Question: Please answer this ASAP, thanks. At time t=0, R $ = 15%, R = 15%, and E $/ =1. Assume that Reserve Bank of Australia

Please answer this ASAP, thanks.

At time t=0, R_$= 15%, R= 15%, and E_$/=1. Assume that Reserve Bank of Australia permanently increases money supply in Australia by 30% at time t=2. In addition, assume the following:

1. The policy change is anticipated at t=1 2. Prices are completely flexible in the short run and immediately respond to any change in money supply 3. Output is always fixed at Y 4. R= 15% at t=1 and t=2 Select the most appropriate option:

A.	E_$/=1.3 at t=1 and in the long-run; E_$/>1.3 at t=2
B.	E_$/=1.3 at t=1, t=2, and in the long-run
C.	E_$/=1.0 at t=1; E_$/>1.3 at t=2; E_$/=1.3 in the long-run
D.	E_$/>1.3 at t=1 and t=2; E_$/=1.3 in the long-run
E.	E_$/>1.3 at t=1; E_$/=1.3 at t=2; E_$/=1.3 in the long-run

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