Discuss the effect of a continued Current Account Deficit on the economy. by Tanya Perritt https://padlet.com/tanya_perritt/x2e78urvbptv en-us 2017-05-22 04:52:55 UTC 2025-09-28 11:33:17 UTC hello@padlet.com https://padlet-assets.s3.amazonaws.com/icons/Ninja.png CAD effect on External stability joshua_cairns https://padlet.com/tanya_perritt/x2e78urvbptv/wish/173915870 A stable and controlled CAD can can reduce foreign debt and result in a stable Australian dollar, while a continued deficit could result in an unstable Aus dollar]]> 2017-05-25 23:38:05 UTC https://padlet.com/tanya_perritt/x2e78urvbptv/wish/173915870 CAD and External Stability https://padlet.com/tanya_perritt/x2e78urvbptv/wish/173917258 A high CAD could lead to falling financial flows as investors lose confidence that an economy has sustainable trends and lead to economic uncertainty (similar to the Greek Economy). This can result in a deflated currency and less fiscal stability.
  ]]> 2017-05-25 23:58:34 UTC https://padlet.com/tanya_perritt/x2e78urvbptv/wish/173917258 CAD & Unemployment bronwyn_woolbank https://padlet.com/tanya_perritt/x2e78urvbptv/wish/173917682 First of all, a Current account deficit is a measurement of a country's trade where the value of the goods and services it imports exceeds the value of the goods and services it exports.  A higher CAD would most likely be associated with a rise in structural unemployment (which is the rise in unemployment based on patterns in demand for G & S.The CAD can mean that economic growth has been too low to generate adequate employment growth. Overall, unemployment is influenced by the level of sustained economic growth achieved in an economy. If there are significant constraints on economic growth, the economy will struggle to create enough jobs to reduce unemployment.]]> 2017-05-26 00:03:56 UTC https://padlet.com/tanya_perritt/x2e78urvbptv/wish/173917682 High CAD and Growth of Foreign Liabilities michael_napoli1 https://padlet.com/tanya_perritt/x2e78urvbptv/wish/173958286 Over a period of time a high CAD will contribute to an increased level of foreign liabilities. A deficit on the current account presupposes financial inflow on the capital and financial account, either in the form of borrowings
from overseas (foreign debt) or through selling equity in items such as property and companies (foreign equity). This will mean that lenders may become more reluctant to lend to Australia or to invest in Australia.
]]> 2017-05-26 09:04:18 UTC https://padlet.com/tanya_perritt/x2e78urvbptv/wish/173958286 Negative potential impacts of a high CAD https://padlet.com/tanya_perritt/x2e78urvbptv/wish/174070960 A high CAD can also increase the exposure of the Australian economy to external shocks, such as terms of trade collapses - which would reduce export revenue and increase cost of servicing foreign debt. It also increases the possibility of capital flight out of Aus if foreign investors lose confidence in us due to perceived inability to repay loans in future. Foreign investors may withdraw some or all of their investment in Aus (to reduce losses), or raise interest rates on loans to minimise risk. 

]]> 2017-05-27 07:56:19 UTC https://padlet.com/tanya_perritt/x2e78urvbptv/wish/174070960 Negative effects of a High CAD https://padlet.com/tanya_perritt/x2e78urvbptv/wish/174118229 Possible negative effects of a high CAD on the Australian economy include:
- Depreciation
- Higher capital inflow
- Increased foreign debt and ownership
- Downgrading of credit rating]]> 2017-05-28 07:46:37 UTC https://padlet.com/tanya_perritt/x2e78urvbptv/wish/174118229 https://padlet.com/tanya_perritt/x2e78urvbptv/wish/267293583 2018-06-15 00:37:10 UTC https://padlet.com/tanya_perritt/x2e78urvbptv/wish/267293583 https://padlet.com/tanya_perritt/x2e78urvbptv/wish/365754465 2019-06-05 04:20:17 UTC https://padlet.com/tanya_perritt/x2e78urvbptv/wish/365754465