The effect of a fall in the exchange rate for Australian dollars relative to other major world currencies would include:

Question

Quizplus · Accepted Answer

A fall in the exchange rate for Australian dollars would make imports more expensive, leading to an increase in the cost of importing goods from overseas. Additionally, any loans or debts taken out in foreign currencies would become more expensive as well, leading to an increase in the cost of offshore debt. Therefore, option D, which includes both these effects, is the correct choice. Option A is incorrect because cheaper goods overseas would mean that the exchange rate has increased, not fallen. Option B and C are partially correct, but they do not take into account the combined effect of both these factors.

The Effect of a Fall in the Exchange Rate for Australian