Use the Following Information to Answer the Question(s) Below

question 11

Multiple Choice

Use the following information to answer the question(s) below:
The exchange rate between the Australian dollar and the British pound is 0.65 (i.e., 0.65 pounds per Australian dollar) . In the U.K., the price level is 1.0 and the interest rate is 15%. In Australia, the price level is 0.5 and the interest rate is 10%. The inflation rate in both countries is zero.
-Refer to the information above. The real exchange rate, from the Australian perspective, is:

• A) 0.325.
• B) 0.525.
• C) 0.225.
• D) 0.125.
• E) 0.425.