I don't know how to answer this essay question:
Analyse the causes and effects of external stability.
This is a question from topic 3 economic issues.
Any advice on how to structure a response on this and how to answer this question would be greatly appreciated.
Is this a short answer question? If so,
I would define external stability (the ability of Australia to meet its foreign debt and equity servicing obligations)
Explain the types of Causes - Cyclical (Exchange rates/international competitiveness interest rates etc.) and Structural (savings and investment gap = high foreign investment = debt and equity servicing costs on NPI, narrow export base etc.)
Explain the Effects and make a judgement on its significance: tarnished triple A credit rating = less investment (maybe mention pitchford thesis) = less economic growth and due to lack of investment to fund businesses etc.
Hope this helps a little!