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International trade · Part 3 of 4
6 exam-style questions with model answers, plus 10 quick multi-choice questions — every question on this part of the standard, grouped by the 2 pages of notes they come from.
Write a full answer before you reveal the model one. That comparison is where the learning happens.
Identify two groups that demand New Zealand dollars on the foreign exchange market, and two groups that supply them.
New Zealand's imports from the United States increase significantly.
Explain in detail how this affects the NZ$/US$ exchange rate. Refer to the market for the NZ$ in your answer.
In the same year, New Zealand's export receipts rise strongly, and the Reserve Bank of New Zealand raises the Official Cash Rate while other countries' central banks hold their rates steady.
Compare and contrast the effect of these two developments on the NZ$ exchange rate, and give a reasoned judgement about the overall effect on the New Zealand economy. Refer to the market for the NZ$ in your answer.
The New Zealand dollar appreciates. Explain the impact on New Zealand exporters.
The exchange rate moves from NZ$1 = US$0.60 to NZ$1 = US$0.68.
Explain in detail the impact of this on a New Zealand firm that imports machinery priced at US$54,000 per unit.
The New Zealand dollar appreciates significantly.
Compare and contrast the impact of this on (i) a New Zealand business that operates guided tours in New Zealand for overseas visitors, and (ii) a New Zealand business that imports and sells European kitchen appliances. Give a reasoned judgement about which is more seriously affected.