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Assume the spot market exchange rate for $1 is currently A$1.1904. The expected inflation rate is 3.3 percent in Australia compared to the U.S. rate

Assume the spot market exchange rate for $1 is currently A$1.1904. The expected inflation rate is 3.3 percent in Australia compared to the U.S. rate of 2.8 percent. What is the expected exchange rate one year from now if relative purchasing power parity exists?

A$1.1844

A$1.2062

A$1.1964

A$1.2286

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