The current account deficit depicts a measure of the extent to which Australia draws upon overseas resources in excess of its capacity to earn the same by way of exports and other similar credits (Kelly 1994, Pp. 198). It calculates the exchange of real goods and services…
There is an inverse relationship between a country’s current account and its foreign debt, all things remaining equal. This can be observed from the current account and foreign debt statistics of Australia, in the current year. In the year 2009 there is a deficit in Australia’s current account. This is because of a continued rise in its net foreign debt which results in a negative impact on a country’s current account. As shown in the figure below – the total current account deficit for the year 2009 amounts to $6346 million.
Revenue gains received by a country help in increasing the balance in its current account while excessive expenditure leads to a deficit. Thus, if a country imports more goods and services than the goods and services it exports, it leads to a deficit in its current account and vice versa (Daly, 2004).
The above figure shows an increase in Australia’s net foreign debt, over the years from $506,355 million in 2006- 07 to $616,650 million in 2008 – 09 (Australian Bureau of Statistics, 2009), thus indicating that its exports far exceeds its imports, and the savings are relatively lower as well. Thus, it can be said that there is an inverse relationship between current account deficit and foreign debt of a country, as the foreign debt increases, with savings remaining constant, there is a deficit in the current account while, a reduction in foreign debt, increase in exports, increase in savings, etc would lead to a surplus in the country’s current account. Another significant relationship between CAD (current account deficit) and foreign debt of a country is the fact that as the country experiences a CAD it leads to an increase in foreign borrowings, which is required to pay off the deficit, which ultimately leads to a further increase in foreign debt. As the foreign debt rises, the interest on it rises simultaneously, ...
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Standard has already have taken back the ‘AAA’ status that it had once given to the US economy. Predictions of OECD OECD has predicted more trouble for the US economy in the near future. The organization has forecasted shrinkage of the world economy owing to the recent financial crisis that led many US companies to bankruptcy.
Introduction The very recent outburst of the housing price bubble in the most advanced and developed economies of the world has raised in serious concerns about the management of the macroeconomic tools, measures to combat the inflationary pressures especially by the public authorities, as that led to a financial crisis, and the consequences of the financial crisis had to be faced by the global financial economy.
It takes a look at the situation of the oil industry in particular. The paper also examines the role of renewable energy sources such as solar, wind and hydropower. Discussion The world has not weaned itself from its thirst for oil despite several warnings made by oil experts that peak oil is upon us (Deffeyes, 2001:3).
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s changing its hegemony in manufacturing to service industry or gearing itself to the new economic environment that the global economics is gradually taking shape. Gradually the image of UK’s manufacturing sector became poor because of uncompetitive nature and that lost many
Moynihan and Titley (2001) have said that United Kingdom was the first country to revolutionize. It is the first industrialized country. However, these days the same country has been undergoing de industrialization.
These days it has been
rate at which one financial institution can obtain surplus cash reserve from the other to fulfil the daily cash reserve requirements that the central bank requires. Demand forecasting is used in order to determine this rate and it is an effective tool of controlling monetary
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