The balance of payments and the exchange rate

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4 Terms

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What transactions represent a demand for a country’s currency?

Any transaction that results in an inflow of money

2
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What transactions represent a supply of a country’s currency?

Transactions that result in an outflow of money

3
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Transactions that are demands examples

  • Australian exports of goods and services

  • receipts of income from overseas residents and

  • foreign investment into Australia (capital inflow)

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Transactions that are supply examples

  • Australian imports of goods and services

  • payment of income to overseas residents and

  • Australian investment abroad (capital outflow)