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4. 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

4. 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 tu. The figure below shows the time path of the nominal money supply.MS Time to tL Consider the time path of the equilibrium exchange rate. Choose the gure showing the correct time path of the exchange rate from 6 gure below. E (a) E (b) Time Time

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