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QLDEconomicsQuick questions
Unit 3: International economics
Quick questions on The terms of trade and the Australian economy (QCE Economics Unit 3)
6short Q&A pairs drawn directly from our worked dot-point answer. For full context and worked exam questions, read the parent dot-point page.
What is effects of a rise in the terms of trade?Show answer
A sustained improvement in the terms of trade is, in effect, a positive income shock for Australia. Trace the chain:
What is improvement?Show answer
Export prices rise relative to import prices, so exports buy more imports.
What is deterioration?Show answer
Export prices fall relative to import prices, so exports buy fewer imports.
What is q1?Show answer
Define the terms of trade and write the formula for the terms of trade index. [2 marks]
What is q2?Show answer
Explain two factors that could cause Australia's terms of trade to improve. [4 marks]
What is q3?Show answer
Analyse the effects of a sustained improvement in Australia's terms of trade on national income, the exchange rate and the federal Budget. [6 marks]
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