unit3aos3

Question 1

Net Foreign Debt

Answer 1

NFD is Australia’s level of borrowings from overseas residents and businesses compared to overseas nations borrowing in Australia
75% from priv secotr (household/business)
25% from government

Question 2

Net Foreign Equity

Answer 2

NFE is the level of foreign ownership of domestic assets minus Australian ownership of foreign assets

Question 3

NIIP (net international positition)

Answer 3

value of austrlias net international finacial obligations to the rest of the world and is made up of NFL (amount of debt NFD-NFE)

Question 4

NFL (net foreign liability

Answer 4

how much austrlia owes (amount of debt) NFD - NFE

Question 5

foreign debt positive

Answer 5

funds are used by the private sector for Investmet (I) which boosts AD

Question 6

foreign debt negative

Answer 6

Interest has to be served on loans
The interest appears on the net primary incomes in CA - major cause of CAD

Question 7

foreign equity positive

Answer 7

Australian households and businesses earn income from these assets (in form of dividends, interest etc)

Question 8

foreign equity negative

Answer 8

Less foreign ownership of Australian companies means capital inflow is reduced. This means less capital is available for private investment, so private sector has to borrow instead.

Question 9

causes of NFD

Answer 9

Australia has a national savings–investment gap, where current savings by Australian households, businesses and governments are not sufficient to finance our high levels of investment spending.
so borrow money from overseas. increasing NFD

budget deficit- when the government is spending more than they are earning
borrow from overseas increasing NFD

Question 10

causes of NFE

Answer 10

Australia large pool of superannuation funds. where 10.5% of income is mandatoryly put into savings. a lot of this is invested into overseas. adding to NFE