Exchange Rates

1. Define the term exchange rate.
2. Outline the factors that can affect demand for the AUD.
3. Outline the factors that can affect the supply of AUD.
4. What is the difference between a fixed exchange rate and a floating exchange rate?
5. Explain the effects of a currency appreciation on imports and exports.
6. Define the term trade weighted index. Explain why it is useful when analysing movements of the AUD.
7. Explain how the RBA can influence the exchange rate.
8. In the long term, how can a depreciation of the AUD increase international competitiveness?
9. How has the appreciation of the AUD between 2003 and 2008 and between 2010 and 2013 caused structural adjustment in the Australian economy?
10. What are the positive and negative effects on the balance of payments when:
(i) there is an appreciation of the AUD
(ii) there is a depreciation of the AUD