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Fin4802 please assist me to answer my questions QUESTION 2 15 marks ) The diagram below illustrates the impact of rising South African interest rates

Fin4802 please assist me to answer my questions

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QUESTION 2 15 marks ") The diagram below illustrates the impact of rising South African interest rates on the equilibrium value of the Botswana Pula in terms of the South African rand. Dollar Price R1.53 Supply Curve 1 R1.50 Supply Curve 2 R1.45 R1.41 Demand Curve 1 Demand Curve 2 Quantity of Pulas Complete the following statements which explain the change in the equilibrium of the exchange rate between the South Africa Rand and the Botswana Pula as shown in the graph above. Choose the correct word from the table below. Demand and supply curves move from curve to curve . Demand for Botswana Pulas as South African investments now seem relatively attractive. Botswana Pulas supplied for South African Rand in order to purchase South African Securities offering the interest rate (6) 1 2 falls rises more less increases | decreases higher lower b) Explain what happens to the demand and supply of Botswana Pulas from the view of South African investors when the South African interest rate rises while the Botswana interest rate remains constant. (9) [40 marks]

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