Debt, Equity and TOT

• NFD?


  Balance of funds borrowed by Australia minus funds we lent to other countries
• NFD Equation?


  AUS's Liabilities - AUS's Assets
• How is NFD measured?

  Public sector

  • Govt borrowing

  Private sector

  • firms/banks borrowing
• Net Foreign Equity (NFE)?

  Balance of AUS assets owned by foreigners, minus, foreign assets owned by AUS
• NFE Equation?


  Foreign owned AUS Assets - Foreign assets owned by AUS
• Causes of NFD?


  • Many CAD's
  • Depreciation of AUD as foreign investors can purchase assets for cheaper
  • Opportunities for foreign investors (in addition to our country being stable economically, politically and socially)
  • Savings and investment gaps
• Causes of NFE?


  • Opportunities for foreign investors (in addition to our country being stable economically, politically and socially)
  • Opportunities for Australian investors (investing into other countries)
• Terms of Trade?


  Ratio of avg price received for AUS exports relative to avg price for imports
• TOT Equation?


  $\frac{Export Price Index}{Import Price Index} *$$100$
• Factors affecting TOT?


  Changes in commodity prices

  • as AUS sells commodities (iron)

  Changes to trading partners production costs

  • as AUS imports raw materials from them