Q)

In response to the COVID-19 pandemic, on the 18th of December 2020 the European Union passed the NextGenerationEU stimulus package of 1.8trillion euros. To finance the NextGenerationEU, the European Commission will borrow on behalf of the European Union.

i)

Using a graph of demand and supply of dollars for euros, explain how will this affect the exchange rate between the Australian dollar and the Euro.

ii)

How would the result change if private savings in Australia decrease?