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Economics

Home > Economics > Australia's place in the global economy > Exchange rates

Exercise 1 Answers

1. The forex market is used for the exchange of currencies to pay for exports and imports.
   True

2. Different foreign exchange markets exist around the world.
   True

3. More tourists coming to Australia will create an increase in supply of Australian dollars.
   False

4. The trade weighted index measures the Australian dollar against Australia’s main trading partners.
   True

5. High domestic inflation rates will make imports cheaper and increase the demand for Australian dollars.
   False

6. If speculators lose confidence in the economy a depreciation in the value of the Australian dollar will occur.
   True

7. Lower rates of inflation increases the demand for Australian exports resulting in an appreciation of the Australian dollar.
   True

8. When business confidence in the Australian economy deteriorates capital outflow decreases.
   False

9. Speculation is the buying and selling of foreign currencies to make a profit.
   True

10. The Australian dollar was floated in December 1993.
    False

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