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External Stability
| Term | Definition |
|---|---|
| Goal of external stability | is a desirable economic situation where Australia is able to pay its own way in its international financial transactions and live within our means as a nation, indicated by a small CAD:GDP ratio of 3-4%, a sustainable NFD and a steady AUD. |
| Terms of trade index | measures the ratio of average prices received for exports relative to the average price paid for imports. |
| Current Account Deficit | is where the total value of debits exceed the total value of credits in the current account. |
| Current Account | records international transactions between Australia and the rest of the world. Includes; exports and imports of goods and services, and net primary and secondary incomes. |
| Trade Weight Index | a measure of the Australia exchange rate. It represents the value of the AUD against a basket of foreign currencies weighted according to their relative importance to Australia's trade. |
| International Competiveness | involves local firms and producers being able to compete with rivals and competitors from overseas without government protection. |
| Net Foreign Debt | is the difference in value between what Australia has borrowed from and owe overseas minus what Australia has lent or invested overseas. |
| Tariff | sn indirect tax added onto the price of imports to make those imported goods more expensive |
| free trade agreement | are agreements between 2 or more countries where tariffs, subsidies, import quotas and restrictions on the free flow of money capital are removed. |
| Free Trade | exists when no restriction are in place to alter the international flow or movement of goods, services and capital between counters. |
| Subsidies | is a cash payment by the Government to local producers to help reduce their production costs and selling price, making them more competitive against imports. |
| Import Quotas | is a Government restriction on the quantity of particular goods which can be imported. |
| Trade protection | is a Government policy that involve using high tariffs, import quotas and subsidies to local producers to support local industries so that it can compete with imports. |
| Balance of payments | is an annual statistical record of the money value of both current, and capital and financial transactions between Australia and the rest of the world. |
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