12 Eco Quiz Trade

Questions 1.Name the 3 accounts that make up the Balance of Payments 2.Define Comparative Advantage 3.Exchange Rate appreciates or Depreciates? – OCR Increased – Cheap flights to the UK – Johnny Rotten campaigns against NZ Diary, Beef & Lamb – Deliah Smith endorses NZ Lamb

Answers 1. Current Account, Capital Account, Financial Account 2. A trade theory which states that a country should specialise in the production of those goods that it is relatively more efficient at producing in terms of costs and resources used. 3. Appreciates (demand), depreciates (supply), depreciates(demand), appreciates (demand)

Questions 1.Define a Sunrise Industry? 2.Name the NZ firm gone into receivership recently, directly due to global depression? 3.State the equation for Aggregate Demand 4.Likely effect of Swine Flu Pandemic on NZ Tourism? 5.Describe a Tariff?

Answers 1.Define a Sunrise Industry? A growth, expanding industry where prospects/profits are likely to be improving 1.Name the NZ firm gone into receivership recently, directly due to global depression? Line 7 1.State the equation for Aggregate Demand AD = C + G+I+(X-M) 1.Likely effect of Swine Flu Pandemic on NZ Tourism? Decrease demand, numbers of tourists, export of tourism 1.Describe a Tariff? A tax on an imported product.

Flow on Effects of World Trade Consumers: Higher/Lower Prices for Goods & Services in NZ More/Less Available Better/Less Quality Greater access to credit..greater levels of debt Increased Employment in Sunrise Industries – Increased Income…. If employed in Sunset Industry, reduced employment, retraining to work in different/sunrise industries etc

Flow on effects of Trade Producers: Increased/Decreased price for products Increase/decrease in Production/Greater Market for goods and services. Increased/decreased demand for Factors of Production – increase in costs but worth it if met by increased price for product. Dependency of world conditions – boom/bust Exchange Rate – appreciation/depreciation Switch resources production into areas of growth/away from decline. Sheep to Dairy etc

Definitions Define: Sunrise Sunset Firm Industry

2007 NCEA Questions Explain the consequences of a net investment inflow in the Financial Account on the subsequent Balance on Income account. Identify the likely impact on economic growth in New Zealand indicated by the resource information above. Explain the effect of the wine exporting success on New Zealand’s grape growing regions.

Wine Exporting Success The regions that specialise in winemaking will be positively affected by the export success. The companies directly involved in the wine industry will receive an increase in profit that should flow on to their employees, who will purchase more goods and services, so the local retail industry will benefit. Employment will rise. People will move into the area and build new houses that will grow the building and associated industries. A positive flow-on effect will be seen overall throughout the region.

“Net investment inflow in the Financial Account” The net investment inflow indicates that investment into New Zealand by overseas investors is greater than investment by New Zealanders into overseas countries. This means that the outflow of interest and dividends will be greater than the inflow of interest and dividends. This will create a negative balance in the Balance on Income account of the current account

Effect on Economic Growth Economic Growth likely to increase. Think that the funds are used for investment which will increase growth, capacity etc