You observe that the inflation rate in the United States is .78 percent per year and that T-bills currently yield 2.94 percent annually. Using the approximate international Fisher effect, what do you estimate the inflation rate to be in Australia, if short-term Australian government securities yield 3.35 percent per year?

a. 2.24 percent

b.1.19 percent

c.1.27 percent

d. 5.51 percent

e. 1.37 percent