External Stability. CAD, BOP, TOT, NFD and the Australian Dollar. Definition. External stability looks at how we transact with other countries overseas. When we purchase products made overseas this is known as imports (M) When they purchase products from us this is known as exports (x).
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CAD, BOP, TOT, NFD and the Australian Dollar
There are three measures or indicators of external
Credits are money that comes into Australia (for the sale of our exports)
Debits are money that flows out of the rest of the world (for the purchase of imports)
The BOP always balances and it is the Current Account that we are most interested in.
Copy the diagram on pg 228 of your text book Economics Down Under Units 1 & 2
The Current Account is broken into four sub