Need points for an eco essay (1 Viewer)

[kooltrainer]

2006 paper (20 marks)
27) Outline the causes of an increase in demand for the Australian dollar, and discuss the impacts on the australian economy of a sustained appreciation of the australian currency.


could someone give me brief dot points for this essay. Ie what points i should include to fill up 5 pages.

 

[S.T.P]

hey mate, i recently did an essay on a topic similar to this, although ours was on the supply and demand of the Australian dollar, the link to the BOP, and the effects of both fluctuations on the Aust economy, if you want a copy of the essay let me know, its quite big, around 2600 words.

 

[kooltrainer]

cool, would u kindly pm me ur essay? thx

 

[S.T.P]

there you go man, its in quite a bit of detail.

 

[2162]

From the top of my head

- global growth - demand for commodities
- interest rate differential
- international business cycle
- decrease in imports
- australia's international competitiveness
- growth in exports
- international risk apetitite
- demand in australia's goods and services
- tastes and preferences
- speculation (high yield currency)
- economic results and stability ( employment etc)
- decreased demand for other currencies
- rba dirtying the float



impacts of appreciation:
less foreign investment - investors find it more expensive and thus risker to invest in Australia. However the contrary can be said that investors will gain more revenue and thus invest more. But you can argue this case
less international competitiveness ( decreased exports)
increase of cyclical unemployment due to decreased exports (arguable as indirect/direct consequence)
increased consumer purchasing power
increased imports ( worsening cad)
foreign debt easier to finance
decreased foreign revenue
increase in terms of trade( more imports for less exports)
prior investments lose value - revaluation effect

in australia there is a growing reliance on commodities on the demand of our currency, though 95% of currency trades are speculative, when the boom stops (not any time soon) there will be severe consequences on our economy. ie a rapid decline in exports . this can be examined through the volatility of our exchange rate due to the changes in the demand for our commodities. However this is arguable and feel free to comment or message me