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This has reduced interest rate differentials resulting in capital flight as investors seek higher returns from overseas financial assets.As foreign investors represent a portion of demand for the $A, a decline in foreign direct investment directly reduces the demand for the $A (at this point you could continue with a diagram showing a decrease in demand for the $A and the subsequent depreciation, again directly referencing the diagram in the subsequent paragraph).
changes in business and consumer sentiment, government policy), and externally, consider what is happening abroad (e.g.
changes in foreign governments policies and economic growth patterns).
Often students focus solely on demand and neglect to discuss supply side factors.
External influences (global factors): When I was writing my economics essay I often struggled to identify impacts to discuss.
I know it can sometimes be difficult to know what to include in an essay so here are the key features HSC markers are looking for: Introduction It is clear that there are two parts to this section — factors causing the depreciation, and impacts.
In your essay you must address both sections explicitly.
To address this issue I thought about the key components of aggregate demand.
Using the equation AD = C I G X — M, it is easy to identify at least 5 potential impacts.
Scroll up if you need a refresher on the key elements which go in an introduction in the ‘Key features of an economics essay’ section.
Here is a sample introduction: An exchange rate is the price of one currency quoted in terms of another.