Use the Information Below to Answer the Following Questions

question 126

Multiple Choice

Use the information below to answer the following questions.
Fact 25.3.1 Aussie Dollar Hit by Interest Rate Talk
The Australian dollar fell against the U.S. dollar to its lowest value in the past two weeks. The CPI inflation rate was reported to be generally as expected but not high enough to justify previous expectations for an aggressive interest rate rise by Australia's central bank next week.
Source: Reuters, October 28, 2009
-Consider Fact 25.3.1. Australia's exchange rate policy is a flexible exchange rate. An expected rise in the Australian interest rate with no change in the Canadian interest rate, everything else remaining the same, ________ the demand for Australian dollars and ________ the supply of Australian dollars.

• A)increases; increases
• B)increases; decreases
• C)decreases; decreases
• D)decreases; increases
• E)does not change; does not change

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Definitions:

Recognition

The ability to identify previously encountered events, objects, or people.

Memory Revision

The process of altering or modifying memories, often involving the integration of new information or reinterpretation of existing memories.

Loftus

Refers to Elizabeth Loftus, a prominent psychologist known for her research on human memory, particularly on the malleability of eyewitness memory.

Nondeclarative Memories

Memories that are acquired and retrieved unconsciously, including procedural memories such as how to ride a bicycle.