User Account

All Pages

Demand and supply model of exchange rate determination

Assignment Help Macroeconomics
Reference no: EM131904768 , Length: 2000 words

Assignment: Research Report

Read the article titled "Australian dollar tipped to slide back to 70 US cents" (Sydney Morning Herald January 29, 2018, uploaded to Moodle), and answer the following questions:

(a) Using a Demand and Supply model of exchange rate determination, briefly explain how the exchange rate of the AUD is determined in the forex market, and what factors influence fluctuations of it.

(b) Using nominal exchange rate data and trade weighted index data from the Reserve Bank of Australia website (use monthly data for the last three years) and analyse the movement of the AUD relative to that of the USD using a graph. In your opinion what are the factors contributing to this behaviour of the AUD?

(c) Summarise the main issues discussed in this article. Using the demand and supply framework discussed in part (a), show and explain how these main driving forces would impact the AUD/USD exchange rate..

(d) Suppose you are a manager of an Australian firm which imports electrical machinery from the US. Some of the analysts interviewed in the article expect that the AUD/USD exchange rate is going to change from US 80C per AUD now to US 70C per AUD one year from now. Explain the impact of this depreciation of the Australian dollar on your firm. Thinking about the overall Australian economy, who will benefit and who will lose from such a depreciation?

(e) Suppose that the AUD/USD exchange rate stabilises at around US 72C per AUD one year from now. What action could the Reserve Bank of Australia take in order to bring the exchange rate back to US 80C per AUD, and what side effects might this action have on the Australian economy? Do you think that such actions would be a reasonable economic policy? Explain your answer.

Verified Expert

The assignment analyzes an article on Australian dollarexchange rate that appeared in Sydney Morning Herald. It answers 5questions based on this article. It also analyzes three years data onexchange rate of AUD with that of USD.

Reference no: EM131904768

Questions Cloud

Write an essay explaining standards in contemporary society : Write a 4-5 page essay explaining Double Standards in Contemporary Society (United States ONLY). Include an example of a famous woman today.
Create a powerpoint or prezi slide presentation : Create a Powerpoint or prezi slide presentation that addresses all the requirements of the report or Record a video or audio file of yourself giving the report.
What percent of anchors are men and what percent are women : What percent of the anchors are men? What percent are women? What percent are minorities? What percent of field reporters are men? Women? Minorities?
What is the amount of the magnetic field in tesla : If the magnitude of its (total) velocity is 60 m/s, what is the amount of the magnetic field in Tesla?
Demand and supply model of exchange rate determination : ECON910 - Demand and Supply model of exchange rate determination, briefly explain how the exchange rate of the AUD is determined in the forex market
What is the stored energy : What is the stored energy in C1 60.6 milliseconds after the battery has been removed in micro-joules?
What is the value of the second resistor : The initial current in the circuit is 4.7 amps and after a very long time the charge in capacitor is 21 micro-coulombs. What is the value of the second resistor
What does telling the story seem to do : Clearly, the story of Fan is being told (and perhaps invented) by the community of B-Mor, but why? What does telling the story seem to do for them?
Determine the magnitude and direction of the total force : Determine the magnitude and direction of the total force on the wire. ? = __° below the negative y-axis

Reviews

len1904768

3/17/2018 3:20:41 AM

Submit your report by 5pm on Thursday of Week 8 online Via Moodle. In addition to the online submission, hand in your hard copy of the assignment to the tutor on or before Week 8 of Trimester 1. Assessed work submitted late will be penalised by the deduction of 10 percent of the maximum possible mark for that assessment per working day or part thereof. The operation of this rule will not result in a negative mark being carried forward.

len1904768

3/17/2018 3:20:33 AM

The required assignment is of Economics and all the details of assignment requirements have been provided in the file attached.Marking Guide: marking guide is uploaded on Moodle. Please refer to the marking guide for marking criteria and question weights. Word Limit: 2000 words maximum. Word count (excluding references) must be provided. Note that your analysis is based on the exchange rate of the Australian Dollar and United States Dollar (commonly abbreviated as AUD/USD). For the purposes of this report assume that the current AUD/USD exchange rate is US 80C per AUD.

Write a Review

Macroeconomics Questions & Answers

  What does the firm have a profit maximising plan

What does the firm have a profit maximising plan in the long run. If no, explain why. If yes, is the plan unique.

  Increase the demand for goods and services

As long as we do not mind having high in ation, we can achieve as low a level of unemployment as we want. All we have to do is increase the demand

  Tips to maximize our average grade

Brian is taking three courses this semester: economics, statistics, and finance. He has decided to spend 19 hours per week studying his objective is to maximize his average grade.

  Determine indiana powers profit maximizing price

uppose the Indiana Power Company wishes to maximize profits. The cost, demand and revenue functions have been determined and given below. Determine Indiana Power's profit maximizing price, output and level of profits.

  What is the yield-to-maturity of a corporate bond with

What is the yield-to-maturity of a corporate bond with a 3-year maturity, 5 percent coupon (semiannual payments), and $1,000 face value if the bond sold for $978.30?

  Production function for a firm

1. Suppose that the production function for a firm is Y= Z LBand Z and B are known constants.

  Support the macroeconomic forecast using the real and

support the macroeconomic forecast using the real and financial frameworks that irelands unemployment rate will remain

  What are the equilibrium values of the real interest rate

What are the equilibrium values of the real interest rate, real exchange rate, consumption, investment, and net exports? Now suppose that full-employment output increases to 940. What are the equilibrium values of the real interest rate, real exchan..

  Obtain a specific level of utility at lowest possible cost

the owner-manager of good guys enterprises obtains utility from income(profit)and from having the firm behave in a socially conscious manner, such as making charitable contributions or civic expenditures. can you set up the problem and derive the ..

  Elucidate the differences among the two and why economics

Microeconomics and macroeconomics: Elucidate the differences among the two and why economics is divided into these two subdivisions.

  Determining the shape of a long-run market supply curve

Contrast the role of constant-cost, increasing-cost, and decreasing-cost industries in determining the shape of a long-run market supply curve.

  How well integrated and complementary are the trade

How well integrated and complementary are the trade and international business resources offered by the Canadian Government, relative to the needs of the private sector?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd