2 Quick questions. (1 Viewer)

[espo14]

Hey, I know these are proabably easy but.. whatever.

1)account for the improvement of the Current account in 2000-2001



2)explain the impact of foreign investment on the Aust. economy



thanks.

 

[ToO LaZy ^*]

1. depreciating dollar- greater international competitiveness- increase in exports that cover more imports- improved CAD

2.
- creation of jobs
- deteriorated CAD due to servicing costs of interest on investments
- increased demand for $A leads to appreciation

 

[Agirlnameddani]

Is that from the 2002 Catholic trial?

If so, I just did that one.

The improvement in CAD in 2000-01 is due to an improvement in the Balance of goods and services. It shows a surplus in 2000-01 after deficits in previous years (see the accompanying table). The improvement can be attributed to Australia's microeconomic reform policies which aims at making Australian industry internationally competitive.

Australia has experienced low rates of national savings, so Foreign direct investment has a positive impact on our economic growth potential. Investment has a multiplier effect on national income.

From a CAD perspective, foreign investment effects net foreign equity and does not directly effect our level of debt. The purchase price does not have to be repaid unless the asset is sold. However, ROI must be paid to foreign investors.

 

[Shuter]

1. depreciating dollar- greater international competitiveness- increase in exports that cover more imports- improved CAD

But your debt servicing costs will go up due to the depreciated dollar so there's really not much benfit there.

I think we're missing the accompnying table in which we were supposed to base our responses off.