From the 1930s to the 1990s, the Australian tobacco leaf industry benefited from regulation on local leaf content. The regulation stipulated that cigarette manufacturers that used imported tobacco leaf also had to include 57% domestically produced tobacco leaf in their products. In the 1990s, this regulation was lifted. As a result, the local tobacco industry eventually failed because it could not compete with foreign producers. If Australia is now importing cigarettes from China, we would expect to see _____ in the demand for the Chinese yuan and _____ in the supply of the Australian dollar.

Question

Quizplus · Accepted Answer

When Australia imports cigarettes from China, it increases the demand for the Chinese yuan to pay for these imports and increases the supply of the Australian dollar as Australians exchange their currency for yuan.

From the 1930s to the 1990s, the Australian Tobacco Leaf