Unit 2 AOS 2 Flashcards
(27 cards)
What are Australia’s top 3 exports?
- Mineral fuels
- Services (ie. travel and education)
- Manafactures
Top 3 imports?
- Raw materials and components
- Consumption goods
- Services
Direction of trade
The countries with whom we trade
Top trade partners of Australia
China, japan, South Korea, India, United States
Composition of trade
Types of goods and services exported and imported. This is dependant on resources available for production and the competition on the market
What does an increase in the value of AUD cause? (Appreciation)
Causes more imports as they appear cheaper to Australians, less exports. Slows AD, GDP, employment
What are the benefits of international trade for Australia?
Economic growth
Job creation
Consumer benefits
Increased productivity
What are the benefits of international trade for the global economy?
Interdependence and peace
Reduction of global inequality
Stimulation of domestic industries (market expansion)
Increased investment
Enhanced global supply chains
What is the balance of goods and service?
Representation of the total balance of payments that measure the difference between the value of g+s imported relative to exported
How is BOGS calculated?
Value of exports - value of imports
Current account balance
A reflection of the difference between national savings and investment that is determined by trade balance and net income balance.
What are the benefits of economic trade for Australia?
Economic growth - increased GDP
Job creation
Consumer benefits
Increased productivity
What are the benefits of international trade for the global economy?
Interdependence and peace
Reduction of global inequality
Stimulation of domestic markets
Increased investment
Enhanced global supply chains
How does the exchange rate impact trade?
AUD worth more: more imports > export
AUD worth less: more exports > imports
Factors affecting trade
Exchange rate
Weather events
Business and consumer confidence
What is meant by composition of trade?
The types of goods and services exported and imported
What is meant by direction of trade?
Where goods and services are being sent
Trade liberalisation
When governments gradually reduce their protection of local industries by cutting tariffs on imports, abolishing quotas and lowering payment of subsidies
Free trade
No government protection of local industries from imports. Includes no tariffs, quotas or subsidies.
Protectionism
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
Quotas
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.
Subsidies
Money paid yo businesses to allow them to sell goods and services at a lower, more competitive price.
Free trade agreements
(FTA’s) are signed to reduce or abolish tariffs on the movement of imports and exports between countries.
Absolute cost advantage
Cheapest or most efficient producer of a good or service in the world
