International Economics Revision

The table shows the exchange rate of the Australian dollar ($A) expressed as units of foreign currency per $A.

How has the value of the Australian dollar changed in Year 2 compared to Year 1?

• It has appreciated against the Euro and depreciated against the Yen

• It has depreciated against the Euro and appreciated against the Yen

• It has appreciated against the Euro and depreciated against the $US

• It has depreciated against the Euro and appreciated against the $US

An exchange rate system where the central bank sets the value of the exchange rate in relation to another currency is referred to as a:

• Flexible exchange rate system

• Fixed exchange rate system

• Floating exchange rate system

• Stable exchange rate system

If a foreign mining company establishes a coal mine in Queensland, the likely impact on the Circular Flow of Income Model for Australia would be:

• An increase in Australia’s unemployment rate and an increase in business investment

• A decrease in Australia’s unemployment rate and an increase in business investment

• An increase Australia’s unemployment rate and a decrease in business investment

• A decrease in Australia’s unemployment rate and a decrease in business investment

One of Australia’s top five imports is:

• Iron Ore

• Coal

• Passenger Motor Vehicles

• Natural Gas

Which of the following is most likely to reduce Australia’s import volumes?

• A recession in Australia and an appreciation of the Australian dollar

• An economic expansion in Australia and a depreciation of the Australian dollar

• An economic expansion in Australia and an appreciation of the Australian dollar

• A recession in Australia and a depreciation of the Australian dollar

Comparative Advantage is the theory:

• a scenario in which one country can manufacture a product at a higher quality and a faster rate for a greater profit than another competing country.

• a condition or circumstance that puts a country in a favourable or superior trade position for example resource endowment

• economy's ability to produce goods and services at a lower opportunity cost than that of trade partners.

• an economic theory where the government seeks to regulate the economy and trade in order to promote domestic industry

Which of the following is a top 5 export for Australia

• Education and Coal

• Tourism and Motor Vehicles

• Coal and Machinery

• Education and Electrical Equipment

Which country does not have a floating exchange system

• Germany

• Canada

• Australia

• Venezuela

Which of the following will cause an depreciation of the Australian Dollar?

• lower interest rates

• decrease in export volume

• political instability

• low inflation

An unfavourable movement in the terms of trade will mean that:

• a holiday to Bali will become more expensive for Australians

• imports are now more expensive to buy.

• the value of the Australian dollar has risen against a basket of other nations’ currencies

• Australia has to export more goods and services to purchase the same volume of imports