The USA and Australia are trading partners and both operate flexible exchange rate regimes. The...
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The USA and Australia are trading partners and both operate flexible exchange rate regimes. The COVID-19 pandemic has caused Australias national income to become even further below US national income. Discuss how lower relative Australian national income would impact the Australian dollar (AUD), ceteris paribus. Your answer must include the role of the actions of Australian and US residents, respectively. [3.5 marks] PART B: Supposed the Reserve Bank of Australia (RBA) increased the cash rate. Everything else remaining the same, explain how the exchange rate and net exports would be affected
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