Identifying factors that will affect the foreign demand at the Sports Exports Company Jim Logan planned to pursue his dream of establishing his own business (called the Sports Exports Company) of exporting Australian footballs to one or more foreign markets. He has decided to initially pursue the market in the United Kingdom because British citizens appear to have some interest in football as a possible hobby, and no other company has capitalised on this idea in the United Kingdom. (The sporting goods shops in the United Kingdom do not sell footballs but might be willing to do so.) Logan has contacted one sporting goods distributor that has agreed

to purchase footballs on a monthly basis and distribute (sell) them to sporting goods stores throughout the United Kingdom. The distributor's demand for footballs is ultimately influenced by the demand for footballs by British citizens who shop in British sporting goods stores. The Sports Exports Company will receive British pounds when it sells the footballs to the distributor and will then convert the pounds into Australian dollars. Logan recognises that products (such as the footballs his company will produce) exported from Australian companies to foreign countries can be affected by various factors.

Identify the factors that affect the current account balance between Australia and the United Kingdom. Explain how each factor may possibly affect British demand for the footballs that are produced by the Sports Exports Company.