Graph the demand and supply of Australian dollars for euros. Currency speculators think that the value of the Australian dollar relative to the euro is going to fall in the future. Show graphically and explain the effect of this change in currency traders' expectations on the demand and supply of dollars and the resulting change in the exchange rate of euros for Australian dollars. (2.5 marks)

How would the change in the exchange rate lead to a change in Australia's current account deficit? (0.5 marks)