Draw a chart and explain in words what is expected to happen to the New Zealand dollar demand and supply curves (USD/NZD) if there is a forecast increase in New Zealands national income relative to a stable growth rate in the USA. Consider the following two scenarios.

- An increase in the rate of growth in a countrys national income relative to that in the rest of the world will result in a depreciation of that currency.

- An increase in the rate of growth in a countrys national income relative to that in the rest of the world will result in an appreciation of the currency