External Stability Flashcards
(3 cards)
1
Q
What is external stability?
A
External stability is the ability of an economy to finance its net foreign liabilities, ensuring imbalances in Australia’s relationship with the global economy do not hinder Australia’s ability to achieve domestic economic objectives.
2
Q
How does the CA determine if a country is able to finance their NFL?
A
A CAS means the country is receiving lots of income through exports and servicing costs, of which is used to pay off the debt and it means the KAFA is in deficit meaning less financial flows are entering the economy, decreasing a countries NFL.
3
Q
What are the 6 indicators of external stability?
A
NFD as a % of GDP
NFL as a % of GDP
CAD as a % of GDP
TOT
International Competitiveness
Exchange rate
