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QUESTION 16 Assume the spot exchange rate is AUD.7004. The expected inflation rate is 1.1 percent in Australia and 1.3 percent in the U.S. What

QUESTION 16

  1. Assume the spot exchange rate is AUD.7004. The expected inflation rate is 1.1 percent in Australia and 1.3 percent in the U.S. What is the expected exchange rate one year from now if relative purchasing power parity exists?

    a

    AUD.6990
    b

    AUD.7008
    c

    AUD.7021
    d

    AUD.7030
    e

    AUD.6979

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