Download 3A Australia and the global economy Task 5 Marking guide 2011

3A ECONOMICS
ASSESSMENT Task 5
TEST
Section A
Multiple Choice
1.
D
2.
B
3.
C
4.
B
5.
D
6.
A
8.
D
9.
A
10.
D
11.
C
12.
B
13.
C
Section B
7.
C
Data Interpretation
Foreign Investment in Australia
Net International
Investment Position
($mill)
Net Foreign Equity
($mill)
Net Foreign Debt
($mill)
2007-08
658 560
58 119
600 441
2008-09
703 667
79 393
624 274
2009-10
779 775
95 709
684 066
Year
Source: ABS 5302.0 December quarter 2010
(a) Distinguish between foreign equity in Australia and Australia’s foreign debt.
(3 marks)
(b) Use the data to describe movements in foreign investment in Australia for the time period given.
(3 marks)
(c) Explain how the changes in foreign investment, seen in the table, could impact on the balance of
payments.
(6 marks)
Part (a)
Description
• FE – selling shares/companies to foreigners.
• FD – borrowing funds from o/seas.
• FD short term/speculative vs FE long term/’ownership’/stability.
• ‘Payments’ and profit.
• Some other difference.
Total
Marks
1
1
1
1
1
3
Part (b)
Description
• Both Net FE and Net FD have increased.
• Data.
• Most of FI increase due to FD increase.
Total
Marks
1
1
1
3
Part (c)
•
•
•
•
•
•
•
Description
FI recorded as credits in FA, thus FAS.
FD  interest payments  CAD.
FE  dividend payments  CAD.
CAD may lead to future FI to finance CAD.
FI  expansion of economy  may lead to X, thus lower CAD.
FI may lead to capital M  net goods deficit   CAD.
BoP definition.
Total
Marks
1
1-3
1
1-2
1
1
6
MULTIPLE CHOICE QUESTIONS
1. Australia has, in the past twenty years, increased its percentage share of exports in the areas of
(a)
(b)
(c)
(d)
agriculture and mining.
agriculture and manufacturing.
manufacturing and services.
services and mining.
2. A country’s trade intensity is measured as the ratio of the value of
(a)
(b)
(c)
(d)
exports to imports.
exports and imports to GDP.
exports and imports to CAD.
imports to GDP.
3. Australia’s main import source is _____________ and main export destination is ____________.
(a)
(b)
(c)
(d)
USA; China
China; Japan
China; China
Japan; China
4. International trade enables a country like Australia to
(a)
(b)
(c)
(d)
produce beyond its production possibility frontier.
expand its consumption possibilities.
increase its production of goods for domestic consumption.
reduce its own production levels and buy cheaper imports.
5. In an open economy, such as Australia, when aggregate demand increases
(a)
(b)
(c)
(d)
exports tend to rise.
imports tend to fall.
imports are unlikely to change.
imports tend to rise.
6. Which of the following transactions is recorded in the capital and financial account of the balance
of payments?
(a)
(b)
(c)
(d)
A foreign investor buying Telstra shares.
A foreign investor receiving dividends for owning Telstra shares.
An Australian company purchasing machinery from overseas.
A foreign company purchasing bauxite from Alcoa.
7. Currently Australia has
(a)
(b)
(c)
(d)
a large net income outflow on the current account and a large net financial outflow on the
capital and financial account.
a large net income inflow on the current account and a large net financial outflow on the
capital and financial account.
a large net income outflow on the current account and a large net financial inflow on the
capital and financial account.
a large net income inflow on the current account and a large net financial inflow on the
capital and financial account.
8. The income received by Qantas, flying Chinese tourists to Australia, will be recorded in which
section of the current account?
(a)
(b)
(c)
(d)
Goods.
Income.
Current transfers.
Services.
9. In 2010 the largest component of Australia’s current account was ______________ and the largest
component of its current account deficit was ________________.
(a)
(b)
(c)
(d)
goods, net income.
goods, net services.
income, net goods.
services, net income.
10. Which of the following is consistent with a country experiencing a rising deficit on net goods
and a rising outflow of net income?
(a)
(b)
(c)
(d)
Higher export prices and a fall in the rate of interest.
Lower commodity prices and direct investment by Australian companies overseas.
Reduced imports and government repayment of overseas debt.
Rapid economic growth financed by overseas borrowing.
11. Which of the following, ceteris paribus, would increase the overseas demand for Australian
made goods and services?
(a)
(b)
(c)
(d)
A fall in the government’s budget deficit.
Higher interest rates in Australia.
A fall in the value of the $A.
A rise in real wages in Australia.
Questions 12 and 13 are based on the Balance of Payments data in the following table.
Current Account($)
Exports
Imports
Net Goods
Net Services
Balance on goods and services
Net Income
Net Current Transfers
Balance on Current Account
Year 1
85 783
98 427
-12 644
-1784
-14 428
-18 189
-749
12. The Balance on goods and services in Year 2 was
(a)
(b)
(c)
(d)
$14 351.
-$14 351.
-$12 955.
-$11 559.
13. The Balance on Current Account in Year 1 was
(a)
(b)
(c)
(d)
$33 366.
-$47 794.
-$33 366.
-$32 617.
Year 2
97 655
110 610
-1396
-19 346
218
-33 479