The Consequences of a High CAD (HSC SSCE Economics): Quizzes
📚Quizzes
Practise the questions
10 questions from this quiz
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Practise the questions
10 questions from this quiz
According to IMF thresholds, what CAD average is problematic over the medium to long term?
According to IMF thresholds, what CAD average is problematic over the medium to long term?
Over 4% of GDP
What are the two main components of foreign liabilities?
What are the two main components of foreign liabilities?
Foreign debt and foreign equity
What is a risk premium in the context of a high CAD?
What is a risk premium in the context of a high CAD?
Extra interest above normal market rates
How do increased servicing costs create a self-reinforcing cycle?
How do increased servicing costs create a self-reinforcing cycle?
They worsen CAD, requiring more borrowing
What is a key consequence of exchange rate depreciation caused by high CAD?
What is a key consequence of exchange rate depreciation caused by high CAD?
Imported inflation
What does the term 'balance of payments constraint' refer to?
What does the term 'balance of payments constraint' refer to?
CAD limiting sustainable growth speed
What is an example of contractionary monetary policy to reduce CAD?
What is an example of contractionary monetary policy to reduce CAD?
Raising interest rates
What CAD range did the IMF (2018) consider sustainable for Australia?
What CAD range did the IMF (2018) consider sustainable for Australia?
2.5% to 3% of GDP
At what level can Australia sustainably maintain net foreign liabilities according to IMF (2018)?
At what level can Australia sustainably maintain net foreign liabilities according to IMF (2018)?
Around 55% of GDP
Which countries are cited as examples of crises from loss of investor confidence?
Which countries are cited as examples of crises from loss of investor confidence?
Sri Lanka and Argentina