Assume the spot market exchange rate for $1 is currently A$1.1904. The expected inflation rate is 3.3 percent in Australia compared to the U. S. rate of 2.8 percent. What is the expected exchange rate one year from now if relative purchasing power parity exists?
a. $1.1844
b. $1.2062
c. $1.1964
d. $1.2286

c. $1.1964

Explanation:

The Expected Rate is calculated as follows,

Expected Rate = ((1+ Australia inflation rate)/(1+ U.S inflation rate)) *spot rate

Plugging in the figures therefore we will have,

Expected Rate = ((1+0.033) / (1 + 0.028)) * 1.1904

Expected Rate = $1.1964

$1.1964 is the expected exchange rate one year from now if relative purchasing power parity exists.

the answer is: c.that person might be arrested and deported

filling w-4 form incorrectly usually would rise suspicions from government's auditors. when they notice such mistakes, they would send their teams to investigate the situation further.

if those investigation teams believe that the incorrectness is done on purpose (with malicious intent), that person can be arrested or deported

answer; i believe its (d) intrinsic;