Section II Section II Question 21 from the 2002 HSC Examination
Question 21
Summary: Using a diagram of the price of $A in $US compared to quantity of $A, (a) state the economic term for the movement of the exchange rate of the $A from $US0.50 to $US0.60; (b) outline causes of increase in demand for $A; (c) explain how the Reserve Banks could intervene in the foreign exchange market to influence the exchange rate of the $A; (d) discuss economic benefits to Australia of an appreciation of the $A.
