US dollar costs 1.3 Australian dollars. The interest rate and the expected inflation in a year in the US are 11% p.a. and 9%, respectively In contrast, the interest rate in Australia is 16% p.a..  What is the expected annual inflation rate of Australia?

 

Answer rating: 100% (QA)

To determine the expected annual inflation rate of Australia we can use the concept of interest ra... View the full answer