ATAR Notes: Forum
VCE Stuff => VCE Business Studies => VCE Subjects + Help => VCE Economics => Topic started by: Seamus Wong on May 16, 2019, 08:46:19 pm
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Can someone give me their explanation of one factor that contributes to Australia's Net Foreign Debt?
Here is what I've written, I just wanna know how other people would answer the same question...
The savings-investment gap is one the leading factors contributing to Australia's NFD. The lack of domestic savings relative to high levels of investment by Australian households firms and the government has lead to shortages in the availability of credit, causing demand-pull inflation and pushing up the cost of credit - i.e. causing Australian Interest rates to rise to relatively high levels. This therefore leads to a dependance on foreign debt through the issuing of bonds or acquiring loans to finance our investments, increasing financial account credits and thus contributing to Australia's NFD. Furthermore, the fact that interest rates abroad are relatively cheaper increases the attractiveness of foreign debt, further adding to financial account credits and thus Australia's NFD.
Please let me know if anything I've said is wrong of if you can answer the question more precisely and/or concisely.
Thanks
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Can someone give me their explanation of one factor that contributes to Australia's Net Foreign Debt?
Here is what I've written, I just wanna know how other people would answer the same question...
The savings-investment gap is one the leading factors contributing to Australia's NFD. The lack of domestic savings relative to high levels of investment by Australian households firms and the government has lead to shortages in the availability of credit, causing demand-pull inflation and pushing up the cost of credit - i.e. causing Australian Interest rates to rise to relatively high levels. This therefore leads to a dependance on foreign debt through the issuing of bonds or acquiring loans to finance our investments, increasing financial account credits and thus contributing to Australia's NFD. Furthermore, the fact that interest rates abroad are relatively cheaper increases the attractiveness of foreign debt, further adding to financial account credits and thus Australia's NFD.
Please let me know if anything I've said is wrong of if you can answer the question more precisely and/or concisely.
Thanks
This seems relatively the same to what I have 👍👍👍👍
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This seems relatively the same to what I have 👍👍👍👍
Okay, good. My teacher has told me that it is fine. The only questionable part in my response is the mention of Demand-inflation. It's not wrong but it's not necessary apparently.
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Okay, good. My teacher has told me that it is fine. The only questionable part in my response is the mention of Demand-inflation. It's not wrong but it's not necessary apparently.
Yeah I don't that in my notes either so i don't think it's necessary at all