12 Eco Quiz

Trade

Questions

1. Name the 3 accounts that make up the Balance of Payments

2. Define Comparative Advantage3. 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, FinancialAccount2. A trade theory which states that a countryshould specialise in the production of thosegoods that it is relatively more efficient atproducing 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 Demand4. Likely effect of Swine Flu Pandemic on NZ

Tourism?5. Describe a Tariff?

Answers1. Define a Sunrise Industry?A growth, expanding industry where prospects/profits are likelyto be improving2. Name the NZ firm gone into receivership recently, directly due

to global depression?Line 73. State the equation for Aggregate DemandAD = C + G+I+(X-M)4. Likely effect of Swine Flu Pandemic on NZ Tourism?Decrease demand, numbers of tourists, export of tourism5. 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:SunriseSunsetFirmIndustry

2007 NCEA Questions

Explain the consequences of a net investment inflow inthe Financial Account on the subsequent Balance onIncome account. Identify the likely impact on economic growth in NewZealand indicated by the resource information above.

Explain the effect of the wine exporting success on NewZealand’s grape growing regions.

Wine Exporting Success

The regions that specialise in winemaking will bepositively affected by the export success. The companies directly involved in the wineindustry will receive an increase in profit thatshould flow on to their employees, who willpurchase more goods and services, so the local retailindustry will benefit. Employment will rise. People will move into the area andbuild new houses that will grow the building andassociated industries. A positive flow-on effect will beseen overall throughout the region.

“Net investment inflow in the Financial Account”

The net investment inflow indicates thatinvestment into New Zealand by overseasinvestors is greater than investment by New Zealanders into overseas countries. This means that the outflow of interest anddividends will be greater than the inflow of interestand dividends. This will create a negative balance inthe Balance on Income account of the currentaccount

Effect on Economic Growth

Economic Growth likely to increase. Think that the funds are used for investment

which will increase growth, capacity etc