Global interdependence, free trade and protection

􏰋 One potential benefit o􏰉 trade liberalisation is that it will 

• allow countries to specialise in goods in which they have the greatest opportunity cost. 
• tend to lead to greater diversity in domestic production. 
• reduce the le􏰎el o􏰉 the current account deficit in the short ter􏰊􏰃 
• lead to higher living standards for domestic consumers. 

Which of the following is likely to improve Australia’s competitiveness in the global economy? 

• increased spending on transport infrastructure in Australia 
• an appreciation of the Australian dollar 
• de􏰀ation in the ma􏰓or countries in the 􏰔uropean 􏰕nion
  
• a change in the industrial relations system in Australia toward more centralised wage determination 

Which of the following statements relating to Australia’s current composition of trade is correct? 

• The USA has become the largest source of Australian imports. 
• Education is Australia’s largest services export. 
• Rural exports have increased in importance over time. 
• Freight services is the largest service import for Australia. 

Globalisation has resulted in 

• an increase in Australian trade surpluses. 
• an increase in global trade barriers. 
• a decline in global extreme poverty. 
• a decline in Australian productivity. 

The purpose of protection is to 

• increase income for the whole economy.  
• increase income for the protected industry.  
• increase efficiency in the protected industry.  
• increase the volume of trade.  

What would limit the globalisation process among nations?

• Increase in the number of free trade agreements
• Increase in the flow of direct foreign investment
• Increase in the volume of trade flows
• increase in tariffs

Critics of globalisation general argue that globalisation 

• helps spread the best of each country's culture.  
• reduce income inequality.  
• causes degredation in the world's environment.  
• helps each country safeguard the best of its own culture

Which of the following could decrease Australia's competitiveness? 

• a decrease in Australia's inflation rate
• a fall in interest rates in Australia
• an appreciation of the Australian dollar 
• a decrease in average weekly earnings in Australia 

Which one of the following global factors is most likely to boost Australia’s exports?

• Urbanisation in Asia 
• Strong growth in Europe
• US Multinational Corporations setting up factories in Africa
• Appreciation of the Australian dollar against all major currencies.   

Which of the following is an indicator of the extent of globalisation

• growth of world trade at a faster rate than global GDP
• Synchronisation of business cycles around the globe.
• reduction in the average rate of tariff protection across the globe
• All the responses are correct