QCEVault

Economic management — Question 64

Original QCE Vault practice · 5 marks

Q64 · Practice questionComplex familiar5 marks

QUESTION 64 (5 marks)

A hypothetical Australian-dollar appreciation changes the exchange rate from US$0.65 to US$0.75 per A$1. An imported machine has a fixed US$15 000 price. Calculate its Australian-dollar price before and after. Explain how this could affect both short-run inflation and longer-run productive capacity.

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