In a world economy consisting of France and Australia, both countries produce only one good: wine. A bottle of wine costs EUR 3.45 in France, and AUD 6.16 in Australia. France and Australia have...

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Extracted text: In a world economy consisting of France and Australia, both countries produce only one good: wine. A bottle of wine costs EUR 3.45 in France, and AUD 6.16 in Australia. France and Australia have engaged in a target-zone arrangement, in which the central rate is AUD1.3699/EUR and exchange rates are allowed to fluctuate by 19%. The current exchange rate is AUD1.5616/EUR. If France imposes a tariff of EURO.45 per bottle on wine imported from France, what is the maximum possible spot exchange rate that could occur if absolute PpP holds? a. EURO.83/AUD b. EURO.73/AUD OC. EUR1.66/AUD d. EURO.49/AUD e. EURO.56/AUD