Assume that the United States invests heavily in government and corporate securities of Australia. In addition, residents of Australia invest heavily in the United States. Approximately $5 million worth of investment transactions occur between these two countries each year. The total dollar value of trade transactions per year is about $8 trillion. Then most. directly influences their exchange rate the Inflation and interest rate differentials inflation differentials only income differentials only interest rate differentials inflation and income differentials 00