. Use the money market with the general monetary model and foreign exchange (FX) market to answer the following questions. The questions consider the relationship between the U.K. pound () and the Australian dollar ($). Let the exchange rate be defined as Australian dollars per pound, Es/. In the U.K., the real income (Y) is 2.00 trill., the money supply (M) is 1.00 trill., the price level (P) is 1.00, and the nominal interest rate (ic) is 4.00% per annum. In Australia, the real income (Ys) is 1.00 trill., the money supply (Ms) is AU$0.75 trill., the price level (Ps) is AU$ 1.50, and the nominal interest rate (is) is 4.00% per annum. These two countries have maintained these long-run levels. Note that the uncovered interest parity holds all the time and the purchasing power parity holds only in the long-run. Assume that the new long-run levels are achieved within 1 year from any permanent changes in the economies. Now assume that Australian dollar is pegged to the UK pound with the exchange rate of Ea/u = 1.5. Reserve Bank of Aus alia (RBA) maintain this exchange rate all the time. (A) What should be the interest rate in Australia today, is, to maintain the par value of the exchange rate at AU$1.5 per pound ()? Explain the reason. [4 marks] (B) Should the RBA raise or reduce the money supply in Australia today to maintain the par value of the exchange rate at AU$1.5 per pound ()? Explain the reason. [4 marks] (C) What should be the Australian money supply in the long-run to maintain the par value of the exchange rate at $1.5 per 1? Explain the reason. [4 marks] Hint: Use the money monetary model to solve for M