If Inflation Increases Substantially in Australia While Euro Area Inflation

question 2

Multiple Choice

If inflation increases substantially in Australia while euro area inflation remains unchanged, this is expected to place ____ pressure on the value of the Australian dollar with respect to the euro.

• A) upward
• B) downward
• C) either upward or downward (depending on the degree of the increase in Australian inflation)
• D) none of the above; there will be no impact

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Definitions:

Demand

The interest and capacity of buyers to acquire a product or service for a certain cost.

Human Capital

The abilities, understanding, and expertise held by a person or a group, considered in terms of their economic or value worth to a company or nation.

Ph.D.

A Doctor of Philosophy degree, a postgraduate academic degree awarded by universities.

College Professors

Faculty members at colleges and universities responsible for teaching courses, conducting research, and participating in academic service.