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Exercise2: (2 marks) 4- For Australia, suppose the annual interest rate on government securities equals 5% while the annual inflation rate equals 1%. For Canada, suppose the annual interest rate on government securities equals 6%, while the annual inflation rate equals 4%. Theses variables would cause investment funds to flow from: a. Canada to Australia, causing the AUD to depreciate b. Canada to Australia, causing the AUD to appreciate c. Australia to Canada, causing the CAD to depreciate d. Australia to Canada, causing the CAD to appreciate 5- Suppose Australia and Canada were the only two countries in the world. There exists an excess supply of AUD on the foreign exchange market. This suggests that: a. The Australian balance of payments is in deficit b. The Australian balance of payments is in surplus c. The Canadian balance of payments is in deficit d. There is an excess supply of CAD