Banks and other financial institutions receive deposits and use this money to lend out to others who need to borrow money. In return for the money deposited in banks and financial institutions, we receive interest . This interest adds to our savings and if we are saving up to buy something, such as a car, we want to find a savings account that will provide a good return or rate of interest). These financial institutions make up what we sometimes call the financial sector of the economy. Banks and other financial institutions also play an important role in providing credit for households. When consumers make large purchases, such as a house or a car, it is usually easier to borrow the money to pay for these than to save up for years to pay cash for them. When purchasing a house or land, most people take out a mortgage loan . This enables them to borrow to pay for the property and pay back the loan over a relatively long period of time. The housing market depends on the amount of money available for mortgage loans. If more people are able to buy houses, more new houses are built, creating more jobs in the construction industry. 21.2.3 The overseas sector While we may not realise it, as well as being part of the household sector and interacting with the business and financial sectors, we also interact with the overseas sector. Australia is an open economy, which means we trade goods and services with other countries. Australian businesses export goods and services to both consumers and producers in other countries. Australian consumers buy many products that have been manufactured in other parts of the world and imported into this country. As a consumer, it is highly likely that you have purchased goods made overseas; you are an importer!
FIGURE5 Australia imports from and exports to many other countries.
The reasons why you may be an importer are varied: • There are some products that we are unable to produce with the same efficiency as can be achieved in other countries. A lot of the highly sophisticated machinery used in factories is imported, helping the factories to produce goods more cheaply. • Imported goods are sometimes cheaper than locally produced goods, which can make it difficult for local producers to compete with overseas producers. • Imported goods may be of a superior quality and we value quality over price in some circumstances.
602 Jacaranda Humanities Alive 8 Victorian Curriculum Third Edition
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