Oz Eat's is a casual dining restaurant chain which has expanded its operations internationally.

Oz Eat's currently needs to convert its profit earned in the U.S. market into Australian dollars. The quote advertised by a local foreign exchange dealer in Melbourne is

AUD 1 = USD 0.6904-0.7620

a) What is the commodity currency in the above quote? Is it a direct quotation or an indirect quotation?

b) What is the rate at which Oz Eat's can exchange US dollars into Australian dollars? Explain why.

c) If Oz Eat's has USD $10,000, how much AUD can it convert to given the rate it has accepted in part b)?

d) Suppose Oz Eat's will also need to buy USD with AUD in 3 months to pay for its import bills. If 3 month later, the Reserve Bank of Australia decreases its cash rate, holding everything else being equal, would this change be more likely to result in an appreciation or a depreciation of AUD against USD? Briefly explain why.

e) Would Oz Eat's be better off or worse off from the change in part d), explain why.