Unit 2 AOS 2

Question 1

What are Australia’s top 3 exports?

Answer 1

1. Mineral fuels
2. Services (ie. travel and education)
3. Manafactures

Question 2

Top 3 imports?

Answer 2

1. Raw materials and components
2. Consumption goods
3. Services

Question 3

Direction of trade

Answer 3

The countries with whom we trade

Question 4

Top trade partners of Australia

Answer 4

China, japan, South Korea, India, United States

Question 5

Composition of trade

Answer 5

Types of goods and services exported and imported. This is dependant on resources available for production and the competition on the market

Question 6

What does an increase in the value of AUD cause? (Appreciation)

Answer 6

Causes more imports as they appear cheaper to Australians, less exports. Slows AD, GDP, employment

Question 7

What are the benefits of international trade for Australia?

Answer 7

Economic growth
Job creation
Consumer benefits
Increased productivity

Question 8

What are the benefits of international trade for the global economy?

Answer 8

Interdependence and peace
Reduction of global inequality
Stimulation of domestic industries (market expansion)
Increased investment
Enhanced global supply chains

Question 9

What is the balance of goods and service?

Answer 9

Representation of the total balance of payments that measure the difference between the value of g+s imported relative to exported

Question 10

How is BOGS calculated?

Answer 10

Value of exports - value of imports

Question 11

Current account balance

Answer 11

A reflection of the difference between national savings and investment that is determined by trade balance and net income balance.

Question 12

What are the benefits of economic trade for Australia?

Answer 12

Economic growth - increased GDP
Job creation
Consumer benefits
Increased productivity

Question 13

What are the benefits of international trade for the global economy?

Answer 13

Interdependence and peace
Reduction of global inequality
Stimulation of domestic markets
Increased investment
Enhanced global supply chains

Question 14

How does the exchange rate impact trade?

Answer 14

AUD worth more: more imports > export
AUD worth less: more exports > imports

Question 15

Factors affecting trade

Answer 15

Exchange rate
Weather events
Business and consumer confidence

Question 16

What is meant by composition of trade?

Answer 16

The types of goods and services exported and imported

Question 17

What is meant by direction of trade?

Answer 17

Where goods and services are being sent

Question 18

Trade liberalisation

Answer 18

When governments gradually reduce their protection of local industries by cutting tariffs on imports, abolishing quotas and lowering payment of subsidies

Question 19

Free trade

Answer 19

No government protection of local industries from imports. Includes no tariffs, quotas or subsidies.

Question 20

Protectionism

Answer 20

Government protection of local industries from imports using tariffs, subsides and import quotas to limit competition and the inflow of goods and service from other countries

Question 21

Quotas

Answer 21

Import quotas set a maximum limit on the number or value of goods and service to be imported. They are time bound and have a fixed limit.

Question 22

Subsidies

Answer 22

Money paid yo businesses to allow them to sell goods and services at a lower, more competitive price.

Question 23

Free trade agreements

Answer 23

(FTA’s) are signed to reduce or abolish tariffs on the movement of imports and exports between countries.

Question 24

Absolute cost advantage

Answer 24

Cheapest or most efficient producer of a good or service in the world

Question 25

Comparative cost advantage

Answer 25

A countries ability to produce a particular good or service at a lower opportunity cost RELATIVE to another country

Question 26

Inflation

Answer 26

Refers generally to rising consumer prices that must be paid for goods and services

Question 27

Inflation

Answer 27

Refers generally to rising consumer prices that must be paid for goods and services