Assume that the exchange rate between the dollar and the euro is €0.60 = $1.Suppose the exchange rate changes to €0.50 = $1.Because of the change

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With the exchange rate decreasing from €0.60 to €0.50, it means that the euro has weakened in value and the dollar has strengthened. This means that US goods become more expensive for Europeans, while European goods become cheaper for Americans. Therefore, Australian exports to Europe should increase as they become relatively cheaper for Europeans, while Australian imports from Europe should decrease due to the increased cost of European goods.

Assume That the Exchange Rate Between the Dollar and the Euro