Q7

Question 7 (7 points) Suppose you have been offered a new job in Australia in one year and you want to make sure your investments give you similar spending power. If the interest rate in Singapore is 1.80% and Australian interest is 0.35%, the AUD/SGD spot exchange rate is 0.97 (0.97 AUD for 1 SGD), finally the one year ahead expected inflation in Australia is 3.80 % and for Singapore is 2.90 %. The real interest in Australia would be if Singapore real interest rate is 0.30 percent. Your Answer: Answer Jestion 8 (7 points) lis18_SAQ_expinf|1: Explain with the attached graph the effect of an increase in he expected inflation rate on the equilibrium exchange rate, everything else hel onstant. S xchange Rate, Et (euros/$) Question 7 (7 points) Suppose you have been offered a new job in Australia in one year and you want to make sure your investments give you similar spending power. If the interest rate in Singapore is 1.80% and Australian interest is 0.35%, the AUD/SGD spot exchange rate is 0.97 (0.97 AUD for 1 SGD), finally the one year ahead expected inflation in Australia is 3.80 % and for Singapore is 2.90 %. The real interest in Australia would be if Singapore real interest rate is 0.30 percent. Your Answer: Answer Jestion 8 (7 points) lis18_SAQ_expinf|1: Explain with the attached graph the effect of an increase in he expected inflation rate on the equilibrium exchange rate, everything else hel onstant. S xchange Rate, Et (euros/$)