Practice exams - Assignment Example

By analyzing annual balance sheet, one is able to determine the economy-wide Assets, Net worth as well as liabilities. d. Analysis of a country’s international investment position as well as balance of payments- This is where one looks into investments a country has made in other parts of twirled and this forms part of the assets. c. Why do bank orientated financial systems compared to market orientated financial systems tend to have more severe economic downturns (or loss of output and bigger asset price falls) during a financial crisis? (3 marks) Financial systems relying on the banking systems tend to develop their own policies and therefore have their own pricing.

On the other hand, market oriented work with tee current trends in the world economy and therefore it is easy for them to prepare for economic crisis. What are the four main supply-side factors that domestic policymakers can target in order to raise the “potential output/ income” of an economy? (4 marks) Provide a recent policy example for Australia. (1 mark) What are the potential costs and benefits for China to easing restrictions and eventually liberalizing cross-border capital flows between China and the rest of the world?

(Pros and cons - 2 marks each = 4 marks) China should involve other participants in the financial markets in regulation and control of its growth credit and deposit rates. This will encourage more international investors into their financial systems. a. The current account surplus of China has reduced from over 10% of GDP in 2007 to a projected surplus of about 2.4% of GDP in 2014. While the US current account deficit has reduced from almost 5% of GDP in 2007 and forecast to be a deficit of about 2.

8% of GDP in 2014. What does this indicate? (5 marks) b. A key driver of relatively low global bond yields in recent years has been the “global savings glut”, whereby many Asian & oil exporting countries ran large