QUESTION 1 (20 MARKS) a. Economic factors such as inflation, national income, government policies and exchange rates affects the international trading. Explain how changes in various economic factors affects the country's current account balance by providing example(s). (10 marks) b. In order to achieve Free trade, some countries are attempting to reduce trade barriers. In the effort to do so, Mr. Johnson, a staff in an exporting firm stated that, We are always at the mercy of the exchange rates and free trade is not possible. This mechanism can be used by any countries in the effort of imposing barriers in trade. What does this statement mean? (5 marks) . c. Kangaroo Corporation (KC), an exporter from Australia has invoiced their export goods to Poland in Poland currency (the zloty). If KC expects that the zloty will appreciate against Australian dollar in the future, should KC hedge their exports with a forward contract