Australians Place in the GLobal Economy Flashcards
1
Q
An appreciation of the dollar is caused by
A
- Increase in Aus. interest rates or decrease in o/s IR
- Improved investment opportunities in Australia or less o/s
- A rise in commodity prices and an improvement in Aus. tot
- Improvement in Aus. international competitiveness
- Lower inflation in Australia
- Increased demand for Aus. exports
- Expectations of Appreciation
2
Q
A depreciation of the dollar is caused by:
A
- Decrease is Aus. IR or increase in O/S interest rates
- Less investment opportunities in Aus. Or more in o/s
- A fall of commodity prices and decrease of Aus. ToT
- A deterioration in Australia’s international competitiveness
- Higher inflation in Aus.
- Increased demand for imported goods
- Expectations of depreciation
3
Q
Appreciation
- Negative Effects
A
- $AUD is harder to sell leading to a decrease in export income
- CAD Worsens
- Domestic production will fall
- Less investment opportunities leads to a decrease financial flows
- Devalues o/s income earned
- Decrease in foreign assets bought in AUD
4
Q
Appreciation
- Positive Effects
A
- Consumers increased purchasing power
- Decrease interest serving cost on foreign debt
- Decreases foreign debt that has been borrowed in FOREX
- Decrease inflation – less chance of higher cash rate
5
Q
Depreciation
Negative Effects
A
- Consumers purchasing power reduces leading to a decrease in import
- Increases CAD by increasing interest servicing cost
- Increase level of foreign debt borrowed in forex
- Increase in inflation and increase cash rate
6
Q
Depreciation
- Positive Effects
A
- Increase in exports leading to improved CAD
- Domestic production will increase
- Increase growth rate
- Increase value of foreign income leading to an increase PI in Cad
- Increase value of foreign asset
- More investment into Australia
7
Q
Japan
A
- The Australia and Japan bilateral trade agreement began n 15 January 2015.
- Australia and Japan are natural partners with highly complementary economies
- Japan is Australia’s 2nd biggest trading partner
- AEPA has eliminated tariffs on more than 3,400 Australian product lines since it entered into force
- Australia’s Agriculture sector has boomed in areas like Beef, Carrot, Honey, Asparagus (Beef exports increased 22.5%, 2014-2016)
- creating jobs and promoting job certainty.
- Significant decrease in small family farms as a result of global competition and structural adjustments
8
Q
Peru
A
- In 2016, total two-way trade in goods and services with Peru was worth $590 million, up 51.2 per cent from the previous year.
- Opening up substantial new trade and investment opportunities for Australia
- Promoting job-creating growth
- Further integrating our economies in this fast-growing market.
- 90 companies currently invest.
- One of the fast-growing Latin American countries.
- Captures benefits of the TPP.
- Elimination of tariffs on beef.
- Peru is only a small export market.
- Seen as more important for Peru.
9
Q
European Union
A
- Two-way G&S trade between the two was valued at $95.6 Billion dollars
- As a bloc, the EU is Australia’s largest source of foreign investment and second largest trading partner.
- EU FDI into Australia in 2015-16 was $157.6 billion dollars
- Australian consumers now have the opportunity to purchase cheaper European-made designer goods and wine
- Australia will have some issues with reissuing trade agreements with the EU and the UK
10
Q
Environmental Goods Agreement
A
- The Environmental Goods Agreement (EGA) is a trade agreement being negotiated by 18 participants representing 46 members of the World Trade Organization
- focusing on reducing tariffs on products that benefit the environment. These products include solar panels, wind turbines, and energy efficiency, as well as air pollution, waste and water management technologies
- It will contribute to creating a cleaner environment and improve access to safe water, sanitation and clean energy
11
Q
the implications of Australia’s for Firms
- Positives
A
- Innovation and Efficiency (technology)
- Increased competiveness on global markets (education)
- Redistribution of resources
- Reduced input costs
- Changing composition of export base
12
Q
he implications of Australia’s policies for firms
- Negatives
A
- Short term business failure e.g. Automotive
- Restructuring (single desk wheat)
- Reduced profits (world price)
- Declining market share in the domestic market
13
Q
the implications of Australia’s policies for individuals
- Positives
A
- New employment opportunities
- Increased range of goods
- Lower prices on imported goods
- Improved customer service
- Improved living standards
- New products
14
Q
the implications of Australia’s policies for individuals
- Negatives
A
- Structural unemployment (regional and industry)
- Decline in the availability of domestic products
15
Q
The implications of Australia’s policies for Govt
- Positives
A
- Increased international competiveness
- More efficient allocation of resources in the economy
- Economic growth
- Increased revenue from business profits
- Increased employment in the longer term
