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