§-Unit

Unit 3: International economics

4 dot points, in syllabus order. Each dot point has a focused answer, with exam-style questions and worked answers where available.

Topic 1: Free trade theory and protection

Explain the theory of comparative advantage and the gains from trade, analyse the rationale for and forms of protection (tariffs, subsidies, quotas, local content rules), and evaluate the impact of free trade agreements on the Australian economy

Free trade and protection. Explains comparative advantage with a numerical example, draws the tariff diagram, analyses the four types of protection, and evaluates Australia's 17 free trade agreements with current trade data.

8 min read →

Topic 2: Exchange rates and the balance of payments

Explain the terms of trade, how they are measured, the factors that cause them to change, and analyse the effects of a change in the terms of trade on the Australian economy

Terms of trade. Defines the terms of trade index, explains the price-driven and quantity-driven factors that move it, distinguishes an improvement from a deterioration, and analyses the effects on national income, the exchange rate, the current account and the Budget, with established Australian framing.

7 min read →

Explain the determination of the Australian exchange rate under a floating regime, draw the foreign exchange market diagram, and analyse the structure of the balance of payments including the current account and capital and financial account

AUD and the BoP. Defines floating, fixed and managed regimes, draws the foreign exchange market, identifies the seven major determinants of the AUD, and explains the structure of the balance of payments with recent ABS data.

8 min read →

Topic 3: Globalisation and Australia's FTAs

Explain the impact of globalisation on Australia, the role of major international organisations (WTO, IMF, World Bank), and evaluate the impact of Australia's free trade agreements

Globalisation and international institutions. Defines globalisation across trade, finance, investment, technology and labour, identifies the roles of the WTO, IMF and World Bank, and evaluates the impact of Australia's 17 FTAs.

8 min read →