2025HSCShort answer

Q22 (b)

3 marks

Question

Use the following graph to answer parts (a) and (b).
Explain how the Reserve Bank could directly influence the value of the Australian currency to move from P1 to P.

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Solution

Criteria	Marks
Explains how the RBA could directly influence the value of Australian currency, to move from P₁ to P	3
Outlines how the RBA could directly influence the value of the currency	2
Provides some relevant information	1

Sample answer:

The RBA could directly intervene in the foreign currency market, ‘dirtying the float.’ To cause an appreciation of the currency the RBA would purchase AUD in exchange for foreign currency reserves, and this results in an appreciation from P₁ to P.

Answers could include:

Selling of foreign currency
Buying of Australian currency.

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Compare this with your working, not only your final sentence.

Syllabus alignment

Australia’s Place in the Global Economy

Trade and financeInvestigate Australia’s trade, balance of payments, exchange rates and external stability.

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