Q24-2

7 pts D Question 24 Suppose the spot rate is A$1.77/GBP. An Audi can be purchased in Sydney, Australia, for A$30,000 or in London, United Kingdom, for 17,860. The real interest rate is 3.5% p.a. for AUD and 1.5% for GBP b) Suppose the real interest parity holds, calculate the expected real exchange rate of per London Audi. Will the change in the real exchange rate lead to an increase in the Australia? Explain. (4 marks) y Audi ports of