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Help with essay question (1 Viewer)
- Thread starter Dimsimmer
- Start date
For the first part, go to the RBA site, find the figures for CAD, put it in excel, turn into the graph, interpret the trend. Then go to a textbook and leech everything out from there.
For the second part, checkout the economic notes under biki. Just wondering, what textbook you guys use? this is fairly straight forward stuff and can be easily found within the textbook.
For the second part, checkout the economic notes under biki. Just wondering, what textbook you guys use? this is fairly straight forward stuff and can be easily found within the textbook.
Okay, as for impacts of high CAD:
- Debt sustainability/debt trap
- "Golden straight jacket" - the limitation of government policy to suit the needs of foreign creditors
- reduce growth/standard of living (you can link all the bad stuff of low economic growth)
- major fluctuations within the exchange rate (may want to discuss)
- selling of Australian assets to meet debt
- imported inflation (you can probably link all the bad stuff of inflation here as well)
- reduced international confidence/investment, credit rating is a big factor here (link to problems of low foreign investment combined with low domestic savings)
- Debt sustainability/debt trap
- "Golden straight jacket" - the limitation of government policy to suit the needs of foreign creditors
- reduce growth/standard of living (you can link all the bad stuff of low economic growth)
- major fluctuations within the exchange rate (may want to discuss)
- selling of Australian assets to meet debt
- imported inflation (you can probably link all the bad stuff of inflation here as well)
- reduced international confidence/investment, credit rating is a big factor here (link to problems of low foreign investment combined with low domestic savings)
I aggree wtih the above...and I think the most important things are :Demandred said:
--reduce the international confidence/investment, which causes the fluctuationin exchange rate and also the decline of credit ranking.
-second thing is the debt trap
-also the living standard decreases as government has to pay back the debt rather than build infrastucture and shchools....
more information are in the textbook and someof them i cant remember...if you still got problems...e-mail me and I will find the answer for you.
by the way, the recent performance of BOP must be in the textbook, you can easily find it out....
good luck with ur economics....
How do you get stop the CAD from growing?
1. Lower Interest rates. (Australians will stop borrowing from overseas and start using our own money. Also, foreigners will borrow from us. They pay us interest.) This is conflicting. The RBA raises interest rates to slow down economic growth to reduce spending on imports and reduce the financial inflow and other stuff.
2.Improve international competitiveness.
I need help on the first point. Is what I mentioned there correct?
How else can you reduce the CAD problem?
1. Lower Interest rates. (Australians will stop borrowing from overseas and start using our own money. Also, foreigners will borrow from us. They pay us interest.) This is conflicting. The RBA raises interest rates to slow down economic growth to reduce spending on imports and reduce the financial inflow and other stuff.
2.Improve international competitiveness.
I need help on the first point. Is what I mentioned there correct?
How else can you reduce the CAD problem?
How to stop CAD from growing?
The only possible way without major reprocussions is the Harrodian way - high-tech/high-skill export oreintated manufacturing = high export earnings. Its very unlikely that this will happen if neo-liberal ideology dominates the political arena, unless the CSIRO or something develops a technology thats puts us in front.
As for increasing interest rates, its a bad idea, at the moment we're coming very close to the natural rate of unemployment and also hitting the upper limits of the 3% inflation bracket - the big Mac says that it would not be surprising if it does go over the bracket this year. So its more of a structural problem, something that has been around for years, yet no one made a decent attempt to fix it. Don't forget that a decrease interest promotes spending and may increase our CAD.
Improving competitiveness is one way, but its often regarded as the 'race to the bottom'. I'd trade higher HDI and happiness over GDP growth any day.
The only possible way without major reprocussions is the Harrodian way - high-tech/high-skill export oreintated manufacturing = high export earnings. Its very unlikely that this will happen if neo-liberal ideology dominates the political arena, unless the CSIRO or something develops a technology thats puts us in front.
As for increasing interest rates, its a bad idea, at the moment we're coming very close to the natural rate of unemployment and also hitting the upper limits of the 3% inflation bracket - the big Mac says that it would not be surprising if it does go over the bracket this year. So its more of a structural problem, something that has been around for years, yet no one made a decent attempt to fix it. Don't forget that a decrease interest promotes spending and may increase our CAD.
Improving competitiveness is one way, but its often regarded as the 'race to the bottom'. I'd trade higher HDI and happiness over GDP growth any day.