Principle of Macroeconomics – Revision (Lecture 12.2)

Principle of Macroeconomics – Revision (Lecture 12.2)

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Principle of Macroeconomics – Revision (Lecture 12.2) Globalisation Monetary Policy o Value of the Australian dollar increasing, resulting in an increase in the price of our exports, but a decrease in our imports. Expected interest rates to increase and therefore an increase in the Australian dollar again. o GDP deflator is an indicator for Australian goods. o CPI includes imports as it is a measurement of household standard of living. Therefore the decrease in imports affects the CPI. Protection o Trying to reduce tariffs If we don’t import from other countries, other countries can’t afford to import our exports. Quotas don’t change anything in our exports. o Also, by fixing ex rate lower than the marketing eq level, undervalues the subsidies. Variable: At a Variable interest rate, the increase in demand in exports will increase the demand of the AUD. Increases the value of the Australian dollar and increases the price of exports and decreases the price of imports. There is
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This note was uploaded on 09/27/2011 for the course FINANCE 1001 taught by Professor Profassorted during the Three '11 term at University of Adelaide.

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Principle of Macroeconomics – Revision (Lecture 12.2)

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