Week 1: Australia Trade

Question 1

Why Countries Needs to Export

Answer 1

1. Economy – exports required to pay for imports
2. International exchange – businesses learn through engagement with other markets
3. Employment – leads to job creation
4. Education and training
5. Innovation – increases competitiveness
6. Info technology – exporters use IT to gain cost advantage + increased productivity / efficiency

Question 2

Mercantilism

Answer 2

Maximise exports whilst minimising imports

Question 3

Absolute Advantage

Answer 3

Exporting goods a country can efficiently produce, trading them for imports efficiently produced by other countries

Question 4

Comparative Advantage

Answer 4

Trade should still occur even if a country efficiently produces everything

Question 5

Relative Factor Endowment

Answer 5

Countries have a comparative advantage when they produce products that rely intensively on their abundant resources

Question 6

Why Does Australia Trade?

Answer 6

• Choose from most competitively priced goods / services globally
• Allow specialisation in production of goods / services
• Maximises economic growth
• Australia’s export = 21%+ of GDP
• Relies on China for 30% of trade – problem if China suffers