economics MCQ (1 Viewer)

[indeed]

Can someone please explain the reasoning for this (and also if debt servicing ratio is important to know for hsc, cause we didnt learn it)

Thanks!

 

[yanujw]

Global interest rate rises would attract investors to invest their money in countries outside Australia, causing an increase in demand for international currencies and so the AUD will comparatively depreciate. Debt-servicing ratio is a term representing the proportion of export revenue that would be spent repaying foreign debt - it is a measure of external stability. When the AUD depreciates, the value of foreign debt increases in AUD terms and thus the DSR would increase.

DSR is not critical but good to know for the HSC. It comes under the syllabus point Indicators of external stability.

 

[indeed]

Global interest rate rises would attract investors to invest their money in countries outside Australia, causing an increase in demand for international currencies and so the AUD will comparatively depreciate. Debt-servicing ratio is a term representing the proportion of export revenue that would be spent repaying foreign debt - it is a measure of external stability. When the AUD depreciates, the value of foreign debt increases in AUD terms and thus the DSR would increase.

DSR is not critical but good to know for the HSC. It comes under the syllabus point Indicators of external stability.

Oh ok thank you!
I didn't think of it in terms of exchange rates though should've.

But could you say that increase in global interest rates compared to AUS will cause more Australians to borrow domestically, meaning less debt (so smaller debt to service ratio)?