strong Australian dollar on tourism?
It can deter foreign tourists, as their currency has less purchasing power.
Fill in the blank: The _____ policy aims to stabilize the economy by adjusting interest rates.
Monetary
What does Australia gain from international trade?
Lower prices, greater choice, access to resources, economies of scale, increased competition and efficiency.
What are the components of the Balance of Payments?
Current Account, Capital Account and Financial Account
The subaccounts of the current account are:
Net Goods
Net Services
Net Primary Incomes
Net Secondary Incomes
Cyclical changes in the Current Account Balance refers to
How increases in aggregate demand tend to lead to increases in the current account deficit and visa versa.
Structural influences on Australia’s current account include
Our poor international competitiveness and savings/investment imbalance.
How does poor international competitiveness impact on our structural current account.
High costs of production and low efficiency leads to our exports being less competitive therefore leading to less credits in the current accoutn.
Net Foreign Debt refers to
The total value of debt held by Australia to overseas relative to the total debt of overseas nations to Australia.
Net Foreign Equities
The total value of assets held by Australian’s overseas relative to the total asset ownership of overseas nations in Australia.
The exchange rate refers to
The value of the Australian dollar in terms of another currency.
Factors which impact on the exchange rate include:
Relative interest rates, commodity prices, the terms of trade, demand for exports and imports, foreign investment, relative rate of inflation, credit ratings and speculation.
If relative interest rates in Australia are higher than overseas, how is the exchange rate likely to be affected?
It would appreciate due to an increase in foreign investment in Australia therefore more demand for the AUD on the foreign exchange market.
The terms of trade refers to
The average price of exports relative to the average price of imports.
Factors that impact the terms of trade include:
Commodity prices, production costs in training partners
International competitiveness refers to:
how effective a country is able to be in different global markets.
Factors that impact Australia’s international competitive are:
Productivity, production costs, availability of natural resources, exchange rates and relative rates of inflation.
