Practice SAC – Unit 3 Area of Study 3 – Australia and the World Economy (20 marks)

Question 1 (8 marks)

a. Explain one cyclical cause that has led to Australia’s current account surplus in 2021-22.

2 marks

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b. Explain the relationship between the current account and the capital and financial account

2 marks

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c. Explain a change in relative interest rates will affect the value of the exchange rate.

2 marks

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d. Explain how an appreciation of the exchange rate would impact the balance of goods and services

(BOGS) in the current account in Australia.

2 marks
Question 2

a. Identify and explain 2 factors that would improve Australia’s international competitiveness.

4 marks

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b. Distinguish between net foreign debt and net foreign equity.

2 marks

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