U3 AOS3 - Australia and the World Economy

Question 1

What is the primary focus of Unit 3 Area of Study 3 in VCE Economics?

Answer 1

The primary focus is on Australia’s economic relationships with the global economy.

Question 2

Fill in the blank: The _____ measures the value of all goods and services produced in Australia over a specific period.

Answer 2

Gross Domestic Product (GDP)

Question 3

What does the term ‘trade balance’ refer to?

Answer 3

The difference between the value of a country’s exports and imports.

Question 4

What is the main benefit of international trade for Australia?

Answer 4

Access to a wider variety of goods and services and potential economic growth.

Question 5

Multiple Choice: Which of the following is a major trading partner of Australia? A) Brazil B) China C) Canada

Answer 5

B) China

Question 6

True or False: A trade surplus occurs when a country imports more than it exports.

Answer 6

False

Question 7

What is the impact of a high Australian dollar on exports?

Answer 7

It makes exports more expensive for foreign buyers, potentially reducing demand.

Question 8

Fill in the blank: Australia’s economy is heavily influenced by its _____ with Asia.

Answer 8

trade relationships

Question 9

Multiple Choice: Which of the following is NOT a factor affecting Australia’s trade? A) Exchange rates B) Global demand C) Weather patterns

Answer 9

C) Weather patterns

Question 10

What is one consequence of economic downturns in major trading partners for Australia?

Answer 10

A decrease in demand for Australian exports.

Question 11

What does the term ‘current account’ refer to?

Answer 11

A component of a country’s balance of payments that records trade in goods and services, income, and current transfers.

Question 12

True or False: Economic growth can lead to increased imports.

Answer 12

True

Question 13

What is the impact of exchange rate depreciation on exports?

Answer 13

It makes exports cheaper for foreign buyers, potentially increasing demand.

Question 14

Multiple Choice: Which of the following is a consequence of trade liberalization? A) Increased prices B) Greater competition C) Reduced economic growth

Answer 14

B) Greater competition

Question 15

True or False: Australia has a trade deficit with most of its trading partners.

Answer 15

False

Question 16

What is the effect of high unemployment on the economy?

Answer 16

It can lead to reduced consumer spending and economic growth.

Question 17

What does the term ‘balance of payments’ encompass?

Answer 17

All economic transactions between residents of a country and the rest of the world.

Question 18

True or False: An increase in global demand typically benefits Australia’s economy.

Answer 18

True

Question 19

What is the impact of a strong Australian dollar on tourism?

Answer 19

It can deter foreign tourists, as their currency has less purchasing power.

Question 20

What does Australia gain from international trade?

Answer 20

Lower prices, greater choice, access to resources, economies of scale, increased competition and efficiency.

Question 21

What are the components of the Balance of Payments?

Answer 21

Current Account, Capital Account and Financial Account

Question 22

The subaccounts of the current account are:

Answer 22

Net Goods
Net Services
Net Primary Incomes
Net Secondary Incomes

Question 23

Cyclical changes in the Current Account Balance refers to

Answer 23

How increases in aggregate demand tend to lead to increases in the current account deficit and visa versa.

Question 24

Structural influences on Australia’s current account include

Answer 24

Our poor international competitiveness and savings/investment imbalance.

Question 25

How does poor international competitiveness impact on our structural current account.

Answer 25

High costs of production and low efficiency leads to our exports being less competitive therefore leading to less credits in the current accoutn.

Question 26

Net Foreign Debt refers to

Answer 26

The total value of debt held by Australia to overseas relative to the total debt of overseas nations to Australia.

Question 27

Net Foreign Equities

Answer 27

The total value of assets held by Australian's overseas relative to the total asset ownership of overseas nations in Australia.

Question 28

The exchange rate refers to

Answer 28

The value of the Australian dollar in terms of another currency.

Question 29

Factors which impact on the exchange rate include:

Answer 29

Relative interest rates, commodity prices, the terms of trade, demand for exports and imports, foreign investment, relative rate of inflation, credit ratings and speculation.

Question 30

If relative interest rates in Australia are higher than overseas, how is the exchange rate likely to be affected?

Answer 30

It would appreciate due to an increase in foreign investment in Australia therefore more demand for the AUD on the foreign exchange market.

Question 31

The terms of trade refers to

Answer 31

The average price of exports relative to the average price of imports.

Question 32

Factors that impact the terms of trade include:

Answer 32

Commodity prices, production costs in training partners

Question 33

International competitiveness refers to:

Answer 33

how effective a country is able to be in different global markets.

Question 34

Factors that impact Australia's international competitiveness are:

Answer 34

Productivity, production costs, availability of natural resources, exchange rates and relative rates of inflation.

Question 35

If Australia's inflation rate way higher than our trading partners, what is the likely impact on the exchange rate and international competitiveness?

Answer 35

Depreciation of exchange rate. Decreased international competitiveness

Question 36

If there is a depreciation of the exchange rate what is the impact on the terms of trade?

Answer 36

A decreased TOT

Question 37

A foreign investor buying shares in Australia would likely have what two impacts on the balance of payments

Answer 37

Increased credits in net portfolio investment in the financial account. Increased debits in net primary incomes in the current account.

Question 38

An Australian moving overseas and then sending part of their income back to Australia would have which two impacts on the current account?

Answer 38

An increase in debits to the capital account. An increase in credits via net primary income in the current account.