Balance of Payments
Trade Agreements
Exchange Rates
Mixed Bag
The Price Taker Model
100
Balance on goods plus the Balance on services
What is the Balance on Trade?
100
An illegal, complete ban of trade with another country.
What is an embargo?
100
Groups include tourists to NZ and foreign investors in NZ.
Who demands the NZ dollar?
100
It would be in between the country with a lower domestic price and the country with the higher domestic price in the Two Country Model.
How is the world price set?
100
Because NZ is too small to influence the world price (the level of output is too low).
Why is NZ a price taker?
200
Balance on the Current Account + Balance on the Capital Account + Balance on the Financial Account
How is the Balance of Payments calculated?
200
Closer Economic Relations
What is the agreement of free trade between Australia and NZ called?
200
Groups include NZ tourists going to London and NZ importers buying goods from foreign countries.
Who supplies the NZ dollar?
200
Asia Pacific Economic Cooperation
What does APEC stand for?
200
This would cause the quantity demanded in NZ to decrease and the quantity supplied in NZ to increase
What would be the affect if the world price was higher than the domestic price?
300
Because we, as a country, usually spend more than we earn in revenue?
What is NZ usually running a deficit?
300
Australia, USA, China and Japan
Who are New Zealand's top 4 export and import markets by dollar value?
300
This is when the NZ dollar increases in relation to another country?
What is an appreciation of the NZ dollar?
300
The cost of borrowing decreases, the incentive to invest increases so firms will expand and may export
What is the result of a decrease in interest rates on Trade?
300
This would cause the quantity demanded by NZ consumers to increase, as it is relatively more affordable for them, and the quantity supplied by NZ producers to decrease, as it is relatively less profitable for them.
What would happen if the world price was below the domestic price?
400
This includes a change in inflow or outflow of assets.
What does the Capital Account include?
400
Protectionism
What is the term that summarises a country's tools trying to protect their domestic market from overseas imports i.e through tarrifs, quotas and export subsidies?
400
The supply of the NZ dollar would decrease.
Open ended questions about a scenario which could cause this answer.
400
This is a tax on imports.
What is a tarriff?
400
More NZ exports or less overseas imports into NZ.
What would be the result of an increase in the world price?
500
The Financial Account
What is the main reason why NZ runs a Balance of Payment deficit?
500
1983
When was the Closer Economics Relation Agreement with Australia signed?
500
The NZ dollar would depreciate.
Open ended question about a scenario that would cause the answer.
500
The dairy/agricultural market as NZ can influence the world price.
What is the one market that NZ is a price maker?
500
Exports
What is the result of the world price above the domestic price?
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