How many QCAA Economics questions cover International trade?

AusGrader has 118 QCAA Economics questions on International trade, all with instant AI grading and detailed marking feedback.

QCAA (QCE) Economics — International trade Questions & Answers | AusGrader

Q8

2023

QCAA

1 mark

Q8

1 mark

If the Reserve Bank of Australia increases interest rates relative to our trading partners, it will cause (ceteris paribus)

A

a depreciating effect on the exchange rate.

B

a reduction in the federal budget deficit.

C

an inflow of foreign financial capital.

D

a decrease in export prices.

Q3

2021

SCSA

1 mark

Q3

1 mark

Australia's international competitiveness will most likely increase if

A

the Australian dollar appreciates relative to our trading partners' currencies.

B

the Australian Government spends more on ports and railroads.

C

Australian workers' wages increase faster than their productivity.

D

Gross Domestic Product (GDP) growth is higher in Australia than in other countries.

Q13

2020

QCAA

9 marks

Q13

9 marks

An economic scenario is provided.

The 2021/22 federal budget is expected to deliver a deficit of ＄4.2b at the end of June 2022. A ＄7.1b surplus is anticipated the following year.
(Forecast released May 2022)

Export data shows coal exports are expected to fall from 2021 to 2022 by approximately ＄70 billion.
(Data released 10 July 2022)

CPI data shows that movements in the consumer price index (CPI) and the wage price index (WPI) were below 2% for the three years to June 2022.
(Data updated 31 July 2022)

Use the scenario to explain two relationships and their economic effects. Evaluate the merit of achieving a budget surplus in your answer.

The CPI data shows there are no inflation pressures from consumer prices or wages, indicating the economy has not experienced demand pressures for three years.
The export data demonstrates that Australia has some external stability pressures, because the export value of coal has fallen by ＄70 billion.
These two datasets, in the absence of further information, indicate that economic activity is weakening. They also provide evidence of negative forces acting within Australia’s economy that require stimulatory policies.
Proposals to achieve a federal budget surplus as expected cannot be justified at this time, because it would mean contracting the economy, which could result in inflation and wages falling further. The fall in wages would be expected to cause households to defer spending and save, causing a flow-on effect on business investment. This would result in several negative forces acting on aggregate demand and reducing economic growth. Consequently, the productive capacity of the economy should be increased.

Marking Criteria

Data Relationships

Marking Bands

Descriptor	Marks
Explains a relationship to – domestic aggregate demand pressures (inflation) – external stability pressures (exports)	2
Identifies a relationship linked to either the inflation data or the export data	1
Does not satisfy any of the descriptors below.	0

Economic Activity Deduction

Marking Bands

Descriptor	Marks
Deduces that economic activity is weak based on the 2 datasets, identifies ceteris paribus	3
Deduces that economic activity is weak based on the 2 datasets OR deduces that economic activity is weak based on 1 dataset, identifies ceteris paribus	2
Identifies that economic activity is weak	1
Does not satisfy any of the descriptors below.	0

Policy Conclusion

Marking Bands

Descriptor	Marks
Draws a conclusion that stimulus is required so there is no merit in a budget surplus, provides detailed reasoning using an economic criterion	4
Draws a conclusion that stimulus is required so there is no merit in a budget surplus, provides reasoning using an economic criterion OR draws a conclusion that stimulus is required, provides detailed reasoning referring to the sources	3
Draws a conclusion that stimulus is required, identifies a reason using an economic criterion	2
Identifies that contracting the economy is not warranted	1
Does not satisfy any of the descriptors below.	0

Q27

2022

SCSA

12 marks

Q27

The economic indicators in the table below refer to a hypothetical economy.

Economic indicator	2020	2021	2022
Change in real GDP	1.2%	1.4%	1.8%
Consumer price index	3%	4%	1.9%
Unemployment rate	7.5%	5.5%	5.1%
Balance on goods and services	＄60bn	＄80bn	＄120bn
Net income balance	＄20bn	–＄25bn	–＄30bn
Cash rate	0.5%	0.25%	0.25%

Q27a (i)

1 mark

Identify the phase of the business cycle the economy experienced between 2020 and 2022.

Descriptor	Marks
expansionary/expansion phase/upswing/recovery	1

Q27a (ii)

1 mark

Calculate the current account balance for 2022.

Descriptor	Marks
＄90bn	1

Q27b

4 marks

Describe two possible causes of the phase of the business cycle identified in part (a)(i) above.

Answers could include:

increased net exports
lower unemployment leading to higher household income and higher consumer spending
increased AD: government, consumer, investment spending, increased exports.
expansionary monetary and fiscal policies.

Marking Criteria

Cause 1

Marking Bands

Descriptor	Marks
Describes a possible cause of the expansion between 2020 and 2022.	2
Identifies a possible cause of the expansion between 2020 and 2022.	1
None of the above	0

Cause 2

Marking Bands

Descriptor	Marks
Describes a possible cause of the expansion between 2020 and 2022.	2
Identifies a possible cause of the expansion between 2020 and 2022.	1
None of the above	0

Q27c

6 marks

Assume that the economic indicators for 2022 shown in the table on page 14 applied to the Australian economy.

Using the aggregate expenditure (AE) model, demonstrate the likely stance the Reserve Bank of Australia would adopt in order to influence economic activity, and explain the impact of this stance.

Answers could include:

RBA would use expansionary monetary policy and lower the cash stance to stimulate economic activity
The lower cash rate will stimulate economic activity via the transmission mechanism.
This will increase GDP, lower unemployment, increase consumption and investment spending and lower AUD, causing increase in exports
There is consideration of the multiplier and a clear reference to the model.

Marking Criteria

Explanation

Marking Bands

Descriptor	Marks
Explains, with reference to the model, how the RBA would use monetary policy to influence economic activity.	4
Describes how the RBA would use monetary policy with some reference to the transmission mechanism and the model.	3
Outlines how monetary policy influences economic activity through the transmission mechanism.	2
States that the RBA would adopt expansionary monetary stance and lowers the cash rate.	1
None of the above	0

Model

Marking Bands

Descriptor	Marks
Correctly labelled AE model clearly demonstrating upward shift in AE curve.	2
Mostly correct model showing an upward shift in AE curve.	1
None of the above	0

Q29

2022

SCSA

20 marks

Q29a

8 marks

Describe the concept of ‘foreign liabilities’ and explain the influence of foreign liabilities on Australia’s current account.

Answers could include:

Definition of foreign liabilities:

Foreign liability – foreign debt:

the stock of foreign borrowing where Australian residents (public and private) have borrowed from the rest of the world
most of Australia's net foreign debt consists of private debt, incurred by companies with the profit motive in mind and has been beneficial in raising living standards.
Government bonds issued to foreign residents and the borrowing by Australian firms from overseas institutions are examples of Australian foreign debt
foreign debt comprises of 63% of foreign investment
foreign debt accounts for all of Australia's net foreign liabilities
most of Australia's foreign debt is private (approximately 74%).

Foreign liability – foreign equity:

the stock of Australian assets owned by foreign residents
there is a distinction between direct and portfolio investment with a clear description and example of each
equity involves the selling of assets (shares of companies, resources) to overseas residents
equity comprises a small proportion of foreign investment
foreign direct investment is when a foreign investor acquires more than 10% of an Australian company resulting in a significant influence over that enterprise and is thus associated with either ownership/control of the asset.

Influence on the current account:

the Australian current account records income flows associated with foreign liabilities. Often, the large primary income deficits in the current account are associated with the servicing costs linked to these foreign liabilities

Marking Criteria

Definition of foreign liabilities

Marking Bands

Descriptor	Marks
Defines the concept of foreign liabilities	1
None of the above	0

Foreign liability – foreign debt

Marking Bands

Descriptor	Marks
Describes debt as the stock of foreign borrowing where Australian residents (public and private) have borrowed from the rest of the world	2
States a fact about debt as a type of foreign liability.	1
None of the above	0

Foreign liability – foreign equity

Marking Bands

Descriptor	Marks
Describes equity as the stock of Australian assets owned by foreign residents	2
States a fact about equity as a type of foreign liability.	1
None of the above	0

Influence on the current account

Marking Bands

Descriptor	Marks
Explains how a change in foreign liabilities changes the income account balance.	3
Describes how foreign liabilities are serviced through the primary income account in the current account (interest and dividend repayments).	2
Identifies that inward foreign liabilities are serviced through primary income outflows in the current account.	1
None of the above	0

Q29b

12 marks

Discuss three ways in which foreign investment has affected the Australian economy in recent years.

Answers could include:

Savings-Investment Gap

Foreign investment supplements domestic savings (I-S Gap)
Australia normally runs a CAD because I>S to offset the Current account surplus

Mining Sector

foreign investment into industries such as mining has generated growth in new mining infrastructure, employment, and export revenue for Australia
technology transfer, management, marketing, other knowledge transfers
has allowed new high-capital industries to be established
higher foreign ownership

Balance of payments

Foreign investment is recorded in the primary income account of the current account
costs of servicing debt.

Macroeconomy

Increasing economic growth
Increasing employment
increased government revenue via taxes, royalties, etc. have funded government infrastructure, welfare expenditure etc.
multiplier effect from productive investment, increasing GDP
improvements in productivity and efficiency.

Marking Criteria

Way 1

Marking Bands

Descriptor	Marks
Discusses how foreign investment affects the Australian economy.	4
Explains how foreign investment affects the Australian economy.	3
Outlines how foreign investment affects the Australian economy.	2
States a fact about how foreign investment affects the Australian economy.	1
None of the above	0

Way 2

Marking Bands

Descriptor	Marks
Discusses how foreign investment affects the Australian economy.	4
Explains how foreign investment affects the Australian economy.	3
Outlines how foreign investment affects the Australian economy.	2
States a fact about how foreign investment affects the Australian economy.	1
None of the above	0

Way 3

Marking Bands

Descriptor	Marks
Discusses how foreign investment affects the Australian economy.	4
Explains how foreign investment affects the Australian economy.	3
Outlines how foreign investment affects the Australian economy.	2
States a fact about how foreign investment affects the Australian economy.	1
None of the above	0

QCAA Economics International trade

Data Relationships

Economic Activity Deduction

Policy Conclusion

Cause 1

Cause 2

Explanation

Model

Definition of foreign liabilities

Foreign liability – foreign debt

Foreign liability – foreign equity

Influence on the current account

Way 1

Way 2

Way 3

Frequently Asked Questions

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