Someone explain this to me ? (1 Viewer)

[oompaman]

Hey,

http://www4.boardofstudies.nsw.edu....wer=C&courseID=15110&testQuestionID=293904329
Still don't know why my answer is wrong as opposed to the correct one.
I understand how their answer is correct, but when i was doing the question i thought my answer was also correct so i just chose the more correct one.

Thanks.

 

[deswa1]

I can see where you're coming from and yes C would probs occur as well but note that the question asked for Australia's major TRADING PARTNERS. These influence our exports which would have a bigger impact than foreign investment so B is more correct. In addition though, note for example that trading partners does not neccessarily equal investors. From memory, the U.S.A and U.K are the biggest investors in Aust. but they aren't our biggest trading partners. Does this make sense?

 

[oompaman]

I can see where you're coming from and yes C would probs occur as well but note that the question asked for Australia's major TRADING PARTNERS. These influence our exports which would have a bigger impact than foreign investment so B is more correct. In addition though, note for example that trading partners does not neccessarily equal investors. From memory, the U.S.A and U.K are the biggest investors in Aust. but they aren't our biggest trading partners. Does this make sense?

Yep


Didn't think about trading partners does not neccessarily equal investors

Thanks

 

[OzKo]

There's always the chance that foreign investment in Australia will increase as investors seek to utilise their money in stable markets.

 

[chrisman9519]

yea what ozko is saying, when the GFC hit, there was a mass flock to safe assets - US and German treasury bonds, because in a world where the American/German bond market defaults or w/e, the whole world is screwed. Since our cash rate would be higher than those of a depressed economy - not depression - because of their expansionary monetary policy there, if anything would be an increase in international investment into oz

but with regard to the question, since there is a higher investment --> current account surplus increase --> current account deficit increase

also less demand for our exports... so higher CAD

lol. easy question