Australia's Economic Linkages and Performance

These flashcards cover key vocabulary and concepts related to Australia's economic relationships, trade policies, and macroeconomic performance.

Linkages

The economic and financial connections between Australia and other countries through flows of goods, services, capital, and people.

Trade (Exports and Imports)

Exports are goods/services sold overseas (bringing foreign currency), while imports are goods/services purchased from abroad (providing a greater variety of goods).

Foreign Direct Investment (FDI)

Investment from foreigners that involves taking a controlling interest in a firm or establishing operations in Australia.

Portfolio Investment

Investment involving buying Australian shares or bonds, generally considered more volatile than FDI.

Tourism

International visitors spending in Australia on accommodation and services, considered an export.

Immigration

The movement of people into Australia which affects labor supply, housing demand, and human capital.

Trade Intensity

A measure of trade openness calculated as (Exports + Imports) / GDP.

Current Account

A record of all economic transactions between Australian residents and the rest of the world, including goods, services, primary income, and secondary income.

Terms of Trade (ToT)

The ratio of export prices to import prices, indicating how much import one can get for exports.

Exchange Rate

The price of one currency in terms of another, indicating the value of the Australian dollar in foreign markets.

Foreign Investment Review Board (FIRB)

A body that assesses foreign investment proposals for compliance with Australia's national interests.

Macroeconomic Equilibrium

Condition where planned spending equals actual production, indicated when Aggregate Expenditure equals national output.

Multiplier Effect

The phenomenon where an initial change in spending results in a more significant overall increase in national income.

Aggregate Expenditure (AE)

The total planned spending on final goods and services in the economy, comprising consumption, investment, government spending, and net exports.

Marginal Propensity to Consume (MPC)

The proportion of additional income that a household spends on consumption.

Balancing of Payments (BoP)

A comprehensive record of all economic transactions of a country with the rest of the world.