Depreciation of the AUD question.... (1 Viewer)

[derek_]

Briefly explain TWO possible causes of the depreciation of the Australian dollar in recent years (2 marks)

It's a question in the leading edge workbook second edition page 65

the problem is that i've got one possible cause :

Persisent CAD may undermine the confidence of international investors in the Aust. economy and by reducing demand for the currency, this may result in the deprecation of the AUD as seen in recent years.

anybody have another possible causes? i modelled my answer on the online answers and my own words, but the second answer they give is "The Perception of AUstralia as an 'old' economy, with little development of growth, such as telecommunications and pharmaceutricals, which make up the so-called 'new' ecnomy", in my opinion not very relevant to the question

 

[corro]

price of the AUD is all about the amount of demand for it. So increased inflation will reduce out international competitiveness therefore there will be less demand for our exports and less demand for the $A to pay for those exports. Another example would be a reduction in the level of tourism to Aust. would also reduce the demand for $A.

 

[big_ticket]

that leading edge answer is way off the pace. has to be the first time ive seen an answer like that... Jeez dezz, expected a higher intellegence coming from you

 

[Rorix]

declining terms of trade


which is sort of what the leading edge answer says


ps this obviously isnt relevant

 

[ToO LaZy ^*]

recovering of the american economy.

 

[Shuter]

But does it ask compared to the trade weighted index or the $USD?