Answer to Question #52841 in Macroeconomics for Ellie

Question

The Australian dollar has fallen markedly against other major currencies. What is economic impact on local producers and consumers?

Answer 1

If the Australian dollar has fallen markedly against other major currencies, local producers and consumers will be worse off, because after the fall in currency value the prices for goods, especially for imports, will rise, so the purchasing power of the consumers and demand for goods will decrease and the producers will have losses. Only exporters from Australia will be better off, as their profits will be higher in national currency.