At time t=0, R_$= 15%, R= 15%, and E_$/=1. Assume that Reserve Bank of Australia permanently increases money supply in Australia by 30% at time t=2. In addition, assume the following:

1. The policy change is anticipated at t=1 2. Prices are completely flexible in the short run and immediately respond to any change in money supply 3. Output is always fixed at Y 4. R= 15% at t=1 and t=2 Select the most appropriate option:

	A.	E$/=1.3 at t=1 and in the long-run; E$/>1.3 at t=2
	B.	E$/=1.3 at t=1, t=2, and in the long-run
	C.	E$/=1.0 at t=1; E$/>1.3 at t=2; E$/=1.3 in the long-run
	D.	E$/>1.3 at t=1 and t=2; E$/=1.3 in the long-run
	E.	E$/>1.3 at t=1; E$/=1.3 at t=2; E$/=1.3 in the long-run