Foreign Exchange Review

Depreciation of our currency tends to decrease the price of imported commodities, thereby making them more attractive to domestic consumers.

• True
• False

When an Australian business exports goods or services overseas, they expect to receive payment in Australian dollars.

• True
• False

The US dollar is the major currency held as part of Australia’s official reserve assets.

• True
• False

The exchange rate is the price of one country’s currency in terms of another currency.

• True
• False

A decrease in demand for Australian wool increases the demand for Australian dollars.

• True
• False

When Australian firms invest in China, the supply of Australian dollars falls on the foreign exchange market.

• True
• False

An appreciation of the Australian dollar will make imports cheaper.

• True
• False

A fixed exchange rate is one that is determined by market forces.

• True
• False

Under a floating exchange rate, a decline in the value of the Australian dollar is known as a devaluation.

• True
• False

A managed exchange rate is controlled by the Australian Government.

• True
• False