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A2. Imagine that the following events occurred in the period between 2000 and 2020. . EU adopted new trade restrictions (such as higher tariffs) on

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A2. Imagine that the following events occurred in the period between 2000 and 2020. . EU adopted new trade restrictions (such as higher tariffs) on Chinese products and simultaneously reduced the annual rate of growth of their money supply from 5% to 3%. . Over the same period of time, Chinese real GDP, trade policies and the Chinese money supply remained stable, so was the EU's real GDP. Seeing these as long run events, analyze the effects on the Euro-Yuan nominal exchange rate, ECNWE, by using the extended version of the monetary approach (i.e. the PPP based model with the real exchange rate extension)

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