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Australia and the USA are trading partners, and both countries operate flexible exchange regimes. Suppose Australia's inflation rate becomes higher than USA's inflation rate. Discuss
Australia and the USA are trading partners, and both countries operate flexible exchange regimes. Suppose Australia's inflation rate becomes higher than USA's inflation rate. Discuss how higher relative Australian inflation rate would impact the Australian dollar (AUD) and the USD. Illustrate your answer with a clearly labelled demand and supply diagram of the Australian dollar.
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