Question 3: a. Discuss the determinants of the equilibrium foreign exchange of USD/AUD in the exchange rate-quantity diagram. Are the lines of the determinants in the diagram upward sloping or downward sloping? Why is it the case? 6 marks b. If the U.S. government decides to reimpose a higher tariff on the importation of Australian goods, what would be the change in the exchange rate of USD/AUD? Discuss the reason(s). 6 marks c. If the Reserve Bank of Australia would like to raise the exchange rate of AUD by adjusting the interest rate in Australia, what should the Reserve Bank of Australia do? Explain the reason(s). 8 marks Total question 3: 20 marks