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Australian Economics Assignment PDF 2022

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Added on  2021-04-21

Australian Economics Assignment PDF 2022

   Added on 2021-04-21

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Running head: ECONOMICS ASSIGNMENTEconomics AssignmentName of the Student:Name of the University:Author’s Note:
Australian Economics Assignment PDF 2022_1
ECONOMICS ASSIGNMENT1Table of ContentsAnswer to Question a:.....................................................................................................................2Answer to Question c:.....................................................................................................................7Answer to Question d:.....................................................................................................................8Answer to Question e:.....................................................................................................................9Reference List................................................................................................................................11
Australian Economics Assignment PDF 2022_2
ECONOMICS ASSIGNMENT2Answer to Question a:Exchange rate can be characterized as the price of the domestic currency or the currencyof a nation stated in terms of the currency of a foreign country. In other words exchange rate canbe held responsible for comparing a currency with the other in terms of their values. Theredifferent types of exchange rate regime such as the fixed, floating and pegged exchange rates anddue to this it becomes difficult to determine the actual rate of exchange (Ferraro et al., 2015).Although, it can be stated that demand supply mechanism can be used to for the purpose ofdetermining the exchange rate in the given scenario as this is identified as an efficient tool bymany of the researchers. The aforementioned framework sometimes help to forecast theexchange rate expected to prevail in the next period as well. On an added notion it traces outdifferent factors which in turn can affect and play a crucial role in determining the actualexchange rate (Engel et al., 2015). This specific report will focus on the Australian economy andhow the value of AUD is obtained in the market of foreign exchange with the help of demandsupply framework will be shown in the next few paragraphs.
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AUD/USDQUSD 84C/1AUDUSD 76C/1 AUDUSD 80C/1 AUDQ2QQ1EE1SD2DD1E2ECONOMICS ASSIGNMENT3Figure 1: Determining the Australian Exchange Rate in the Forex Market (Demand-Supply Framework)(Source: Created by Author)The figure above depicts the demand and supply framework of the foreign exchangemarket. Through this demand supply framework the exchange rate of a country can bedetermined. The export demand of a country determines the demand for currency and on theother hand, the supply is dependent over the demand for the importable in the domestic country(Engel, 2014). The demand curve is projected on the basis of the derived demand while thesupply curve is projected on the basis of the overall aggregate demand for the importable. Now itcan be observed that equilibrium is achieved where demand equals supply and at this point E theexchange rate is 80 C USD for a unit Australian Dollar. At this point the supply of the currencywhich is determined by the demand for importable in the domestic market is found to be
Australian Economics Assignment PDF 2022_4

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