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 mean that it takes more Australian dollars to buy the same amount of foreign currency. Therefore, importing goods from overseas would become more expensive as the cost of foreign goods would increase. Additionally, the cost of offshore debt would increase as it has to be repaid in foreign currency, which would now be more expensive to acquire with Australian dollars. Choice A is incorrect as it implies that people would find imports cheaper, which is not the case. Choice B and C are partially correct, but D is the best choice as it includes both of these effects. Choice E is incorrect as it implies that there are other effects not mentioned in the options.

The Effect of a Fall in the Exchange Rate for Australian