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1. Home economy was initially in the long-run equilibrium. Then, Home central bank changes nominal money supply permanently at to. Home economy reaches a new
1. Home economy was initially in the long-run equilibrium. Then, Home central bank changes nominal money supply permanently at to. Home economy reaches a new long-run equilibrium at tL. The gure below shows the time path of the nominal money supply. MS Time 1.a. Consider the time path of real money supply. Choose the figure showing the correct time path of the real money supply from 6 figure below. MS/P (a) MS/P (b) Time Time to tL to tL MS/P (c) MS/P (d) Time Time to tL to tL\f1.b. Consider the time path of the expected exchange rate. Choose the gure showing the correct time path of the expected exchange rate from 6 gure below. Please be careful; this asks above Be, not E. E6 (80 E (b) Time to tL Ee (d) Time Fe Fe (e) (f) Time Time to tL to1.c. Consider the time path of the equilibrium exchange rate. Choose the gure showing the correct time path of the equilibrium exchange rate from 6 gure below. Please be careful; this asks above E, not Ee. E (a) E (b) || Time to tL E E (e) (f) Time Time to tL to tL
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