33. The spot exchange rate between the British Pound and Australian Dollar is 1GBP for 1.8062 AUD. The interest rate in the UK is 4% and the interest rate in Australia is 7%. The inflation rate in Australia is 3%. c. Suppose a change in expected inflation causes the one-year forward exchange rate to change to 1.90 AUD for 1 GPB. If the real rate in Australia is unchanged, what is the new Australian rate? inflation

33. The spot exchange rate between the British Pound and Australian Dollar is 1GBP for 1.8062 AUD. The interest rate in the UK is 4% and the interest rate in Australia is 7%. The inflation rate in Australia is 3%. a. What is the expected future exchange rate? b. Show a graph of the market in Australia for British Pounds and demonstrate what will hap the exchange rate there is slower foreign growth (slower growth in the UK). to c. Suppose a change in expected inflation causes the one-year forward exchange rate to change to 1.90 AUD for 1 GPB. If the real rate in Australia is unchanged, what is the new Australian inflation rate?