External stability exists when Australia’s trade and financial dealings with the rest of the world do not create significant foreign concerns triggered by trends in the CAD, net foreign debt, net foreign liabilities and the value of the $A. It refers to the situation in which Australia is able to meet its international commitments. This means being able to afford the imports we want and also being able to service any external debt we have accrued. There are four main indicators of external stability:
- CAD as a percentage of GDP
- Net foreign debt
- Net foreign liabilities
- Trade Weighted Index
(elaborate on all of these)
These four indicators suggest that there are three main problem areas in our economy:
- The level of national savings (elaborate and show how savings can be increased)
- Problems with our international competitiveness
- The impact of adverse views on the $A
Elaborate on all that, using facts and figures for support, and you're set
