Your Country Is in a Recession. You Feel That a Policy of Exchange Rate Depreciation Will Stimulate Aggregate Demand and Bring the Country Out of the Recession.

The size of financial flows out of Australia The level of financial flows out of Australia will also be determined by the domestic interest rates relative to overseas as well as international confidence in Australia and other economies. If Australian interest rates are relatively lower and the confidence in the Australian economy has deteriorated, capital outflow will increase, thus increasing the supply of AUD. At the present, interest rates are at low levels, however they are expected to rise in the near future as economic confidence and growth are relatively high. This means there will not be a large increase in the supply of Australian dollars.

The exchange rate is the price of one currency in terms of another. A fall in the value of the pound is known as a depreciation and affects both the level of aggregate demand and the costs of production for firms in the UK economy. //One way in which a fall in the exchange rate can be beneficial for the UK economy is that it “should

Exchange rates fluctuate in response to a multitude of factors. Upswings and downswings in the exchange rate can have both positive and negative consequential effects. Depreciation drops the value of the dollar and permits owners of foreign currencies to purchase a greater amount of Australian goods. Hence, depreciation makes Australian exports cheaper and accordingly

The decline in the CAD has been affected by what is happening to the nation’s levels of saving and investment. The level of Australia’s national

This has been the result of inflationary pressures due to excessive consumer demand, and a world increase in oil prices, the RBA’s primary objective is to contain inflation at 2-3% whilst also achieving sustainable growth. The current increases in interest rates will result in lower aggregate demand as consumers have less disposable income. This results in reductions in inflationary expectations, and a decrease in the demand for imports. Furthermore higher rates of interest will encourage overseas investment into Australia, thus resulting in an increase in the demand for the Australian dollar. An increase in the demand for the AU$, and a decrease in its supply due to less import expenditure will result in an appreciation of the AU$ in forex markets. Overall this results in depressed economic activity and lower levels of growth. However the RBA has been able to increase interest rates in order to contain inflation while maintaining economic growth. This is because the global economy has continued to grow at record pace, with strong growth in the US and China, and the recovery of Japan and Europe. Consequently demand for Australian exports has remained high, thus creating opportunities for increased production and subsequent economic

The spread of globalisation especially since 1990 has introduced many new elements into the financial markets and what determines the value of a nation 's exchange rate. This does not just apply to Australia, but as we saw in the later half of the 1990 's, to many other nations in the world. Firstly, trade in goods and services makes up a much smaller proportion of the demand and supply for currency. In the world economy, payments for international trade only account for about 1% of foreign exchange transactions. The total foreign exchange requirements for exporting and importing of goods and services in Australia is less than 3% of the total use of the foreign exchange turnover in Australian dollars (Reserve Bank Bulletin, Table F7 and Australian National Accounts, 5206.0). The main purpose for foreign exchange trading is international financial transfers of

The Australian economy marks external stability as an important objective because it can influence other important aims such as economic growth, unemployment and inflation. External stability is the concept of sustaining a nation’s external accounts so that in the future, it is able to service its foreign liabilities and can avoid currency volatility. When looking at external stability, we must examine Australia’s balance of payments, which records all economic transactions between Australia and the rest of the world. Australia’s balance of payments has two components, which is the current account and the capital and financial account. The current account measures the receipts and payments for trade in goods and services, transfer payments and income flows, while the capital and financial account shows international borrowing, lending, purchasing and sales of assets.

Within Australia’s current economic climate, a lower exchange rate provides more economic advantages than a high exchange rate. However, some experts argue that a higher exchange rate is overall beneficial for the economy through having an increased purchasing power, whilst others disagree. By having a lower exchange rate, a country is able to accelerate its exports industry, making exports cheaper abroad, in turn increasing demand for their goods. This report will discuss the recent trends in Australia’s exchange rate, in addition to exploring factors that influence the exchange rate and its impact on the trade industry. The effects of a depreciating

On February 17, 2018 at approximately 1854 hours, I was dispatched to the Family Dollar located at 6670 Ridge RD Port Richey, FL in reference to a subject attempting to utter a counterfeit $20 bill. Upon my arrival, I made contact with Family Dollar employee, Katlyn Sue Edwards.

This report will detail the state of the Australia economy using key economic indicators, and provide an analysis and pinpoint any economic problems. Using this information it will further provide recommendations how to apply the monetary policy in the short and medium term to help the Australian government achieve its main economic objectives. Finally it will state the effects of these recommendations using three outlined economic criteria.

Booms, busts, recessions, and growth; all of the preceding terms are characteristics of a typical market economy. There are times when an economy can flourish spectacularly and there are times when it can fail miserably. Consequently, it is the responsibility of a nation’s central bank to manage these fluctuations through conducting effective monetary policy. The following paper will assume the perspective of the Reserve Bank of Australia (RBA) and critically analyze the past, present, and future of the Australian economy while considering specific sectors.

The world economic environment is continually undergoing rapid integration through exports, imports and the coordination of monetary and fiscal policies. Both Australia and Japan’s economies are mixed, whereby they contain elements of planned and market economies. Over the past 3 decades the Australian and Japanese economies have experienced gradual economic growth. Japan experienced a recession in 2014. The monetary system used in Australia and governed by the Reserve Bank of Australia who set the interest rate on overnight loans. The Australian currency is called the Australian dollar (AUD). The Australian Stock Exchange (ASX) is Australia’s stock market, which allows the buying and selling of shares of companies. The Japanese currency is

Analyse the effects on the Australian economy of a sustained reduction in the cash rate with particular emphasis on the housing market.

Even though technically Australia has not fallen into recession, posting yet another quarter of GDP growth in the June quarter of 2009 it is still feeling the effects of a fall in demand, some areas effected more than others. An example of this is the ‘cancellation of first class fares on 3 of Qantas’ long haul services between July 6th and October 31st‘(Platt, 2009). The reasoning for this is simple according to the International Air Transport Association (IATA) “business and first class (fares) dropped 19 percent in March”(Platt, 2009) , this is in contrast to an 8 percent decline in economy fares; a clear result of people

Li Tiandong and Jiang Boke (2006) point out that the relationship between exchange rate and employment depends on the coaction of three mechanisms: (1) the effect of exchange rate changes on aggregate demand; (2) the effect of exchange rate changes on prices of capital goods; (3) the substitution effect of exchange rate changes on the relationship between physical and human capital.[4]