SCSA Economics Economic skills

Incorrect. A trade-to-GDP ratio of 75% is much higher than Australia's and is typically seen in smaller, highly open economies or major global trade hubs.

Incorrect. A ratio of 25% is too low for Australia and is more characteristic of very large economies with massive domestic markets, such as the United States.

Incorrect. A trade-to-GDP ratio of 5% is exceptionally low and does not accurately represent the trade openness of any modern developed economy.

A decrease in the price of the good itself causes a movement along the existing demand curve (an increase in quantity demanded), rather than shifting the entire curve.

If a substitute becomes cheaper, consumers will switch to buying the substitute instead, which would decrease demand for the original good and shift its curve to the left.

A decrease in production costs affects producers, causing the supply curve to shift to the right, but it does not directly impact consumer demand.

This is incorrect. One unit of beef is the opportunity cost of producing one unit of corn for Country A ($5000/5000 = 1$), not Country B.

This is incorrect. Two units of beef is the inverse of the correct calculation; it represents Country B's opportunity cost of producing one unit of beef ($4000/2000 = 2$ units of corn).

This is incorrect. Opportunity cost must be measured in terms of the alternative good given up, which in this case is beef, not corn.

A decrease in supply shifts the supply curve to the left, which causes the equilibrium price to increase, not decrease.

While the price does increase, the quantity demanded would only decrease by a relatively larger amount if the demand were relatively elastic, rather than inelastic.

A decrease in supply causes the price to increase, not decrease. Furthermore, inelastic demand means the quantity falls by a relatively smaller amount, not a larger one.

Country A, not Country B, has a comparative advantage in producing coal because its opportunity cost ($2$ tonnes of iron ore per tonne of coal) is lower than Country B's ($4$ tonnes of iron ore per tonne of coal).

Country B has an absolute advantage in producing iron ore because it can produce a maximum of $320$ tonnes, which is greater than Country A's maximum of $100$ tonnes.

Country A does not have a comparative advantage in producing iron ore because its opportunity cost ($0.5$ tonnes of coal) is higher than Country B's opportunity cost ($0.25$ tonnes of coal).

This is incorrect. This value likely results from an arithmetic error or incorrectly applying the balance of payments identity.

This is incorrect. This value might result from a sign error when calculating the current account balance or misinterpreting the balance of payments components.

This is incorrect. This value is the simple sum of all the given figures ($27 + 6 - 10 - 9 - 25 = -11$), which ignores the correct algebraic relationship of the balance of payments identity.

Incorrect. This is an incorrect calculation. The correct method is to divide the EURO amount by the exchange rate ($2500 \div 0.65$).

Incorrect. This is the result of multiplying by the exchange rate ($2500 \times 0.65 = 1625$), which incorrectly converts AUD to EURO instead of EURO to AUD.

Incorrect. This is an incorrect calculation. The correct method is to divide the EURO amount by the exchange rate ($2500 \div 0.65$).

This is merely the ratio of export prices to import prices ($200 / 100 = 2$). To find the index value, this ratio must be multiplied by 100.

This is the value of the import prices index, not the calculated terms of trade index.

This is the ratio of import prices to export prices ($100 / 200 = 0.5$), which is the inverse of the correct formula.

Trade intensity measures the importance of international trade to an economy, not its reliance on foreign investment.

Smaller economies like Australia typically have higher trade intensities than large economies like the USA, which rely more heavily on their massive domestic markets.

While trade barriers can influence the volume of trade, the trade intensity ratio measures the actual level of trade relative to the economy's size, not the specific impact of those barriers.

Incorrect. This calculates the ratio of net exports (exports minus imports) to GDP, which is $\frac{3.6 - 2.9}{32.8} = 2.1\%$.

Incorrect. This calculates the ratio of exports alone to GDP, which is $\frac{3.6}{32.8} = 11.0\%$.

Incorrect. This is simply the sum of exports and imports (＄6.5 billion), not the ratio of this sum to GDP.

Incorrect. This value is obtained by incorrectly multiplying the AUD amount by the exchange rate ($40000 \times 1.43 = 57200$) rather than dividing.

Incorrect. This is an incorrect calculation. To convert AUD to USD with the given rate, you must divide the AUD amount by the exchange rate of 1.43.

Incorrect. This is an incorrect calculation. The correct conversion requires dividing the AUD price by 1.43.

Incorrect. While the AUD appreciated against the yen, it also appreciated against the won, since ＄1 AUD buys 900 won in Year 2 compared to 800 won in Year 1.

Incorrect. The AUD appreciated, not depreciated, against both the yen and the won, as ＄1 AUD buys more of both currencies in Year 2 than in Year 1.

Incorrect. While the AUD appreciated against the USD, it also appreciated against the yen, since ＄1 AUD buys 80 yen in Year 2 compared to 50 yen in Year 1.