AREA 4: EXTERNAL STABILITY (BOP) Multiple choice 1. B 2. A 3. C 5. A 6. B 9. A 12. A 16. D 17. A 18. C 19.A 22. C 24.B 26.C 27. A 30. A Essays 2. Describe the components that make up the current account of Australia’s Balance of Payments. (8 marks) • define current account& BOP • state the components recorded under the current account • describe what is recorded in each of the three items of the CA • explain what a CA deficit/surplus means 3. Outline the factors that can worsena current account deficit. (6 marks) • explain what CAD means • give at least two factors, the most three – e.g. domestic economy growing, domestic r higher than other countries, trade partners’ economies not doing well 11. Describe the effects of a rise in interest rates on the Balance of Payments. (8 marks) • define BOP • at least one effect on CA (how ↑ in r affects BGS or net foreign Y) and one on KFA (how ↑ in r affects foreign I i.e. PI & OI)) 12. Explain how ONE factor may cause an increase in the current account deficit of the Australian Balance of Payments. (6 marks) • define BOP & explain CAD • any one point from the factors affecting the CAD 13. Explain TWO ways that an increase in interest rates in Australia relative to those overseas may affect the current account of the Australian Balance of Payments. (8 marks) • define BOP& CA • at least 2 effect – both must be on CA 14. Explain how an improvement in Australia’s international competitiveness would decrease the deficit on the current account of the Australian Balance of Payments. (8 marks) • define BOP & CA deficit • international competitiveness can increase when quality of Australian goods increase or the price of Australian goods are relatively cheaper than those of Australia’s trade partner • if international competitiveness increases due to lower prices, X revenue increases if dd is elastic & if because quality is better, X revenue increase as well - improve the balance on goods & services &, reducing the CAD • also as competitiveness increases, domestic dd for Australian goods will increase to replace M, especially imports of consumption goods – again, the balance on goods & services will improve and the CAD will fall 16. a. Distinguish between the current account and the capital and financial account of the Australian Balance of Payments. • define BOP • explain what is recorded in each of the items is the CA and the K&FA b. Explain how TWO factors may cause change in ONE of these accounts. • pick any two factors affecting CA or KFA AREA 4: EXTERNAL STABILITY (BOP) Multiple choice 1. B 2. A 3. C 5. A 6. B 9. A 12. A 16. D 17. A 18. C 19.A 22. C 24.B 26.C 27. A 30. A Essays 2. Describe the components that make up the current account of Australia’s Balance of Payments. (8 marks) • define current account& BOP • state the components recorded under the current account • describe what is recorded in each of the three items of the CA • explain what a CA deficit/surplus means 3. Outline the factors that can worsena current account deficit. (6 marks) • explain what CAD means • give at least two factors, the most three – e.g. domestic economy growing, domestic r higher than other countries, trade partners’ economies not doing well 11. Describe the effects of a rise in interest rates on the Balance of Payments. (8 marks) • define BOP • at least one effect on CA (how ↑ in r affects BGS or net foreign Y) and one on KFA (how ↑ in r affects foreign I i.e. PI & OI)) 12. Explain how ONE factor may cause an increase in the current account deficit of the Australian Balance of Payments. (6 marks) • define BOP & explain CAD • any one point from the factors affecting the CAD 13. Explain TWO ways that an increase in interest rates in Australia relative to those overseas may affect the current account of the Australian Balance of Payments. (8 marks) • define BOP& CA • at least 2 effect – both must be on CA 14. Explain how an improvement in Australia’s international competitiveness would decrease the deficit on the current account of the Australian Balance of Payments. (8 marks) • define BOP & CA deficit • international competitiveness can increase when quality of Australian goods increase or the price of Australian goods are relatively cheaper than those of Australia’s trade partner • if international competitiveness increases due to lower prices, X revenue increases if dd is elastic & if because quality is better, X revenue increase as well - improve the balance on goods & services &, reducing the CAD • also as competitiveness increases, domestic dd for Australian goods will increase to replace M, especially imports of consumption goods – again, the balance on goods & services will improve and the CAD will fall 16. a. Distinguish between the current account and the capital and financial account of the Australian Balance of Payments. • define BOP • explain what is recorded in each of the items is the CA and the K&FA b. Explain how TWO factors may cause change in ONE of these accounts. • pick any two factors affecting CA or KFA
Posted on: Thu, 19 Sep 2013 14:29:41 +0000
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