Australia has a number of firms that operate in other countries. These multinational companies (MNCs) provide several benefits for their home country of Australia. The Australian Government imposes relatively low import tariffs and the country has a floating exchange rate. In recent years, Australia has experienced an increase in investment and a higher Human Development Index (HDI) value.

Mark scheme

Marking points from the official mark scheme (May/June 2025). The mark or mark type is shown in brackets.

1. [1] profits
2. [1] (increased) exports
3. [1] raw materials
4. [1] job opportunity / wages for workers
5. [1] raise country's income
6. [1] Reduce (free) trade
7. [1] lower competition
8. [1] Risk of retaliation
9. [1] resulting in trade war / unemployment
10. [1] Raise price of imports
11. [1] which may raise price of domestically produced goods (because of the lack of competition)
12. [1] Raise the price of imported raw materials / capital goods
13. [1] cause cost-push inflation
14. [1] Reduce quality
15. [1] due to lower competition
16. [1] Protected industries / infant industries / declining industries may become inefficient
17. [1] if become reliant on tariff (protection)
18. [1] Reduce output / consumption / less quality / less choice
19. [1] lower living standards
20. [1] Reduce ability of countries to specialise
21. [1] less efficient use of resources / loss of potential economies of scale
22. [1] Investment can increase GDP / GNI
23. [1] employment
24. [1] which may increase GDP/ GNI per head
25. [1] higher GDP/GNI may raise tax revenue
26. [1] enabling the government to spend more on education and healthcare
27. [1] Higher personal income / wages
28. [1] enabling families to afford sending children to school
29. [1] pay for private healthcare
30. [1] An increase in investment in healthcare facilities
31. [1] can increase life expectancy
32. [1] An increase in investment in education
33. [1] will increase mean / expected and expected years of schooling
34. [1] increase skills/productivity
35. [1] which may increase GDP per head
36. [1] raise awareness about nutrition
37. [1] increase life expectancy
38. [1] An increase in investment may introduce more advanced technology
39. [1] which can make work less physically demanding
40. [1] improving health / life expectancy
41. [L3] A reasoned discussion which accurately examines both sides of the economic argument, making use of economic information and clear and logical analysis to evaluate economic issues and situations. One side of the argument may have more depth than the other, but overall both sided of the argument are considered and developed. There is thoughtful evaluation of economic concepts, terminology, information and/or data appropriate to the question. The discussion may also point out the possible uncertainties of alternative decisions and outcomes.
42. [L2] A reasoned discussion which makes use of economic information and clear analysis to evaluate economic issues and situations. The answer may lack some depth and development may be one-sided. There is relevant use of economic concepts, terminology, information and data appropriate to the question.
43. [L1] There is a simple attempt at using economic definitions and terminology. Some reference may be made to economic theory, with occasional understanding.
44. [0] A mark of zero should be awarded for no creditable content.
45. [1] may eliminate a current account imbalance
46. [1] if there is a current account deficit, exchange rate may fall making exports fall in price and imports rise in price
47. [1] no need to keep reserves of foreign exchange
48. [1] no need to change interest rates to influence the exchange rate
49. [1] enable government to concentrate on other aims as does not have to keep the exchange rate fixed
50. [1] may make it difficult for firms to plan, not knowing how much they will have to pay for imports and earn from exports
51. [1] may create uncertainty
52. [1] discourage investment
53. [1] speculation can cause (significant) destabilising changes in the exchange rate