-pari-
Active Member
some stuff i didnt get.... 
any help would be great..
1) under a floating exchange rate the currency moves to equalise the supply and demand for $A, and that as a result the balance of payments always sums to zero. i dont see the link between the two. in other wordsif there is a deficit on the current account this is offset by an equal surplus on the capital and financial account. why? how? i dont get that.
2) when domestic spending > domestic output, ie when a situation of CAD arises, "we are forced to make up for this by bringing in financial inflow from overseas" - ie financing it either by forgeign debt/equity borrowings...
when you finance a deficit through "forgeign equity" ...does this mean Australia will make investments overseas to gain the returns on the investment...and then this is used to finance the deficit...?
also i'm guessing CAD is financed from foreign borrowings because we cant finance it from domestic savings coz domestic investment > domestic savings which results in the CAD situation in the first place.
amirite?
3) what is the "public sector borrowing requirement/public sector underlying deficit"? is it just the budget deficit?
in which case when it rises, PTEs may end up borrowing foregin funds becoz the govt doesnt' have the capacity to provide funds...?
4) "...about 40% of Australia's net foreign debt is denominated in foreign currency loans" meaning?
5) y'know when they talk about foreign debt...with the public sector i'm guessing debt in terms of PTEs borrowing from overseas...firms/govts? with the private sector, does foreign debt include personal debt? like say i borrow $1000 from a friend of mine in Canada...is that included? If not, what's included in "private sector"'s contribution to net foreign debt.
6) "the outflow of equity investment from Australia to overseas economies..." say what?! does this mean outflow of money that australia is paying overseas to foreigners holding australian assets, or does it mean outflow of money that australia is paying in actually investing in foreign assets itself....?
7) What would a higher/increasing CAD reflect in terms of economic growth? like does a high CAD reflect a good (ie increasing) eco growth, or deterioating eco growth?
8) 'Persistent CAD and large foreign debt increases the exposure of the Australian economy to external shocks..." ....like? can anyone gimme some examples? ....external shocks?
9) with Australian assets in foreign ownership...it says "only a protion of the profits are remitted overseas"
why not all profits? if someone owns a house in australia...wouldn't all the rent to go the owner?
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any help would be great.. 1) under a floating exchange rate the currency moves to equalise the supply and demand for $A, and that as a result the balance of payments always sums to zero. i dont see the link between the two. in other wordsif there is a deficit on the current account this is offset by an equal surplus on the capital and financial account. why? how? i dont get that.
2) when domestic spending > domestic output, ie when a situation of CAD arises, "we are forced to make up for this by bringing in financial inflow from overseas" - ie financing it either by forgeign debt/equity borrowings...
when you finance a deficit through "forgeign equity" ...does this mean Australia will make investments overseas to gain the returns on the investment...and then this is used to finance the deficit...?
also i'm guessing CAD is financed from foreign borrowings because we cant finance it from domestic savings coz domestic investment > domestic savings which results in the CAD situation in the first place.
amirite?
3) what is the "public sector borrowing requirement/public sector underlying deficit"? is it just the budget deficit?
in which case when it rises, PTEs may end up borrowing foregin funds becoz the govt doesnt' have the capacity to provide funds...?
4) "...about 40% of Australia's net foreign debt is denominated in foreign currency loans" meaning?
5) y'know when they talk about foreign debt...with the public sector i'm guessing debt in terms of PTEs borrowing from overseas...firms/govts? with the private sector, does foreign debt include personal debt? like say i borrow $1000 from a friend of mine in Canada...is that included? If not, what's included in "private sector"'s contribution to net foreign debt.
6) "the outflow of equity investment from Australia to overseas economies..." say what?! does this mean outflow of money that australia is paying overseas to foreigners holding australian assets, or does it mean outflow of money that australia is paying in actually investing in foreign assets itself....?
7) What would a higher/increasing CAD reflect in terms of economic growth? like does a high CAD reflect a good (ie increasing) eco growth, or deterioating eco growth?
8) 'Persistent CAD and large foreign debt increases the exposure of the Australian economy to external shocks..." ....like? can anyone gimme some examples? ....external shocks?
9) with Australian assets in foreign ownership...it says "only a protion of the profits are remitted overseas"
why not all profits? if someone owns a house in australia...wouldn't all the rent to go the owner?
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