Unit 3 AoS 3 - Definitions

Question 1

Trade Liberalisation

Answer 1

Gov policy to reduce protection of local industries by gradually cutting tariffs, subsidies and import quotas and the signing of FTAs

Question 2

International Specialisation

Answer 2

When countries produce limited range of GnS focusing where they have greatest comp. cost adv or least disadv&raquo_space; more alloc eff

Question 3

EoLSP

Answer 3

Reduction in firm’s average costs per unit associated with increase in production levels from trade liberalisation and bigger export markets

Question 4

Comparative Cost Advantage

Answer 4

Principle that nation should specialise in a few key areas where cost advantage is greatest, or disadvantage/OC is lowest

Question 5

Absolute Cost Advantage

Answer 5

When nation is cheapest/most efficient producer of a single GnS in the world (e.g. Aus is iron ore)

Question 6

Balance of Payments

Answer 6

Annual stats record of Aus financial transactions with the rest of the world being considered either a current transaction or a transaction with CAFA

Question 7

CA

Answer 7

Total value of credits minus debits for GnS, primary and secondary incomes measured over time

Question 8

CAD

Answer 8

When value of all CA debits exceeds credits for GnS, NPI and NSI

Question 9

CAS

Answer 9

When value of CA credits exceeds debits for GnS, NPI and NSI

Question 10

Net Goods

Answer 10

Subaccount of CA - measures credits form exports minus debits from imports for goods measured overtime

Question 11

Net Services

Answer 11

Subaccount of CA - measures credits from exports minus debits from imports for services over time

Question 12

Net Primary Incomes

Answer 12

Value of credits for PI minus value of debits for PI over time

Question 13

Net Secondary Incomes

Answer 13

Value of credits for SI minus debits for SI over time

Question 14

Capital and Financial Account

Answer 14

Total net value of all capital transfers for non-financial assets and transactions of financial assets and liabilities measured over time

Question 15

Balance on Capital Account

Answer 15

Total value of credits minus debits for capital transfers and other intangible assets

Question 16

Balance on Financial Account

Answer 16

Records international transactions and liabilities involving movement of money capital and investment + dealings of the RBA

Question 17

Direct Investment

Answer 17

Capital movements in and out of Aus involving establish/purchase/expand companies and other assets

Question 18

Portfolio Investment

Answer 18

Money transactions in and out of Aus for shares, debt and securities

Question 19

Net Reserve Assets

Answer 19

Value of foreign currencies, monetary gold and other required contributions to overseas governments and international agencies

Question 20

Net Errors and Omissions

Answer 20

Items that reflect estimations/inaccuracies in recording international transactions

Question 21

Cyclical Influences on CA

Answer 21

Shorter term, volatile AD factors that cause a nation’s CA balance to strong/weak as AD and EA change

Question 22

Structural Influences on CA

Answer 22

Affects CA balance in longer term by influencing costs and intercomp (e.g. productivity, production costs, taxes etc.)

Question 23

NFD

Answer 23

Cumulative difference between what Aus house/bus/gov have borrowed and owe overseas minus what Aus has borrowed/lent abroad - involves paying interest and capital some time in future

Question 24

NFE

Answer 24

Difference between foreign-owned Aus assets and overseas assets owned by Australian residents

Question 25

Official Debt

Answer 25

Represents net borrowing by gov, perhaps to finance budget deficits

Question 26

Non-official Debt

Answer 26

Represents borrowing overseas by Aus businesses to finance expansion

Question 27

Terms of Trade

Answer 27

Is an AD cyclical factor that represents ratio of average prices we receive for our exports relative to those paid for imports

Question 28

Exchange Rate

Answer 28

Ratio at which one nation's currency is swapped for that of another, determined by no. of buyers and sellers of each currency in FEM

Question 29

Foreign Exchange Market

Answer 29

Institution where international currencies are swapped for another at a price reflecting the currency's value/relative scarcity

Question 30

Intercompetitiveness

Answer 30

Means Aus businesses are relatively efficient in resource use and can compete and sell their GnS both here and in other markets around the world at a lower price than overseas rival

Question 31

Productivity

Answer 31

Efficiency or output gained from certain quantity of productive inputs