Assume the spot exchange rate is 1.40 Australian dollar per U.S. dollar. If the inflation rate in the U.S. is expected to be 1.5% and the inflation rate in Australia is 1.2% for the next two years, then the:

		exchange rate will increase.
		exchange rate will double.
		U.S. dollar will appreciate relative to Australian dollar.
		U.S. dollar will become more valuable.
		Austrlian dollar will strengthen against the U.S. dollar.