2009 Economics Marathon (1 Viewer)

[georgefren]

The CAD and the KAS equal zero (i.e. the balance of payments equals zero) because we have a floating exchange rate. Essentually, for the market to clear there can't be any shortages or excesses in demand or supply and since the factors in the CAD and KAS are pretty much those dictating the demand and supply of the exchange rate, if the balance of payments does not at any time equal zero then the exchange rate will fluctuate in order to make it so.

But dont worry, you wont be asked to explain why in an exam. You'll at most be asked to do calculations demonstrating they equal zero.

Okay - what are the main sections of the financial account?

 

[gurmies]

Portfolio investment (largest portion), direct investment, other investment (i.e. trade credits, loans, currency & deposits), reserve assets & financial derivatives.

What is the "Terms of Trade"?

 

[barbecuedflava]

the terms of trade shows the relationship between an economy's imports and exports. the terms of trade index can be calculated by dividing the export price index and the import price index and then multiplying that by 100.

what factors cause an appreciation or depreciation of the aussie dollar?

 

[Lex152]

Question: Identify two negative consequences of increased financial flows between nations.

1) Increased risk of financial contagion. That is that the value of these investments collapse causing huge loses in the originating country.

2) Increased interdependency. That is where the interests of each country conflict, but because of the close economic relations these countries cannot decouple. This can be due to investment in areas that do not benefit the receiving nations' interest, or political interests.

How do import Quota's affect supply, demand and price of a product?

 

[darshil]

How do import Quota's affect supply, demand and price of a product?

Straight to the action:

-Import quotas affect supply by decreasing it at a certain number. For example a quota on ipods will mean that the supply will be limited at a certain number say 10000. After that the government prohibits its trade.
-So import quotas will increase price (of international goods), because as supply decreases, the price increases
- Import quota will reduce demand of imported products as the price has risen.

Please correct me on anything this is my first time:
Explain the TWI. Why is it a useful measure of the trend of the $AUD?

 

[darshil]

bump

 

[ayehann]

Please correct me on anything this is my first time:
Explain the TWI. Why is it a useful measure of the trend of the $AUD?

The trade Weighted Index is a measure of the value of the australian dollar against major trading partners. it is a useful tool as it gives a general jist of the trade and financial flows in and out of australia.
It indicates the value of the Australias exchange rates against other major currencies hence measures the trends in the $ A

i think thats preety basic.. someone else should add to it

 

[Venetiad]

The TWI is the Trade Weighted Index, a calculation comparing the value of your own currency against another nation's. The TWI is a useful measure in the trend of $AUD currency because (not 100% sure on this) it is an evaluation of the $AUD and it's significance in global trade, the TWI will reveal as to how strong it is against another currency. In this the TWI is a fairly accurate indicator of the trend of the $AUD.

Please correct me if I'm wrong.

Q: Give the formula for the Participation Rate.

Timing much.

 

[Kaatie]

working age population/labour force
in other words population 15+ divided by (employed plus unemployed)

Explain the impact of a reduction in protection on the CAD

 

[roli]

Explain the impact of a reduction in protection on the CAD

A reduction in protection would lead to a higher degree of free trade, with less artificial barriers and all. I'm assuming that when you refer to CAD, you mean Australia's CAD, so with that in mind, a reduction in protection would mean that the value of our exports would increased. This is reflected in our comparatively large agricultural and rural exports. Many other countries retain high levels of agricultural protection for multiple reasons, and thus, if it were removed, Australia's agricultural exports would derive a greater value than if protection still stood. As a result, the balance on goods in the current account would increase, and hence the CAD will be reduced, ceteris paribus.

Overall, which provides the most benefits for the Australian economy and the Balance of Payments: the appreciation or the depreciation of the Australian Dollar? Explain.

 

[GoZidane]

Question: State and explain reasons for differences in economic development between economies.
. Resource or factor endowments are uneven and resource rich countries with export industries will tend to have higher levels of development than countries which are lacking in natural resources.
' Difference in levels of education, life expectancy and productivity between nations. In DIEs and NIEs are generally well educated, higher life expectancy and access to highly paid employment. In developing nations levels of literacy are lower, as are life expectancy and access to highly paid employment is low.
. The rate of capital accumulation is higher in DIEs and NIEs compared to Developed or emerging economies.
. The role of government is important in promoting economic development. Stable, honest and effective governments more likely to achieve development objectives than governments which are unstable, corrupt or inept. Political stability or lack of it can be a major influence on development.

 

[GoZidane]

Question: State and explain reasons for differences in economic development between economies.
. Resource or factor endowments are uneven and resource rich countries with export industries will tend to have higher levels of development than countries which are lacking in natural resources.
' Difference in levels of education, life expectancy and productivity between nations. In DIEs and NIEs are generally well educated, higher life expectancy and access to highly paid employment. In developing nations levels of literacy are lower, as are life expectancy and access to highly paid employment is low.
. The rate of capital accumulation is higher in DIEs and NIEs compared to Developed or emerging economies.
. The role of government is important in promoting economic development. Stable, honest and effective governments more likely to achieve development objectives than governments which are unstable, corrupt or inept. Political stability or lack of it can be a major influence on development.

DISCUSS ONE STRATEGY that a developing country could use to promote economic development.

 

[lolcal]

if you kids want to be able to answer any of these questions within 30 seconds by consulting the topic area in state ranking notes - check out the notes i'm selling before you start your trials.

http://community.boredofstudies.org...nt-pdhpe-legal-success-one-general-maths.html

 

[aero135]

Governements encouraging national savings which can lead to economic growth bringing economic develpment.

Next question:

What is the equilibrium level of income if

C + I = 130 + 0.4Y

how do u calculate this?