Unit 3 AoS 3 - Notes Flashcards

Question

NFD: Neg Effects

Answer 1

1. Econ hardship in future 2. Burden of debt repayment 3. May drop credit rating 4. Interest repay weakens CA balance

Answer 2

Measures avg change in price of basket of exports/imports with items weighted in relative importance between years

Answer 3

Reflects GLOBAL conditions of D/S for exports and imports assuming countries are price-takers

Answer 4

- Strong global demand >> rise prices >> strong TOT - Weak global demand >> fall prices >> weak TOT

Answer 5

- More global supplies of Aus exports >> fall prices >> weaker TOT - Less/scarce global supplies >> rise prices >> stronger TOT

Answer 6

- Fall TOT >> lower export credits vs import debits >> less CA - Rise TOT >> more export credits >> more CA

Answer 7

Fall TOT >>Less export >> less (X-M) >> less AD >> slow EG >> more unemp >> less demand inflation Rise TOT >> more AD >> more EG >> less unemp >> more demand inflat (IF no unused PC)

Answer 8

Fall TOT >> slow AD >> less incomes >> less mat LS Stress >> less non-mat LS Rise TOT >> up mat LS + up non-mat LS

Answer 9

We have a FLOATING exchange rate (value decided in foreign exchange market by no of buyers and sellers)

Answer 10

1. Interest relatively lower than O/S 2. Increase in imports relative to exports 3. Fall in TOT 4. Higher relative inflation rate 5. Fall in credit rating

Answer 11

1. Interest relatively higher than O/S 2. Fall in imports relative to exports 3. Rise in TOT 4. Lower relative inflation rate 5. Rise in credit rating

Answer 12

Demand Inflation: - Down AUD >> more exports >> D-inflat (IF lack PC) - Up AUD >> price discount >> less D-inflat Cost Inflation: - Down AUD >> import bus pay more >> C-inflat - Up AUD >> lower prod costs >> less C-inflat

Answer 13

AD Factor: - Down AUD >> more exports >> more EG - Up AUD >> less exports >> less EG AS Factor: - Down AUD >> higher prod costs >> less EG - Up AUD >> lower prod costs >> more EG

Answer 14

AD Factor: - Down AUD >> more EG >> less CYCLICAL unemp - Up AUD >> less EG >> more cyclical unemp AS Factor: - Down AUD >> higher prod costs >> STRUCTURAL unemp - Up AUD >> more profits >> less structural unemp

Answer 15

Down AUD >> exports >> lift LS BUT - if max capacity >> D/C Inflat Up AUD >> less exports >> down LS BUT - if max >> slow inflat >> restore LS

Answer 16

Exports/Imports: - Down AUD >> more exports >> better CA - Up AUD >> less exports >> weaker CA

Answer 17

- Down AUD >> more capital inflow in short term BUT - more NFL >> payments abroad >> weaker CA in long term - Up AUD >> overseas assets cheaper >> capital outflow >> more NPI credits in long term + discourage foreign capital inflow >> less NPI debits

Answer 18

1. Competitive Sell Price 2. Attractive NPF (quality, innovative etc.)

Answer 19

1. Productivity 2. Production Costs 3. Relative Inflation Rate 4. Availability of Resources 5. Exchange Rate

Answer 20

- Less intercomp means higher prices >> assoc with cost inflation - More intercomp >> lower cost inflation

Answer 21

- Less intercomp >> less exports >> less EG - More intercomp >> more exports >> more EG

Answer 22

- Less intercomp >> less prof >> more STRUCTURAL?? unemp - More intercomp >> more prof >> less STRUCTURAL?? unemp

Answer 23

- Less intercomp >> less GDP >> less Mat LS - More intercomp >> more GDP >> more Mat LS

Answer 24

- Less intercomp >> better for enviro, but bad for mental - More intercomp >> bad for enviro, but happier

Answer 25

1. Tech advances 2. Exchange rate 3. Volume and efficiency of resources 4. Climatic Conditions 5. Production costs and profitability 6. Gov reg and policies 7. Supply chain disruptions 8. Productivity Growth

Answer 26

1. Consumer confidence 2. Business confidence 3. Disposable income 4. Interest rates 5. Overseas EA 6. Exchange rate 7. Terms of Trade 8. Budget expenditure 9. Population Growth

Unit 3 AoS 3 - Notes Flashcards

(50 cards)