open economy and change rates

Open Economy and Exchange Rates (12 marks) 0 O 01 m d All 8 a) The figure above shows that the demand for Australian dollars have increased. Provide three different examples to explain this change? (3 marks) b) How does the appreciation of the Australian currency affect the current account in its balance of payment? (2 marks) c) Suppose all Australians started experienced a rising income and the demand for German cars in Australia increases. How will this affect the exchange rate in the above figure from P1 and why? (3 marks) d) The Australian economy is a small open economy and allows its currency to float against other currencies with occasional central bank intervention. Currently, the RBA has implemented an expansionary monetary policy to stimulate the economy. How would the aims of RBA be achieved in a small open economy like Australia? (4 marks)