Assessment - Authentic tasks - Research Project
Topic - Case Study
The case study will demonstrate following learning outcomes and UOW graduate Quality(s);
1. Demonstrated research effort [which involves theoretical knowledge (informed) and skills to propose solutions (problem solver) to a given economic problem, conducting a professionally focused research project (innovative and flexible)].
2. Capacity to answer the question [ability to communicate via written skills (effective communicator)].
3. Demonstrated understanding of subject matter [ability to reflect on performance and feedback to identify learning opportunities (informed)].
4. Original insight of student [ability to exercise judgement to propose solutions to the case (innovative and flexible)].
Information -
From the article titled 'Is the Australian dollar overvalued?' (Sydney Morning Herald February 10, 2017), answer the following questions. Note that your analysis is based on United States Dollar and Australian Dollar.
(a) Briefly summarise the main issues discussed in this article? [Not exceeding 300 words].
(b) Using Demand and Supply model of exchange rate determination briefly explain how AUD is determined in the forex market, and what factors influence its fluctuations.
(c) Using nominal exchange rate data and trade weighted index from Reserve Bank of Australia and graphs (monthly data of last three years) analyse the movement of AUD relative to that of the USD. Is it in line with the world commodity price movement during this period? Are there any other factors contributing to this behaviour of the AUD?
(d) Assume that you are exporting alcoholic beverages to United States. Explain the impact of overvalued AUD on your income. What advantages/disadvantages do you think Australia will have in overvalued AUD?
(e) If the market rate is US 76C then what action could the Reserve Bank of Australia take in order to maintain the exchange rate at US 72C, and what side effects might this action have on the Australian economy? Do you think that such actions would be effective? - (20 Marks)
Word Limit: 2000 words maximum. Word count (excluding references) must be provided. Excess words will not be marked.
Attachment:- Article.rar