Identify whether each of the following would lead to an appreciation or depreciation of the Australian dollar. In each case, explain why the currency either appreciates or depreciates. a. Australian citizens switch from buying stock in US companies to buying stock in Australian companies. b. The inflation rate in Australia increases relative to the inflation rate in the US. c. The federal government takes a more restrictive view of foreign investment takeovers of Australian enterprises. d. There is an expectation that the central bank in Australia will raise interest rates.

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a. A switch in the Australian citizens from buying stock in US companies to buying stock in Australian companies will lead to an appreciation of their currency. By purchasing stock in Australian companies, the citizens are improving the performance of the whole economy through increased production and expanded investments, hence making their currency more valuable in the foreign exchange market.

b. When the inflation rate in Australia increases more than the inflation rate in the US, the Australian currency will depreciate. An increase in the rate of inflation in Australia will lead to an increase in the general prices of domestic goods hence discouraging exports. Australian citizens will also opt for cheaper foreign products, and the result of this is the depreciation of the Australian currency relative to that of the United States.

c. When the federal government takes a more restrictive view of foreign investment takeovers of Australian enterprises, this will lead to the depreciation of the currency since it amounts to a restriction in the flow of capital. The foreign investors will respond to this move by withdrawing from the country and moving to others that are willing to have them, hence decreasing the value of the Australian dollar relative to the countries that are open to foreign investment.

d. In the event of an expectation that the central bank in Australia will raise interest, the currency will appreciate. This is because the anticipated increase in the rate of interest will attract investors from other countries into Australia hence increasing the demand for the Australian currency. This, in turn, leads to the appreciation of the value of the currency.

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Academic.Tips. (2021) 'Identify whether each of the following would lead to an appreciation or depreciation of the Australian dollar. In each case, explain why the currency either appreciates or depreciates. a. Australian citizens switch from buying stock in US companies to buying stock in Australian companies. b. The inflation rate in Australia increases relative to the inflation rate in the US. c. The federal government takes a more restrictive view of foreign investment takeovers of Australian enterprises. d. There is an expectation that the central bank in Australia will raise interest rates'. 22 July.

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Academic.Tips. (2021, July 22). Identify whether each of the following would lead to an appreciation or depreciation of the Australian dollar. In each case, explain why the currency either appreciates or depreciates. a. Australian citizens switch from buying stock in US companies to buying stock in Australian companies. b. The inflation rate in Australia increases relative to the inflation rate in the US. c. The federal government takes a more restrictive view of foreign investment takeovers of Australian enterprises. d. There is an expectation that the central bank in Australia will raise interest rates. https://academic.tips/question/identify-whether-each-of-the-following-would-lead-to-an-appreciation-or-depreciation-of-the-australian-dollar-in-each-case-explain-why-the-currency-either-appreciates-or-depreciates-a-australian-c/

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Academic.Tips. 2021. "Identify whether each of the following would lead to an appreciation or depreciation of the Australian dollar. In each case, explain why the currency either appreciates or depreciates. a. Australian citizens switch from buying stock in US companies to buying stock in Australian companies. b. The inflation rate in Australia increases relative to the inflation rate in the US. c. The federal government takes a more restrictive view of foreign investment takeovers of Australian enterprises. d. There is an expectation that the central bank in Australia will raise interest rates." July 22, 2021. https://academic.tips/question/identify-whether-each-of-the-following-would-lead-to-an-appreciation-or-depreciation-of-the-australian-dollar-in-each-case-explain-why-the-currency-either-appreciates-or-depreciates-a-australian-c/.

1. Academic.Tips. "Identify whether each of the following would lead to an appreciation or depreciation of the Australian dollar. In each case, explain why the currency either appreciates or depreciates. a. Australian citizens switch from buying stock in US companies to buying stock in Australian companies. b. The inflation rate in Australia increases relative to the inflation rate in the US. c. The federal government takes a more restrictive view of foreign investment takeovers of Australian enterprises. d. There is an expectation that the central bank in Australia will raise interest rates." July 22, 2021. https://academic.tips/question/identify-whether-each-of-the-following-would-lead-to-an-appreciation-or-depreciation-of-the-australian-dollar-in-each-case-explain-why-the-currency-either-appreciates-or-depreciates-a-australian-c/.

Bibliography

Academic.Tips. "Identify whether each of the following would lead to an appreciation or depreciation of the Australian dollar. In each case, explain why the currency either appreciates or depreciates. a. Australian citizens switch from buying stock in US companies to buying stock in Australian companies. b. The inflation rate in Australia increases relative to the inflation rate in the US. c. The federal government takes a more restrictive view of foreign investment takeovers of Australian enterprises. d. There is an expectation that the central bank in Australia will raise interest rates." July 22, 2021. https://academic.tips/question/identify-whether-each-of-the-following-would-lead-to-an-appreciation-or-depreciation-of-the-australian-dollar-in-each-case-explain-why-the-currency-either-appreciates-or-depreciates-a-australian-c/.

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"Identify whether each of the following would lead to an appreciation or depreciation of the Australian dollar. In each case, explain why the currency either appreciates or depreciates. a. Australian citizens switch from buying stock in US companies to buying stock in Australian companies. b. The inflation rate in Australia increases relative to the inflation rate in the US. c. The federal government takes a more restrictive view of foreign investment takeovers of Australian enterprises. d. There is an expectation that the central bank in Australia will raise interest rates." Academic.Tips, 22 July 2021, academic.tips/question/identify-whether-each-of-the-following-would-lead-to-an-appreciation-or-depreciation-of-the-australian-dollar-in-each-case-explain-why-the-currency-either-appreciates-or-depreciates-a-australian-c/.

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