two countries, the united states and australia, produce just one good, wheat. suppose the price of wheat in the u.s. is us$2.80 per bushel and in australia is a$ 3.70 per bushel. a. according to purchasing power parity, what should be the us/australian dollar spot rate of exchange? b. suppose the price of wheat over the next year is expected to rise to us$3.10 in the united states and to a$4.65 in australia. what should be the one-year forward us/australian dollar exchange rate? c. given your answer to (a) and (b), and given the current interest rate in the united states is 10% for treasury notes of a one-year maturity, what would you expect current australian interest rate to be?
